It’s no secret that top talent expects to be paid top dollar. Even with a developed recruiting program, fantastic work environment and great work-life balance, it will be difficult for your company to attract and retain the best employees without a competitive pay policy. Read on to learn about some of the benefits of a competitive pay policy and the basics of compensation strategy design.
Benefits of a Competitive Pay Policy
Though the initial investment appears steep, the benefits of competitive compensation are numerous. Here are a few ways higher salaries can aid your organization:
- Generous compensation allows you to aggressively target top talent for key positions.
- Competitive pay levels can serve as a way to create “brand recognition” for job seekers. It differentiates your company from other employers.
- If you are currently unable to offer an ideal benefits package or workplace environment, a competitive pay policy may be the best and most immediate way to acquire talented employees.
- Bonuses tied to the productivity of the company allow your employees to feel the success of the company. When success is rewarded, your employees are driven to succeed, driving your organization forward.
- Even the best managers cannot motivate underpaid employees. Better compensation will make your employees more motivated and managers more effective.
- Offering an above-average wage allows you to be more selective in the hiring process, ensuring the best fit when filling a position.
Compensation System Design
When designing a compensation strategy, the first step is to identify if you have a competitive pay issue:
The task of developing and maintaining an equitable Wage/Salary Administration System is more challenging today than ever before. Contributing to this challenge are the normal compensation choices such as the method of payment, the type of wage/salary structure, the market competition, etc., along with the implications of an industry that is complex and demanding.
To establish a fair and reasonable Wage/Salary Administration System, two very important goals must be attained – the system must be internally equitable and, at the same time, externally competitive.
Internal equity refers to the relationship between jobs based upon their relative worth. Once this “worth” is determined, the jobs can then be grouped into classes from entry level jobs to those considered most important to the organization.
The comparison of the organization’s wage/salary structure with that of other similar organizations within the industry and labor market will determine the extent to which the “externally competitive” objective is met. Wage and salary surveys are typically used to determine labor market rates for positions within the organization.
For more information on wage on how an effective compensation strategy can be developed for your organization, Please Contact: Trisha Shearer, VP/Human Resources Consulting & Compliance at (814) 317-4246 or firstname.lastname@example.org