Every business should regularly revisit its compensation plan to ensure it evolves over time. Not only will your workforce change as your business grows, but the job market itself is always shifting, which impacts your employee’s expectations.
Overall, the biggest measure of your compensation plan’s success is whether your business has managed to find and retain top talent while keeping compensation costs an affordable part of your operating budget. If you haven’t already, it’s time to take a serious look at your compensation plan and consider what changes should be made.
The current market should significantly inform whether your plan meets market needs. Some highlights of the current market include:
As you review your compensation plan, you’ll need to research the going market rate for each type of position in your organization. Although statistics from Payscale and the Bureau of Labor Statistics are useful for finding average salaries, you’ll have to dig deeper for more meaningful data. Whether the information you uncover merits a raise for employees or not, having it handy will help you make better decisions moving forward.
Along with looking at your pay rates, you’ll need to ascertain whether your benefits are in line with industry averages. For example, are the benefits you provide in a range close to 31.7 percent of what you’re paying each worker?
One of the biggest indicators of the adequacy of your pay structure is how it compares to your direct competitors. Pay close attention to job ads posted for positions similar to those at your company. If other businesses could lure your workers away with higher salaries, better medical insurance, or other perks, it may be time to make some changes.
Your compensation plan should not only satisfy industry standards but also meet your business goals. As you review the plan, ponder these questions:
Your business’ employees are its most valuable asset. Whether you have one worker or over 100, maintaining high worker morale is pivotal to achieving successful business outcomes. If budget constraints make it difficult for you to provide big perks, keep in mind that your employees may be just as appreciative of small gestures, such as flexible work hours and notes congratulating them on their work performance.
Is your compensation plan in compliance with employment laws? From one year to the next, you could find that the plan becomes outdated simply because of changing laws that you failed to implement, putting your business at risk. There are several regulations that affect pay and benefits—including the Equal Employment Opportunity Commission’s discrimination laws—so be sure to review the plan for compliance.
Considering the complexity of evaluating a compensation plan, you may be better off partnering with an HR solutions company that can look over your plan and tell you whether it’s competitive—and what needs to be done if it’s not. Contact us today to find out how we can help!
February 8, 2018
Article Business Owners Over 50 Employees Competitive Insurance & Benefits