When hiring new employees for your business, the focus is on finding the best person to fill a job, and keeping good staff members on board once you have them is another critical aspect of your human resources efforts. If you don’t design an effective total rewards package as a key part of your strategic planning, you might find yourself struggling to build and maintain an effective work force.
Compensation includes what you pay your workers in salaries, wages, commissions and bonuses. It also includes relocation expenses, benefits and guaranteed perks. Before you set the pay for any position, consider if it’s better to shift more of your compensation budget to benefits and perks that build employee loyalty and make you an employer of choice.
Unlike awards, which employees earn, rewards are discretionary items you give employees. They can include staff lunches, monthly employee birthday parties, employee-of-the-month programs, wellness competitions, bonuses, motivational notes from managers, and plaques or trophies. If you don’t have a planned rewards program, create one that lets your employees know that you recognize and appreciate their work, and also lets their fellow employee know it.
Compensation and Rewards Relevance
The relevance of compensation and rewards to your human resources efforts is the effect it has on your ability to attract and retain qualified workers. If you have two candidates and one is a bit more qualified than the other, you don’t necessarily want to hire the more qualified worker. A candidate with high salary requirements might be worth more in the marketplace, so might leave your company if you can’t offer sizeable raises or bonuses each year. To create the optimal work force, you must balance your compensation and rewards with your workforce needs. This means finding the best candidates you can keep long term. For example, younger employees are not as interested in retirement benefits and health insurance as older employees. While baby boomers might cost you more in health care costs, Millenials surveyed in Future Workplace’s “Multiple Generations @ Work” said they planned on staying in a job less than three years.
Building a Total Rewards Program
The concept of Total Rewards centers on creating a complete package of pay, awards, rewards, benefits and perks. If you can’t afford many benefits, look into voluntary benefits that let your workers buy group insurance at more affordable rates than they could on their own. You can also let your employees contribute to a 401(k) plan, health savings account, or flexible spending account with no contribution from you. This can help lower your payroll taxes and your employees’ income taxes, since contributions are not taxed as income. Arrange for convenient and lower-cost commuting and parking options for your staff. Consider flexible hours and more paid time off to make you a more attractive employer. Create a dedicated morale program that recognizes and rewards employees on a regular basis. Look into putting a fitness center on site and offering monthly educational classes on personal finance, fitness, diet and health.