Breaking Down the Importance of Compensation and Rewards: How to Retain Your Top Employees

employee retention and compensation

Do you know if your compensation and rewards packages are up to market value? Are you eager to keep your top performers happy and motivated to stay invested for the long term? It’s time to discuss one of the most important elements to growing and maintaining your workforce: compensation and reward packages. Read on to learn how to navigate this tricky area of business development below!

Signed, Sealed, Time to Deliver!

Whether you’re gearing up for a fresh round of new hires or are in the process of taking a closer look at organizational expenditures in the new quarter, it likely comes as no surprise that compensation takes up a large share of operational budgets (40-70% in fact). It’s important to continually revaluate compensation packages and to ensure they are both in alignment with your values and capabilities as an employer. Doing so will protect your bottom line and ensure that employees continue to feel valued as a part of your team. When evaluating your packages, you’ll want to look at two core elements:

  • Compensation
  • Benefits

Because these two terms are often used in conjunction with one another, it’s important to note that they offer two very different benefits (and thus attractors) to your employees. Compensation, obviously, deals with how much you pay your employees on an hourly or annual basis, and what monetary bonuses or incentives you may provide, whereas benefits denote the additional perks and privileges involved in joining your team.

Why They Matter

It seems fairly obvious on a surface level to say that both compensation and benefits are key to employee retention, but in order to understand why, we need to take a closer look. When deciding on fair compensation, you need to not only make sure the amount you offer is fitting for the expectations of the job per your standards but also in alignment with the range that your industry peers support. If you offer too little, you’re likely to lose top performers, and offering too much can quickly put you in an uncomfortable position budget-wise. Benefits help to enhance your offer package by offering additional value in the form of perks that carry both tangible and intangible value such as:

  • Health and dental coverage
  • Additional paid vacation
  • Paid sick leave
  • Flexible start times
  • Gym passes, cell phone reimbursement, free parking spaces and more.

Striking a Balance

Today’s workforce places a higher value than ever before on maintaining a healthy work-life balance, as well as seeking out positions that allow them to grow professionally while benefiting personally at the same time. Keeping up with the expectations of a benefit-literate workforce can certainly be challenging for business owners, especially if you find yourself going through a substantial change where your team is concerned.

If you’re in the process of trying to remodel or are a new business trying to lay the groundwork for success as you expand, partnering with an external HR firm like Pivot can make it easy to design compensation packages that serve your needs as a business while attracting the right kinds of talent. Contact our team today to learn more!

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