Conventional salary strategies won’t meet millennial's needs. To get the most value from your compensation dollars, you need to modernize your total compensation management strategies.
Consider the following tips to you modernize your company’s compensation.
Treat Employees as Individuals
Many companies are still offering one-size-fits-all pay to their employees. Every employee with the same job title receives the same pay. Employees receive across-the-board raises. One-size-fits-all pay is easy for companies to manage, but it’s an outdated strategy that won’t help you retain millennial employees.
Your employees are individuals, and their pay should be individualized. If you offer one-size-fits-all pay, you’re not creating incentive for average and low performing employees to improve their productivity and output, as they’re already being paid the same as your top employees.
Employees are also motivated by different things. Some of your employees may be motivated at the prospect of more money, while others would rather have more sick days. Others would rather have a better health plan, while others would rather work from home. If your compensation doesn’t take individual preferences into account, you won’t be getting the most value out of your salary and benefits dollars.
Individualized pay may seem like an administrative hassle. It is, if you’re still using spreadsheets. Small businesses can simplify HR processes with all-in-one HR technology.
Be Transparent About Salaries
While older workers may want to keep their pay a closely guarded secret, millennials value transparency. They share a lot of details about their lives already, so showing coworkers their pay stubs or talking about their bonuses isn’t a breach of privacy. Salaries are also being shared outside of the company, and there are many sites online where your employees can post their earnings.
Since your employees will talk about how much they’re making, you should be transparent about your compensation strategy. If your compensation plan is data driven, you’ll want to explain to employees why they receive a certain salary, or why their coworker may have received a larger bonus.
When pay is transparent, employees know what they need to do to earn a higher pay from the company. Instead of being upset that a coworker got a large raise, they’ll know what steps to take to get a pay increase of their own.
Your front-line managers are the ones who spend the most time with your employees. They know how well employees on their teams are performing and which types of rewards each employee wants. They’re in the best position to talk to employees about pay, but they aren’t always allowed to do it. Department managers or human resources managers make pay decisions, while front-line managers are just the messengers.
Your high-level managers may be very talented, but they don’t know your employees well. Without knowing the employees, it’s impossible to set the individualized pay that today’s employees want. This part of the compensation process needs to be modernized.
Train your front-line managers to discuss salaries and benefits with your employees. They should be empowered to make compensation decisions on their own, within the guidelines you’ve set. For example, you might decide to give front-line managers full control of bonus allotment for their teams. You may allow them to give their teams additional sick days or vacation days. Set the ground rules first, and trust your managers to handle the rest.
Modernize Compensation through Improved Technology
Modernizing employee compensation can be made easier when you use technology designed to help HR processes. An HRIS, complete with access to an HR Hub, can help your newly empowered managers track employee goals, performance and KPIs as well as benefits.