When you are experiencing retention and recruitment concerns, it can be challenging to know what component of total rewards to prioritize and address. Often, we see organizations making changes to increase their benefit offerings, or give additional perks, before addressing the more fundamental parts of total rewards. Here, we’ll highlight the key areas of focus, including creating a total rewards philosophy, base pay, target total cash, and benefits.
Total Rewards Philosophy:
Before making any changes to your total rewards offerings, it’s crucial to establish a total rewards philosophy and guiding principles. This philosophy articulates your organization’s approach to compensating employees, while the principles outline how the philosophy is realized. Articulating your philosophy and what you want the employee experience to be around pay and rewards, provides a framework for decision-making and ensures consistency across the organization..
After determining your philosophy, one of the fundamental components of total rewards is the base salary. We recommend conducting a market analysis to benchmark your base salary against data from comparator organizations (often where you attract talent from and lose talent to!), to ensure you are offering a competitive salary. This analysis will ensure base salary is competitive which is crucial for attracting and retaining high performing employees. It is an essential building block of your total rewards program and if employees do not feel that they are able to afford their basic expenses with their base pay, they will not be satisfied with their overall total rewards program.
Target Total Cash (TTC):
In addition to base salary, we recommend you review how your target total cash (base salary + any bonus opportunity) compares to the market. By including bonus as a consideration, employers provide a comprehensive compensation package that motivates employees to perform at their best and rewards the achievement of individual or organizational objectives.
Once you have addressed monetary compensation, employee benefits, perks, and workplace flexibility play a significant role in attracting and retaining talent. Competitive benefit packages, including health insurance, retirement plans, paid time-off, and professional development opportunities, can greatly enhance employee satisfaction and loyalty. Additionally, providing flexibility in work hours or remote work options can help accommodate employees’ needs and contribute to a positive work-life balance.
Communicate your Philosophy:
Communicating to your employees is an important aspect of the perceived value and competitiveness of your offerings. Sharing your philosophy, pay ranges, and the reasoning behind your compensation decisions fosters trust, confidence, and understanding among employees. Explain why and how you rewards employees and what is available to the employee as they grow with the organization.
Addressing retention and recruiting concerns requires a comprehensive approach that encompasses both compensation and total rewards. Competitive base salary and incentives serve as the fundamental building blocks to attracting and retaining talent. By creating a total rewards philosophy, benchmarking your compensation against the market, and effectively communicating your offerings, you can foster a loyal and motivated workforce, leading to improved retention rates and enhanced recruitment success.
Written by: Hannah Wells, Principal Consultant at White & Gale Consulting Inc.