Your small business needs the best talent available to succeed. To attract and keep talented individuals, you must think of compensation in a holistic way that includes several forms of compensation as well as other attractive features you can offer to make the workplace desirable. Develop the habit of speaking about your total rewards system when interviewing prospective employees, and you will attract and retain the best.
Five Components of a Total Rewards System
The right rewards system is a blend of monetary and non-monetary rewards offered to employees. It can generate valuable business results in terms of increasing productivity and loyalty, and has hiring advantages too since a good rewards programs should make your organization stand out from other employers, reports the Society for Human Resource Management. Generally, there are five pillars of a comprehensive rewards system: compensations, benefits, flexibility, performance recognition and career development.
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Wages and Salaries
In the total rewards model, compensation is viewed holistically and comprises not only base salary, bit the other types of compensation that motivate employees to perform well. For example, a variable-pay system rewards employees based on performance. Once the employee achieves this level of pay, it must be earned again for each subsequent pay period.
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Short-term incentive pay offers extra compensation for short-term (less than a year) performance improvements. Long-term incentive pay offers rewards such as stock options and cash bonuses for sustained productivity and performance for longer than one year. Top employees find these options attractive because they know they can consistently outperform expectations.
Benefits That Go Beyond
Within the total rewards framework, employers may seek to offer benefits that go beyond the legally mandated minimum of Social Security insurance, Medicare, unemployment insurance, worker's compensation insurance and state disability insurance. Your vacation package, along with leave of absence, sick leave and bereavement leave, can attract top-notch employees. Consider offering a variety of retirement plans from simple Individual Retirement Accounts to retirement benefits plans.
The aim is to give employees a positive perception of the benefits on offer, so you may wish to consider a flexible benefits or cafeteria program. These programs give employees 'benefits credits' equal to a fixed dollar amount which they can 'spend' on whatever combination of benefits they prefer. In March 2019, 37 percent of government workers and 14 percent of private industry workers had access to flexible benefits, reports the Bureau of Labor Statistics.
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Work-Life Balance
Your work environment should promote a healthy balance between work and personal time. If you create an atmosphere that recognizes your employees' needs to have a work schedule that allows them to get enough rest, you foster better morale. Offer flexible scheduling for those who must take care of elderly dependents.
Promote wellness through fitness facilities, nutritional counseling, health screenings and stress-reduction workshops. Offer a child-care facility. Consider offering financial counseling that includes planning for retirement and an overview of investment alternatives.
Recognizing Good Performance
Institute a system of recognition awards including peer recognition and team recognition. These awards are voted by the recipient's coworkers and can boost morale by singling out exceptional performances. You can add employee-of-the-month awards and appreciation luncheons to let employees know you are aware of excellence in the workplace. You can also offer recognition for employees who reach specific goals.
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Career Development
If you offer professional development, you not only foster employee loyalty, you improve the skills of your workforce. Provide tuition assistance, technology training, time off for outside seminars or mentoring programs that help employees grow in their careers.
