Keys to attracting and retaining talented workers
October 15, 2013
Article courtesy of SBAM Approved Partner AdvanceHR
How does your company’s compensation package measure up? Business owners and executives know they need productive employees to achieve their goals. If your compensation package is subpar, you may not be able to attract and retain the best workers. Since the hiring market is heating up, according to new reports, it’s a good time to evaluate the competitiveness of your compensation package — and whether your workplace offers employees opportunities to feel fulfilled and inspired.
Who was the highest-paid executive at a U.S. public company last year? Software giant Oracle paid its CEO, Larry Ellison, $96.2 million last year in cash, benefits and stock options, according to its proxy statement.
That might seem like a hefty price tag for C-level talent, but many public companies pay out multi-million dollar compensation packages to attract and retain key executives. In addition, they often provide lavish perks.
How Does Your Package Measure Up?
Your employees may feel undercompensated and overworked when they hear about highly paid executives. They’re not alone. A Gallup poll conducted in August 2013 reports that:
- 31 percent of U.S. workers are dissatisfied with the money they earn;
- 40 percent are dissatisfied with their health insurance benefits; and
- 15 percent are dissatisfied with the amount of work their employers require.
As the labor market heats up (see New Reports: Job Market Is Rebounding below), it’s a good time to assess whether employees are satisfied with what you’re offering in terms of:
- Salaries, wages, overtime and bonuses;
- Vacation, sick and holiday time;
- Medical, dental and vision benefits;
- Life and disability insurance coverage;
- Retirement plans;
- Wellness benefits, such as reimbursement for health club dues; and
- Other perks, such as discounted stock, company vehicles and corporate discounts.
Research how other companies in your area and industry compensate their workers. If it seems like you’re offering too little (or too much), consider revising your compensation package. Also, survey your employees to see which benefits and perks they value most. You might be surprised by the results.
For example, after surveying employees about benefits and perks, one large insurance company discovered that workers valued free daily lunches from local restaurants above other more expensive perks, such as commuter benefits, an annual holiday party and Friday afternoons off during the summer. From the employer’s perspective, a bonus from free lunches is that employees are more productive, because they don’t leave their desks and often collaborate over meals. As a result of surveying employees, the insurer eliminated summer hours to save money but kept its free lunches to maintain morale.
There is no universal compensation package that works best for all companies. The “best fit” for your business depends on demographics, such as geographic location, income levels and average age of employees.
Don’t Fear Change
If you modify your compensation package, expect some initial resistance. People don’t typically like change, especially if they feel like something’s being taken away. But sometimes you need to rethink conventional ways of doing business.
For example, some high-end restaurants in major cities no longer accept gratuities from customers. Instead, they’ve built tips into their menu prices and they pay wait staff a higher fixed salary. Initially, many people scoffed at the change, arguing that customer service would suffer without tips.
But restaurateurs who adopted a “no-tip” policy — a practice common in other countries — found that when servers are less concerned about money, they’re more focused on doing a good job. There are also fewer spats about how to divvy up tips among servers and support staff. Of course, customers are happy to forgo the post-meal mathematics, too.
Change is often necessary to remain competitive. If you continue to offer mediocre compensation because you’re afraid to rock the boat, employees could seek greener pastures. Weak compensation packages also make it harder to attract new talent as companies ramp up their hiring efforts.
Money Alone Doesn’t Buy Happiness
Compensation packages aren’t the only means of attracting and retaining talent. Many employees are motivated by qualitative factors, such as challenging assignments and the opportunity to contribute.
These can be hard motivators to measure, because you can’t put a price tag on them. Here are some ways to help employees feel enriched and empowered:
Give them a voice. Some of the best ideas come from frontline workers. Put out a suggestion box or set up an online system for submitting ideas. Survey workers about proposed changes to policies and procedures. Create think tanks to brainstorm more efficient workflow. Above all, listen and implement feedback whenever possible.
Provide opportunities to try something new. No one wants to do the same tasks, day after day, year after year. Allow employees to rotate duties. Invest in training and continuing education. Expand or modify daily responsibilities. If you don’t allow employees to change it up, they may get bored or burnt out.
Share what’s in the pipeline. Surprises and rumors make employees edgy. As much as possible, communicate how the company is doing and where it’s heading.
Create a sense of real or perceived ownership. Tie bonuses to personal, department and company performance. Or consider offering stock options or discounted stock purchase plans for employees. As the value of the company climbs, so does the value of these benefits. When employees feel their input is valued, they want to make a difference in your organization.
An Overall Competitive Environment
Your ability to attract and retain the best and brightest employees can make or break your business. While few businesses are in a position to offer multi-million dollar compensation packages, yours needs to be competitive. And your work environment needs to foster personal development and enrichment — attributes employees often value more than cash and other perks.
If you’re among the employers that plan to hire new workers in the coming months, here are a few considerations:
Downplay first impressions. Don’t make hiring decisions based on gut feelings or what happens in the first minutes of an interview.
Measure performance first, then personality. First determine if a candidate can do the work. Then determine if you like him or her.
Clarify success. Before you begin the hiring process, define specifically what superior performance is for that job. Clarify what the candidate must do to succeed in the job, not what experience or skills the candidate must have. Then, you can begin looking for superior people.
Think beyond traditional recruiting. The response rate to newspaper ads is declining. To maximize the number of qualified applicants for job openings, consider social media, Internet hiring sites and radio ads — or put up notices for entry level positions at business school campuses. Market your job. Think of candidates as customers.
New Reports: Job Market Is Rebounding
Recent sources of hiring data suggest that the job market is starting to turn around.
AICPA Survey: A growing number of companies plan to hire new employees in the next 12 months, according to the third quarter Business & Industry Economic Survey recently released by the AICPA. Companies have improved outlooks for revenues and profits, which translates into higher spending on hiring, capital investments, information technology, training and development.
However, the AICPA survey found that financial pros are cautiously optimistic about the future. Their optimism is tempered by three concerns:
- Regulatory changes (such as healthcare and tax reform),
- Domestic economic conditions, and
- Employee and benefits costs.
Manpower: A recent Manpower survey supports the AICPA’s findings about increased employer optimism. Manpower discovered that 18 percent of employers expect to add workers in the fourth quarter of 2013, according to seasonally adjusted data. This represents the highest percentage of employers projecting a fourth quarter increase since 2007.
DOL Data: The Department of Labor reports similar findings. In July 2013, job openings in the U.S. fell to their lowest level in six months. The reasons? Hiring and payrolls are up while firing is down. The jobless rate was 7.3 percent in August, its lowest level since December 2008.