How to get your compensation and benefits strategy right in order to attract, retain and motivate people
Compensation and benefits plans represent the whole package that the employer is prepared to offer to its employees for the work done and could come in the form of:
- Monetary compensation consisting of:
o Base pay
o Merit increases – ongoing increases to reward achievements
o Merit bonus – one-time, lump sum as a reward paid to the:
§ Individual
§ Group/Team
§ Organization
§ A blend of the above
o Long-term incentives: stock options
- Benefits could be:
o Income protection
§ Required
· Social security
· Worker’s compensation
· Unemployment insurance
· Parental leave
§ Voluntary
· Medical insurance
· Retirement programs
· Life insurance
· Saving plans
o Work/life fit programs
§ Time off
§ Childcare
§ Counseling
§ Financial planning
§ Flexible work arrangements like remote work
o Miscellaneous benefits
§ Employee discounts
§ Meals
§ Education
Key questions when mapping out the compensation and benefits plan in your organization:
- What objectives are we trying to accomplish as a company with our compensation and benefits plan? Is it competitive attractiveness? Is it product or service excellence?
- How should we position the plan to meet the below-mentioned considerations?
- What behaviors are we looking to encourage and reward, and what behaviors are we not wanting?
- Communication: how open should you be in communicating the plan? 1 to 1, group or organization wide communication?
Key considerations in setting up or adjusting your pay strategy:
- Should follow the rule Attract – Retain – Motivate (ARM)
- Market and industry competitiveness
- Composition of the organization in relation to the types and complexity of jobs
- Alignment with the organization mission and create a “line of sight” to drive the desired employee behavior
- Should comply with country, state or local compliance so make sure you ask for competent legal advice in your country, state
- HRIS software which stands for Human Resources Information System, for more about it please refer to this link
Key elements in building up the compensation and benefit strategy plan:
- Study your market and industry for similar roles to be competitive
- Set the right goal for the strategy and plan to succeed and get the leadership buy-in, which needs to be aligned with your organization’s goals and budget
- Define the organization expectations regarding employee behavior
- Embed Governance, make sure you follow the national, local protocols, prepare formal documents, include evaluation metrics
- Develop performance management metrics and communicate them