Did you know that millennials are now the largest generation in the Canadian workforce? You’ve probably heard that millennials have different values and beliefs than the generations that came before them. Now that millennials dominate the workforce, employers need to adjust their practices.
The old approach to salary and benefits won’t work well for a millennial workforce. While previous generations were satisfied with generic compensation packages and across-the-board pay increases, those methods won’t attract and retain the new workforce. For companies to stay competitive, they need to take a modern approach to salaries and benefits.
Here’s what a modern approach to compensation entails.
Offering the same salary and benefits package for all employees at the same level doesn’t make sense anymore. While the employees may all be performing similar jobs, they’re probably not performing at the same level. Employees who always go aboveandbeyond and help your company grow deserve to get more pay than employees who aren’t putting in the same effort. One-size-fits-all pay, like across-the-board pay raises, may be viewed as unfair or demotivating by high-performing employees.
Different people are motivated by different things, and your compensation package needs to reflect that, too. Some employees want more vacation time, while others want flexible work hours. Others aren’t concerned about time off or hours, and just want a higher salary or the opportunity to earn more bonuses. When employees get the salary and benefits that motivate them, you can get the best performance from each employee.
Many companies discourage the sharing of salary information, or even expressly forbid it. While older workers may think that their salary information should be kept a secret, millennials don’t agree. Millennials have gotten used to sharing many details about their lives online, so sharing salary information isn’t a breach of privacy to them. Companies are now realizing that they need to change their compensation transparency practices to keep millennials happy.
There are many degrees of transparency that companies can adopt. At one end, you can simply encourage employees to talk to their coworkers about their salaries. On the other end, you can post all workers’ salaries internally. Transparency helps your employees understand why some people are paid more than others, and it encourages competition.
Use of Technology
Offering individual pay to each employee can be a big challenge for business owners who are managing their pay with spreadsheets. When pay is standardized, spreadsheets can work, but spreadsheets get complicated quickly when individual compensation is introduced.
Technology can make managing salary and benefits much easier and faster. With cloud-based HR technology, your HR employees can manage each employee’s individual compensation efficiently, even as your company grows and you hire more employees.
Use of Quality Data
To make good decisions, business owners and human resources managers need access to quality data. This is true for pay, too. Before you set salaries and benefits for your employees, look at relevant data, like salary surveys. You can also work with compensation specialists to determine the right strategy for your business.
Since today’s workers value transparency, be prepared to show the data you used to reach your salary decisions. Many employees will remain in jobs where they’re paid below market rate if the reasons for the pay are clearly communicated. Without knowing the reasoning behind pay decisions, employees may assume they’re disliked or are being discriminated against.
As companies grow, managing individual pay and having transparent conversations can take a lot of time. To ensure your process remains scalable, line managers should be empowered to talk about salary and benefits with their employees. Line managers are the ones who are in contact with employees every day, so they’re in the best position to evaluate performance and offer personalized, suitable compensation.