As the job market tightens up, compensation is impacted. This generally means that wage expectations are increasing at a rapid pace, particularly for in-demand skills. In order to stay competitive, companies must decide the best way to retain employees, which often means offering financially compelling compensation packages that reflect current market trends.
Typically, salaries increase slightly each year. This article estimates that U.S. salaries rose on average 3.3% for 2020. Salary is just one portion of a company’s compensation package, however, the question employers must ask is: Does our compensation and benefits assure that my current people will stay and that I will attract the right level of future talent? The answer may require an overhaul of your current comp plan.
Here are three steps to building the right plan for keeping your people and remaining competitive in the talent market.
1. Find out what the market is actually paying.
An HR lead comp analysis can provide the most current data. It will give you a clear picture of the industry trend. You can also check with industry associations and local employer groups to see what they have access to relating to industry compensation. Some of these insights could be available online. There are various paid and validated comp analytic tools available, such as Comp Analytics from Salary.com
2. Evaluate the real cost.
Crunch the numbers and then compare the cost of making market comp adjustments for your team or the cost to replace, retrain or restructure when they do. Doing this deep dive cost analysis will quickly help you determine what the best method is for your company. This process should include evaluating the overall cost for your company to attract talent and help you to decide where else you could compromise to remain competitive.
3. Educate your staff.
If giving raises isn’t feasible, consider non-monetary benefits, like flex time. You should be transparent with your people about your effort to provide meaningful benefits and company perks that matter to them. Talk about their realistic career path within the company, and what will be required to earn a promotion. Whether that’s additional training or time in position requirements, making them aware of what’s next is compelling. Show how raises will come through promotion, any bonuses they could earn, additional holidays, or any other non-comp benefits available to them. And always offer transparency as much as possible. This is crucial for maintaining a positive company culture and showing your employees how much you value them.
As the competition for industry talent continues to grow, you may need to assess and implement changes regularly, quite possibly on an annual basis. This process is a great way to maintain an excellent employer reputation as an ideal workplace!