Compensation mistakes can impact a business’s ability to hire quality candidates.
After all, employee compensation is an investment in talent. It should pay off for your business – both in terms of the talent quality it attracts and their ability to contribute productively.
To improve candidate quality and maximize return on compensation investment, any business needs to avoid the most common compensation mistakes.
Here are 5 compensation mistakes to avoid and what to do instead:
Ignoring the organization’s bigger goals.
Any organization is most effective when its goals are aligned. Before you start tinkering with salaries or benefits, look at the company’s goals. Then, talk to your recruiter for tips on crafting compensation packages that will promote these goals.
Comparing your salaries with competitors, but not with employee performance.
The best compensation, raise and promotion systems not only stay competitive with similar employers, they also use benchmarks to determine whether employees are being over- or underpaid relative to their individual performance. Incorporate these benchmarks into your annual performance review system to make data-gathering easier.
Keeping the compensation system in a “black box.”
Pay is perhaps one of the most taboo subjects in the work world. Companies that break this taboo and make their compensation, raise and promotion decision process transparent gain the trust of employees, who are more likely to accept a decision – positive or negative – if they believe it to be the result of an understandable, neutrally applied system. Transparency can boost retention and even productivity.
Staying stuck in the 20th century.
Salary, healthcare and retirement remain the three “cornerstones” that hold up any solid compensation package. Companies that focus only on these three, however, miss chances to differentiate themselves from competitors in the race for top candidates. Talk to your staffing firm about nontraditional benefits options that are cost-effective to implement and are particularly attractive to motivated, engaged top performers.
Leaving hiring managers out of the loop.
Managers responsible for hiring should have the tools and training they need to do the job well. That training includes detailed information on how compensation decisions are made. Whether the hiring manager also makes those decisions for the open position or simply receives information from another decision-maker, the person in charge of hiring should understand the compensation process well enough to answer detailed questions – because top performers inevitably have them.
At TERRA Staffing, our staffing partners work with each client to help you improve your employment brand, create a competitive compensation package and find the qualified candidates you need when you need them. Contact us today to learn more about our recruiting services in Portland, Seattle and Phoenix.