Compensation Corner: How Competitive Employee Compensation Can Benefit Your Company
As a strategic partner for Total Reward Solutions, you know that competitive employee compensation isn’t just an admirable goal or lofty ideal; if you want your company to attract and retain top talent and improve employee morale, competitive compensation is a must. Here’s why it matters, and how you can implement fair and competitive employee compensation in your organization:
The Dangers of Uncompetitive Employee Compensation
Do you have trouble recruiting top-notch performers in your industry? Have you lost excellent employees to key competitors due to pay or other compensation components? Does your company suffer from poor productivity and low morale based on perceptions – right or wrong – that pay is too low? If so, these could be signs that your employee compensation program is not currently competitive or “market-correct”.
There are other danger signs as well:
- Your incentive programs are not driving the desired employee productivity and behaviors
- Your top performers feel undervalued
- Company loyalty and commitment is suffering among longer-term employees because they believe new hires are being paid more than they are despite their years of service
- You’re not confident your “merit dollars” are being utilized effectively
- You feel your company has skills gaps that cannot be filled within your current compensation structure
If you recognize even a few of these issues in your organization, your employee compensation may be a major part of the problem.
The Benefits of Fair and Competitive Employee Compensation
On the other hand, if your company maintains competitive employee compensation as part of a well-crafted compensation program – and your employees know this to be true – there are many benefits to be realized. These can include better overall productivity and individual employee performance, greater employee satisfaction and morale, and improved employee loyalty. With market-correct employee compensation programs in place, you can more confidently and cost-effectively recruit top industry talent. You can reduce costs due to employee turnover. And you can improve job descriptions and identify skills gaps, training needs, and development opportunities. You’ll even be able to more accurately determine which employees are eligible for overtime pay (and perhaps even avoid costly FLSA infractions).
How to Make Sure Your Company’s Compensation is Competitive with Your Market
When the economy remains robust, job markets heat up and employees start to look for their best opportunities. Operating in that economic environment, few companies can afford to offer uncompetitive employee compensation. But how can you know whether your current employee pay and total rewards are too low, too high, or market correct? Simply put, if you haven’t had a full Market Rate Analysis of employee compensation within the last two or three years, it’s probably time to get this done. In particular, when market conditions have been volatile – as they’ve been in recent years – the economic shifts can quickly undermine the current accuracy of your pay ranges and your overall compensation competitiveness.
The Bottom Line:
The benefits of competitive employee compensation can mean the difference between employee loyalty and turnover, profit and loss, and even your company’s ultimate success or failure. A Market Rate Analysis can help you make the corrections needed to confidently compete and thrive. If you believe your company could benefit from an up-to-date study of the market rates in your industry, contact Total Reward Solutions today at 317.589.8529.
About Total Reward Solutions:
Have a referral for us? Total Reward Solutions is the outsourced compensation services provider dedicated to innovating total rewards that drive people and business excellence. Total Reward Solutions offers a broad range of compensation, benefits, performance management, and reward/recognition consulting services to help organizations attract top talent, motivate employees and retain top performers. Call us today at 317.589.8529 to discuss how we can help your referred organization develop and implement competitive and effective compensation and total reward programs.