"47 percent of people actively looking for new positions say company culture is the main reason" -- Hays.com
Does this make you wonder if you might have some work to do around your office?
A couple of weeks ago, we started a series about simple strategies to improve your work culture. I’m going to share some of my experiences with the companies who are finding success in creating a great culture.
#1 – Providing Feedback
(If you missed it, check out the link HERE)
#2 – Providing a Flexible Work Environment
If you missed it, check out the link HERE
#3 – Provide “Better-Than-Market” Total Compensation
Most people tend to think of compensation as something totally separate from company culture. However, compensation is one of the ways that you express how much you value your employees. And as you know, employees who feel valued look forward to coming into work, have higher morale and productivity, and stay longer. So it’s important to periodically take a fresh look at how you stand compared to the market related to total compensation.
Do you know what total compensation is? The elements are listed below. We like to think of these as levers. Each are important, but if you are able to offer more compared to what is common in companies in your industry in one area, it will allow you to sometimes offer less in another.
Salary
Bonuses
Health Benefits
401K
Vacation and Sick Pay (also now referred to as PTO - paid time off)
Let’s look at each of these individually.
Salary
In times of low unemployment as we are in right now, we suggest that you pay at least 10% over the market rate for all your positions, and up to 30% over market for positions that are “low talent availability – meaning those job candidates are HARD to find”. For now, some of those candidates in Atlanta are experienced bookkeepers, controllers, paralegals, and sales people. For these positions, if you aren’t at 30% over market, you have a large chance of losing people even if you have an incredible culture. Salary.com is a great place to start your research. If you want a professional analysis of the market rate for the jobs in your company, we can help you with that!
Bonuses
As you know, bonuses, profit sharing, etc. are great ways to recognize employees for their work. These can be a big motivator for employees to work harder and cut costs in order to increase profitability. However, bonus opportunities need to be clearly defined and fairly implemented or they will become a de-motivator and greatly increase employee dissatisfaction.
When you’re working hard to build a certain culture within your company, bonus plans can be a great tool in helping to do that. Tie in specific behaviors and work habits, etc. that you want to reward on top of results that you want achieved. This shows your employees that you are serious about creating the culture you talk about and that you are wiling to put money against it to back it up.
Health Benefits
Only about 35% of today’s employees are covered by a spouse’s plan and don’t need health benefits. We know that offering benefits is expensive and can be very difficult for a small business to afford. But with the high cost of an individual getting his/her own plan, benefits comparisons are becoming a huge factor in how candidates evaluate different job opportunities. To make yourself an attractive employer, you may need to find an affordable plan, offer to cover the out of pocket costs for an individual to get their own, or at least offer a stipend toward those costs.
401K
Most employees feel that this is definitely a “nice to have” and not a necessity. Note that if you offer a 401k or IRA, that DOES NOT replace the need to pay properly.
PTO
Here is where you, as a small business, can make up for not having the highest pay! Offer more vacation. Employees are valuing time off, flexible work options (like we talked about in the last post), etc. as much as pay during some seasons of life. Most companies are starting their professional employees at 3 weeks vacation now. And clients that give 4-5 weeks a year report high work satisfaction and longer tenure. Although there is an opportunity cost in giving more vacation, it may be more doable for you than offering higher salaries.
A CEO told me the other day that he felt that they had such an awesome culture that people didn’t care if he paid below market and didn’t offer benefits. I’m concerned about this CEO’s strategy. This could work for the short-term. But even people working in a great corporate culture need to pay their bills. As the difference between what you pay and what your competitors pay gets larger, your favorite employees might surprise you with a letter of resignation. Don’t let that happen.
Why don’t you take the next 30 days to evaluate where you are as it relates to Total Comp and take a few steps towards confidence in this area? I think it will be a great use of your time and perhaps even save your favorite employee.