One of the most important roles HR will have is working to determine fair compensation. Fair compensation helps drive employee motivation, helps with attraction and retention and generally can help the business with its bottom line. Despite manager desire for more autonomy on pay, HR still maintains a lot of control. Greater cooperation with managers and frontline workers may be in order.
To help HR ensure best practices for determining fair compensation and working with management to do so.
What is Determining Fair Compensation?
Fair compensation is simply the base pay determined for workers at all levels of an organization. Being fair means that the compensation amount was impartially and honestly determined in an objective manner based on merit without any favour or prejudice. Paying for performance means that the compensation amount was determined by a thorough analysis of specific performance results.
How does Determining Fair Compensation improve employee engagement and culture?
When your employers are confident in the amount of compensation they receive for their work they are more inclined to be engaged at work and produce results accordingly. Pay, in many people’s minds, can equate to recognition or worth, which drives them to do more and apply themselves. Alternatively, if employees feel compensation is lower than it should be, there might be a disengagement effect.
What are the benefits?
More engaged workforce
Attraction and retention
Reduce stress
Improve financial (and overall) wellness
How do you Determine Fair Compensation in the workplace?
Fair pay can be looked at in a few ways. There are market determining factors such as what your competitors’ pay is and/or what the general range is for particular skills. There is also a pay-for-performance culture that would require performance review policy and actual reviews.
Define Fair Pay In The Workplace
Know your competition: Conduct a market analysis of what competitors or similar workers are being paid.
Talk with managers: Get a good sense from management about roles and tasks and how best to evaluate workers.
Be transparent: Be open with workers about how pay is determined, whether merit or market base. Provide as much information as possible.
Consider a pay audit: Get leadership buy-in to conduct an audit. Certain pay policies may be unlawful and could be harming the company, in general. Consult lawyers when conducting the audit.
Phase in change: Review results when completing audits or informal analysis. Draft a plan of implementation, monitor compliance and act accordingly to employee feedback (or complaints).
Providing bonus pay and incentives to high-performing staff can work as a motivation tool. Employees who receive bonuses often feel more job satisfaction and engagement with their workplace, and are more likely to stay with the organization.
To incentivize and reward employees with compensation above and beyond base pay.
What is Bonus Pay Or Incentives?
Additional pay or bonuses (above and beyond the base salary or wage) can be awarded to an employee, such as stock options or a contingent bonus plan. It can include awards such as cash or other items of value, such as stock (or stock options), based on accomplishments achieved.
How does Bonus Pay Or Incentives improve employee engagement and culture?
The purpose of the incentive or bonus pay to promote the achievement of excellent performance and results of employees and the company. The ability to earn greater rewards and bonuses positively affects job satisfaction, trust and organizational commitment.
What are the benefits?
Increase motivation
Recruitment and retention
Provide employees with sense of pride in organization
Can help with longer term savings
How do you implement Bonus Pay Or Incentives in the workplace?
Bonus or incentive pay should be discussed between management and HR. Incentives have to be properly measurable so definite goals and tasks have achievable and clear results leaving no ambiguity in the minds of employees. Bonus can come in the form of a yearly addition to pay, commissions or other items like company stock.
Create A Bonus Pay Or Incentive Program
Put the bonus plan in writing: Create a formal policy that lays the terms of bonus pay, what it is and when it is handed out.
Base bonus on results that are measurable: Ensure there is full transparency and employees understand what goals must be achieved to acquire their bonus.
Make the reward a strong incentive: Provide a bonus of relative significance to further incentivize employees.
Assess market conditions: Compare bonuses to similar industries and/or workers to ensure you are not under or overselling your incentives.
Think it through: Know what your (HR’s) goals are in creating a bonus plan. Know what you are willing to pay and who is eligible for the plan. Is there a maximum pay out?
Besides actual pay, total rewards compensation can and should be part of a total compensation package. Total rewards can include benefits, bonus, perks and other forms of compensation that are included in an employees’ rewards package.
Total rewards strategies combine compensation and benefits to improve personal growth opportunities.
What are Total Rewards Packages?
Total rewards is a concept that describes all the tools available to an employer that may be used to attract, motivate and retain employees. To an employee or candidate seeking new employment, the notion of total rewards includes perceived value as a result of the employment relationship.
How do Total Rewards Packages improve employee engagement?
An organizational culture that “takes care of people” not just through pay but also through total rewards can have a positive effect on productivity, engagement and employee satisfaction. Total rewards packages also reduce stress and anxiety as there are outlets for employees to discuss issues and pay for health or mental health needs. Less stress and anxiety will lead to improved engagement.
What are the benefits?
A persuasive recruitment and retention tool
Improved performance and productivity
Engage with employees’ families
They are less expensive than piecemeal benefits
How do you implement Total Rewards Packages in the workplace?
No total rewards package will work well if you don’t understand your employees’ preference and needs. Ensure you have a thorough understanding of your workforce. Segment workers into groups to communicate rewards effectively and map out employee’s journeys to understand their needs on their terms.
Create A Total Rewards Package That Will Help Employees
Conduct analysis of current benefits package: Analyze the benefits you have versus what you think you want to change to.
Engage employee feedback through surveys: Survey employees and managers to understand their needs and requirements.
Talk with total rewards providers: Do a market analysis of different providers and what they can offer your workplace (including how adaptable to change they are).
Determine the right package for your organization: Create the package that best reflects your corporate culture and fits within budgetary restraints.
Implement strategy and adjust as necessary: Slowly implement the rewards package with a proper communication strategy. Monitor and adjust as necessary.