Legacy Bowes Blog
How compensation frameworks help employers navigate wage demands
COVID-19 has removed many people from the workforce. Whether they are retiring or joining the gig economy, the results are the same: less people are applying for available positions and candidates are asking for higher compensation packages.
Driven by news reports and the high Consumer Price Index, existing employees are also asking for more in compensation.
These scenarios are putting employers in a tough spot. Balancing the wish to hire and retain fantastic people who can move the organization forward with wanting to keep a lid on payroll costs can lead to tough decisions with lasting consequences.
Develop a Compensation Plan
When the pressure starts to build, it is time to step back and develop a plan. A Compensation Framework is a great way to do just that.
Compensation frameworks are pay-based structures that organizations use to set fair and equitable pay guidelines for all employees. This is a helpful tool that businesses can use to work through conversations around wages.
The first thing you need to do before putting pen to paper on this framework is collect relevant information. You will need to figure out the value that role has within your organization and you will need to know what the market is paying for similar roles.
This information is necessary to have when entering into employee contract negotiations – whether for new recruits or for existing employees.
Jobs with equal value to the organization should be compensated equally. This means that employees who will inevitably compare their pay to their co-workers should feel that any differences are fair and related to the degree of responsibility inherent in the job and their years of tenure with the organization.
All jobs in the organization should be evaluated using a logical and objective ranking of jobs to one another. At the end, there is a hierarchical list of the value of each job to the organization. This is important because if one employee asks for a raise, approval needs to be justified and defensible relative to their co-workers.
Consider Creating an Employee Services Plan
It is important to remember that compensation is more than just money. Employees are looking for perks that fit their lives: paid sick leave, additional general holidays, on-the-job breaks, personal days off, and better than normal holiday allowance can be magic in attracting candidates that are juggling work/life balance.
As the competition for employees heats up, employers could consider setting up employee services like an educational assistance program which pays (or partially pays!) for training in exchange for an employee remaining with the employer for a set time. If the employee chooses to leave, they pay back a prorated amount of the training costs.
Employees are sometimes looking for perks that fit their lifestyles. Creating an Employee Assistance Plan could be a great way to provide value to your team.
Employee assistance programs are also being commonly offered by Health Benefits companies as part of a package with health and dental coverage and are not as expensive as employers perceive.
Employee assistance plans connect employees with counselling and wellness services to help them overcome personal challenges affecting their overall wellbeing. They are seen as a caring benefit from employers and can result in higher productivity and loyalty.
Showcase Your Workplace Culture
Last, but certainly not least, sell your fantastic culture. If you barbecue lunch for the staff in the summer, hold bubble hockey tournaments, have draws for concert tickets, or have a staff meal before the dinner rush, boast about it.
Employers should consider concrete ways that they can show employees that they care, and want them to stay and flourish. These may seem like small acts, but they can build a huge foundation for your company.
By providing experiences to your employees, employees will in turn become brand ambassadors and will sell your company as a great place to work.
Compensation in the Long Run
Photo credit: Unsplash
Compensation is a hot topic right now. Employers are being bombarded with requests for raises and the media reports are making employers panic that there are no good candidates left out there.
While we are in a perfect storm of high inflation and a small candidate pool, it is important to keep calm and make structured decisions that will benefit the organization in the long term. Focusing on equity of pay between co-workers, adding options for paid time off, and understanding that employees may need mental health supports can certainly assist in retaining the employees you have.
Candidates will always consider an organization that shows heart and builds some fun into the job. In this climate, that is what being an employer of choice means.