With unemployment rates averaging around 3.9% in February of 2019, now, more than ever, employers need to find creative ways of attracting top talent into their companies. As candidates have so many options to choose from, and many opportunities to say no, a simple bump in their salary is not enough to attract them towards your organization. The best strategy to encourage talented people to apply for the role you’re offering, as well as retain them for long periods of time, lies in developing a compensation plan. This means that you are not just thinking about the salary you’ll be giving them, but about all of the added benefits and perks that no other company can provide.
Benefits vs. Compensation: Which is More Important?
There is no doubt that salary is a large component in a candidate’s decision when picking one role over another. Everyone has bills to pay, and a gym membership does not put food on the table. However, with many companies offering only subtle differences in pay, the comparison naturally turns towards the benefits given to employees, and how much they fit with the candidate’s long-term goals. An organization with a solid salary compensation plan, one that includes both a fair salary and good benefits, is sure to win over the candidate.
We can see this, especially in the past few years, with the rise of the gig economy, when more and more employees prefer the freelance life over a secure, permanent position, as it provides them with flexibility. In fact, a Glassdoor Employment Confidence Survey from 2015 found that 80% of the employees polled would choose additional benefits over a pay raise altogether, while 60% of people reported that benefits provided to employees play a major role in considering whether they accept a job offer.
Developing a Compensation Plan: What are the Most Desirable Benefits?
Everyone knows the stories about tech giants like Google and Twitter, offering their employees yoga lessons, chef-catered meals, massages, and whatnot. Even smaller companies have made headlines with benefits given to employees such as reimbursing vacation expenses. However, most candidates and employees have the same basic needs and desires when it comes to benefits and employee compensation.
A survey conducted by the Harvard Business Review found that the most important concern for US workers is health. 88% of people said they would choose a lower paying job if it had better health, dental and vision insurance. Right behind that, we can find benefits that provide employees with better work-life balance. Most of the people polled said that flexible hours (88%), more vacations days (80%) and more opportunities to work from home (80%) will make them choose a lower paying job. This is especially true with parents, who wish to have more time around their children.
Compensation Benchmarking: Learn Your Competition
It’s easy to get lost while developing employee compensation and benefits, as there are many components to consider. First, you need to take your company’s budget into account, then look at what you are offering your other employees, and make sure that some are not getting extensively more than others. You also need to be realistic about what you can offer and what will attract the type of employee you wish to have in the company.
Using a salary survey you can determine the appropriate pay for the type of role you are offering, based on your industry, size of the company, geographical location, and other components. If you wish to learn more about the benefits that other companies like yours are offering, so you can measure up and build a competitive salary compensation plan, you can use compensation benchmarking. This can be done by your HR team, if they have the proper tools and knowledge, or by a third-party consultant. It will be extremely useful in high-level positions, where there is not a lot of data to go on.
It’s safe to say when looking at benefits vs. compensation, one does not trump the other in the eye of the candidate. While some will rather choose good health insurance over a simple pay raise, most will rather have a good combination of the two — so make sure you strike a good balance when developing a compensation plan for your ideal employee.