Compensation is an important part of business. Being able to offer an alluring compensation package helps business’s compete on large scale. They also help with employee retention.
It’s important to note though that no two compensation strategies are exactly alike. Each company’s strategy will depend on how they manage their compensation, company culture and profit margins.
One thing all compensation strategies do have in common is that like anything, they will evolve over time. Compensation should be thought of as fluid—as times change, so do compensation needs. Maintaining competitive compensation packages is imperative if you want to attract the best talent available.
When developing your 2020 compensation strategy, take time to consider these five key details.
The Big Picture: Compensation is More Than Salary
Your compensation strategy will focus on salary. But you must also recognize that compensation is more than a pay cheque. Total compensation—everything your business offers its employees (benefits, wellness programs, EAPs, etc.)—is a major part of compensation and should be the first detail you consider when defining your 2020 compensation strategy.
There are many types of indirect compensation you can include in your total compensation package. What you choose will depend on your budget, your company culture and its generational makeup. You want your total compensation package to appeal to the type of candidates you hope to recruit. But it should also focus on your current employees and meeting their needs.
Connect Compensation to Your Business Goals
Your 2020 compensation strategy should double as a tool to get employees on board with your company’s goals. Compensation is one of the most effective tools for motivation.
Competitive, worthwhile compensation packages will include a reward element. Whether you choose to reward employees for bringing in new customers or rewarding activities that help generate growth and profits, including a competitive rewards-based system into your compensation strategy can be the incentive needed to bolster employee productivity and engagement. Essentially you want to create a system that rewards the behaviours that drive results.
Consider Which Roles Should Come with the Most Competitive Pay
For smaller businesses or company’s just getting started offering competitive compensation can be a challenge. There’s always the possibility that despite wanting to offer higher salaries, your business simply can’t afford it.
In this case, your 2020 compensation strategy should consider the various roles within your business and for strategic purposes, determine which positions are arguably the most in-demand. What roles render your organization functional? Or, likewise, what roles are the most in-demand across a variety of businesses? These may be the positions you choose to offer more competitive salaries because these are the roles you recognize as most integral to supporting and meeting your business’s objectives.
Get Executive Buy-In
Arguably the most difficult aspect of any compensation strategy is getting the C-Suite on board. They key here is to remind executives that the bottom line—improved growth and higher profit margins—can’t be reached without a high-quality workforce.
People have been debating the ways to get executive buy-in for a long time. For instance, consider this article from 2015, all about the tactics to use to get buy-in.
Promoting the need for change is part of both HR and middle managements job. Executives are concerned with the big picture. As the people working on the projects that lead to success, management and HR need to ensure they have the tools required for success. But they can’t get them without buy-in.
Meeting employee needs, attracting and retaining talent, remaining competitive—these are all needs you’ll aim to meet with your 2020 compensation strategy. To gain buy-in from the C-Suite, you’ll have to present these needs, along with a compelling argument as to why and how your compensation strategy can meet them. Building a business case is one way to do this.
Design with Scalability in Mind
The final detail your 2020 compensation strategy needs is scalability.
We consider scalability when it comes to implementing new technologies. It’s also something that should be considered with our compensation strategies. If you’re planning for any level of company growth, you’ll want to ensure the compensation offering you have can grow too.
A scalable compensation strategy is a proactive step towards securing your compensation management for the future.
Build Your Compensation Strategy with Technology
Using technology to build your 2020 compensation strategy will help keep the process organized. HR tech, like an HRIS, can help you with recruitment, performance, goals and more—all elements you’ll need to analyze to develop your strategy.