In our last Tools for Growth blog, we began our series on how to reduce employee turnover, one of the biggest problems facing employers today. Our first tip was hiring the right candidate, so be sure to read part 1 if you haven’t already. Let’s move on to our second tip.
Review compensation and benefits. If you were to conduct exit interviews with employees voluntarily leaving your company, you’d find that compensation can be a pretty common reason for departure. Employees should be compensated fairly based upon market averages, their level of experience and education and their quality of work. If you’re filling a new position, do some research. Find out what other companies in your region are paying their employees in similar positions. You have to be competitive in order to attract qualified candidates.
Compensation goes way beyond salary, though. A compensation package typically includes benefits, such as health insurance, life insurance, 401k, vacation days, sick days, tuition reimbursement, and more. These are the things employees look at when deciding which job offer to take. An employee should, above all else, feel valued. A low salary with little benefits does not make a person feel valued.
The same goes for current employees. Compensation packages should be reviewed yearly and adjusted accordingly depending on the employee’s performance for the year. Outside of that, if a worker takes on more roles or responsibilities, their compensation package should be reviewed. Not doing so can make the employee feel like they’ve gone as far as they can within their company. This can also lead to them not feeling valued and, in either situation, they will look elsewhere.
We fully understand that not all companies can afford to pay high salaries or cover large yearly raises. So what else can you do?
Reward employees in other ways. More PTO or a safe harbor deposit into a 401k are just some of the ways an employer can compensate their employees at a lower cost. Adding a health club membership as a benefit doesn’t cost a lot of money, and it can produce healthier and happier employees (and healthier employees can mean less sick days and higher productivity). There’s also a large amount of resources that companies can offer to their employees at no cost, such as discount programs for businesses and entertainment (Working Advantage is one very popular option).
Compensation can go as far as to include the discounts you give employees on your products or services, or even discounts on vendor services. At a previous company, I introduced an employee discount with our cell phone provider. It was a simple process that was suggested by the vendor when I called to add a line for a new employee. Our employees were able to get an 8% discount on their cell phone plans, and they were thrilled. So, as you can see, there are tons of ways to compensate your employees outside of salary. Adjusting the benefits that go along with the salary can go a long way towards keeping employees happy.
Your goals here, above all else, is to make your employees feel valued. In doing so, you’ll be able to obtain (and keep) a high quality workforce. And remember, the cost of finding and training a replacement for a current employee can be twice as much as the cost of their salary. Be sure to consider that while reviewing compensation and benefits.
In part 3, we’ll be moving on to our final tip – and man, it’s a doozy. Be sure to subscribe to our blog so you don’t miss this important update.
Don't want to wait to read more? Download our eBook "3 Ways to Effectively Reduce Employee Turnover" today!