It is no secret that money plays a significant role in attracting, motivating, and retaining employees; however, recent studies and our experience show that a holistic approach to total compensation is key to success in today’s market. A 2016 study by the Society for Human Resources Management (SHRM) found that pay was the second most important factor of job satisfaction. Many employers focus on the numbers behind the dollar sign, but total compensation goes beyond the paycheck. Total compensation, as defined by Indeed, refers to the total value an organization offers an employee in exchange for their work, including their salary and any benefits or incentives. In addition to these elements, intangible factors like company culture, engagement, wellness, development, and recognition should also be considered as features of total compensation.
Equity and Perception
Fair and equitable compensation can make all the difference in a candidate’s decision to choose one company over another, or to motivate an employee who has become stagnant. What is seen to be fair and equitable is ultimately determined by the perception of each individual; therefore, providing employees with appropriate information is key to acceptance and appreciation of a compensation plan. What this looks like will vary greatly based on the culture of the company.
When developing pay strategy, to get to “fair,” it is important to consider and benchmark to market data, with the goal of understanding and being competitive within the market. Whether you desire to lead or match the market is a business decision to be considered carefully and in conjunction with other components of your total compensation plan. For our federal government contractor clients, this step is also important in determining and proving reasonableness per FAR 31.205-6(b)(2) (we won’t go down that rabbit hole here – see this previous article, Questioning Contractor Executive Compensation for more information).
What about Equity?
We spend most of our time focused on pay equity from the perspective of compliance and, of course, that is very important, but when it comes to driving employee satisfaction and engagement, we must focus on the employees’ notions. As the employer, you have the ability (and responsibility) to accurately and carefully craft communications regarding pay and other elements of the total compensation plan. It can be very difficult to strike the appropriate balance between providing transparency and responsibly safeguarding information. Again, the manner in which each company manages this process will vary greatly, but in all circumstances, we encourage you to be proactive and use this as a tool in recruiting and retention of talent.
Benefits Can Make Your Employees Feel Valued
A comprehensive benefit package is a vital component of a strong total compensation plan. Standard benefits like health insurance, life insurance, and disability insurance are often considered typical. Employers should also consider nonstandard benefits to enrich the lives of their employees and their families. Pet Insurance has become an increasingly popular option to help ease the burden of unexpected, expensive veterinary bills. Covering subscription fees to meal delivery services can provide a convenient way for employees to easily feed their family on a busy weeknight, and stipends for wellness equipment or gym memberships can promote healthy habits among your workforce. These examples are just a few of the many relatively inexpensive benefits that can provide far reaching positive impacts in your organization. Providing benefits that support not only your employees, but also the people who they care about (including their furry friends!), makes them feel like a valued member of the team rather than just another employee number. When employees feel valued, they will perform better, remain engaged, and show loyalty to the organization.
More Ways to Value Your Employees
Flexibility
According to SHRM research, at the end of 2022, 67 percent of employers provided complete or partial scheduling flexibility. Flexibility can be implemented in a variety of ways such as allowing employees to choose their hours or to work remotely. Because of the popularity of nonstandard work schedules and locations, employers who do not offer flexibility will face additional challenges when recruiting and retaining talent. If unable to provide flexibility, it will likely be important to find alternative perks to pique the interest of your candidates and employees.
Professional Development
Development of employees enhances an employee’s overall sense of feeling supported and valued. Investing in the professional and personal growth of your employees can provide long-term positive impact on both the individual and the company. Providing these opportunities and a clear plan for growth is often vital to retention, improves job performance and enhances confidence.
Recognition
Feeling overlooked or taken for granted is a common complaint. Employers should ensure that employees are recognized for their efforts to support the organization’s goals. It can be helpful to tailor recognition to the employee based on their preferences. While some may enjoy the fanfare, others will prefer a more personal and quiet approach. Employees who feel appreciated and celebrated are more likely to be engaged and inspired, thus increasing loyalty and satisfaction.
What Should You Do Now?
It is easy to see that total compensation includes much more than money. All the examples shared above point to one common theme – ensuring employees feel valued. There is not a one-size –fits-all approach. Knowing and understanding the needs and desires of YOUR workforce are key to developing a successful plan. Employers should take a close look at their compensation model to ensure that it utilizes a total compensation strategy. It might be time to pursue additional ways to increase employee satisfaction by thinking outside the box. The Redstone GCI Human Resources Team can assist with reviewing, revising, and developing a total compensation plan that benefits both the employer and employee.
Sheri joined Redstone Government Consulting, Inc. in December 2012 as a Human Resources Consultant. She provides HR consulting services to our customers on a wide range of issues, from specific projects to an ongoing outsourced solution of the human resources function. Sheri has two decades of experience in providing a comprehensive assessment of all areas of HR, including establishing and implementing policies and practices, contract transition efforts/onboarding, and investigations. Sheri’s experience covers a broad spectrum of compensation planning and analysis for total compensation projects, reasonableness assessments including executive compensation, compensation philosophy development, total reward strategies, benefits analysis, market pay and pay equity evaluations. She regularly supports clients with the analysis and mapping of labor categories and the preparation and analysis of wage calculations and supports clients in pricing disputes with DCAA. Sheri has a wealth of experience in navigating the many compliance challenges associated with Service Contract Act and Davis Bacon Act. She has been a valuable resource to our clients in all these areas. She stays abreast of the various requirements of the Department of Labor and, of great importance to government contractors, the Office of Federal Contract Compliance Programs, as well as other federal and state regulations impacting human resources. Professional Experience Prior to joining Redstone Government Consulting, Inc., Sheri served in various roles in the Human Resources arena. While employed by a mid-size government contractor she assisted with database development, recruiting, affirmative action planning and contract proposals. Sheri later became an Employment Specialist with one of the largest employers in Huntsville, where she assisted and led managers in the interpretation and documentation of the progressive disciplinary process, conducted employee investigations and allegations of discrimination, sexual harassment, wrongful discharge and employee disputes, conducted unemployment hearings and conducted new employee orientation. Sheri developed and presented management training, administered facility compensation plan, monitored staffing budgets and wrote job descriptions and handbook revisions.