In today’s competitive environment, employees are more educated than ever before about the current salary rates in their location and industry. If you want your business to remain competitive, and retain top talent, you need to stay one-step ahead of your competition, and have a solid pay strategy that’s based on accurate salary data – not speculation.
Here are a few simple steps to get you closer to a compensation strategy that retains talent and keeps your company ahead of the curve.
1) Get a Pulse on Your Market
After a series of wage declines in 2009 and 2010, a number of industries are now seeing continual salary growth across multiple industries and locations. If your company’s compensation plan is based on the trends in those leaner years immediately after the recession, it’s probably time to revisit your pay strategy. Or you may be at risk of losing talent to competitors who’ve more quickly adapted to shifts in the market. Keep an eye on the PayScale Index to keep track of quarterly trends in pay by location, industry and job category.
2) Benchmark Your Job Positions
It’s great to have a pulse on the overarching pay trends in your industry and area, but it’s another thing to have confidence that you’re actually paying top employees at the right rates for their job. By engaging in at least once-per-year salary benchmarking, you’ll be able to identify employees who are at a “high flight risk” of turnover, and be able to make smarter decisions about where you allocate your labor budget. Download PayScale’s How to Perform Compensation Benchmarking and Salary Ranges whitepaper for more information.
3) Develop a Compensation Plan
Often times, businesses fear that having a compensation plan will limit their ability to make good business decisions, so they skip building a compensation plan in favor of fewer rules and less structure. But without a formalized compensation plan, companies often miss an opportunity to structure their pay decisions in a way that support business goals. As companies grow, the costs of compensation continue to rise, and without a formalized plan in place, companies often experience problems with pay inequities, employee retention, and engagement. Simply put, it’s easier, and more cost-effective to take small steps toward developing a smart compensation plan now, than it is to alter your course later down the line.
4) Identify Pay Inequities
Some people live by the motto, “What you don’t know won’t hurt you.” That’s a motto your organization cannot afford to live by when it comes to internal pay inequities. Without a formalized comp plan, it’s often common for pay inequities to develop across organizations and departments. Those pay inequities can most definitely hurt you and your organization in the form of heightened turnover, over payment, and even litigation. Learn how to identify and resolve these inequities with PayScale’s guide to pay inequities.
5) Communicate Your Compensation Strategy
If you go through the process of creating a compensation plan, don’t forget to let your employees know about it. In theory, your compensation strategy should reiterate and support your business goals. So, it’s important to communicate to employees how their work aligns with the goals of the organization, and how their compensation reflects that. If you share with your employees, and make your investments in talent clear to them, you’ll be surprised by the positive effect it has on employee morale. Check out PayScale’s Four Tips for Communicating Your Compensation Plan to Employees to help you get started.
Need help developing a competitive compensation strategy, or maintaining salary ranges for your workforce? PayScale offers access to the largest online salary database in the world. With data that’s updated on a daily basis, and software designed to help you maintain salary ranges, benchmark jobs, and allocate raises, PayScale is the choice for businesses who value accuracy and ROI in their pay practices. Request a demo of PayScale compensation software to learn how PayScale’s fresh, detailed data can support good compensation planning.
Source: HR Morning