Compensation management can feel a bit complicated, after all, there are many aspects to consider. We’ve already laid out what compensation management is. So, in this blog post, we’ll take a closer look at the objectives of compensation management, specifically, we’re going to consider three compensation management key objectives:
- Attracting talent
- Retaining high achieving talent
- Motivating employees
These objectives are key because they deal with your best and most important assets—your employees.
1. Objective: Attract the Best Talent Possible
A competitive compensation plan is one of the best ways to attract fresh, superior talent to your organization.
In 2018, American staffing firm OfficeTeam released research that showed a whopping 44 per cent of employees (that’s about 2 out of 5 employees), would leave their current positions for one that offered more money.
For smaller businesses, offering competitive salaries can be difficult, particularly when competing against behemoth businesses (think tech giants like Google for example). Ensuring prospects understand the total compensation package you offer is important. When you take the time to show potential recruits all that’s included in their compensation—including benefits beyond healthcare such as Friday half-days, free snacks, gym memberships, remote work opportunities, etc.—you demonstrate that while the base salary you offer might be less than another company, you make up for it with additional benefits, that offer cost-savings of a different kind.
2. Objective: Retain Your High Achievers
Total compensation cannot remain stagnant. It must evolve as your workforce does. As older employees retire and new, younger employees join your team, you’ll notice a shift in needs and wants.
Recognizing generational demands is a big part of providing total compensation that helps lower turnover at your business. Meeting the needs of individual employees may seem daunting, so consider using tools such as employee surveys and polls to help you determine the specific needs and wants of your employees. With this information in hand, you can build out benefit packages that hit these marks, creating a more alluring total compensation package.
The more specific and detailed your total compensation is, the easier it will be to retain high performing staff, who will recognize that your business works to adapt to their needs.
3. Objective: Motivate Your Employees
Keeping employees motivated is an ongoing struggle for many businesses. Goal setting is one-way companies look to boost motivation. Using technology to track employee performance and schedule reviews is a proven way to keep high achieving talent, well, achieving, and to motivate those who may not be quite up to par.
In combination with goal setting and performance reviews, total compensation can be used to motivate employees. How? Simply put, through incentive programs. People respond positively to rewards. A total compensation package that includes incentive-based rewards can help keep employees focused on meeting, and even surpassing, their goals.
Employees need to feel valued, one study found that 39 per cent of employees feel under- appreciated at work, and 77 per cent reported they would work harder if they felt they were being recognized for the work they do.
With stats like that, is it any wonder one key objective of your total compensation package should be to boost employee motivation?
Why Objectives Matter
In compensation management, objectives matter because they’re what help you focus on what to offer. Total compensation must consider future and current talent. It must aim to support employees, increase their motivation, and demonstrate their value to your business.
When total compensation is created with these three objectives in mind, you create an offering that meets the varied and specific needs of your individual workforce.