How to Work Out your Compensation and Employee Benefits Offer

Working out your compensation and employee benefits offer is not an easy feat, but these tips will help you get on the right track!

Employer Branding

Leen Sawalha

VP Product & Growth

Tuesday, October 07, 2014


Trying to work out your compensation and employee benefits offer is a daunting task. How much should you offer to remain competitive? What should you offer to be a more attractive employer? What if your organization can’t afford such packages?

Having a million questions is very common, and finding all the answers in one place is highly unlikely! But instead of going into all the little details, let’s look at the main points you should never ignore when working your compensation and benefits offer.

Don’t forget the purpose!

It is critical to always remember that compensation has several purposes. Some companies use compensation as a recruitment and selection tool, while others rely on it to retain their employees. Some organizations use it as a way to increase job satisfaction and loyalty, while others to reward and encourage high performance. And then you have some companies that do it all!

It is not impossible to have your compensation and employee benefits offer be so comprehensive. In fact, a well thought-out plan would easily allow you to have it all. Of course, you can also always focus on your specific needs, but in a world full of impossible tasks, why wouldn’t you take advantage of one that isn’t?

It’s all about perception!

One of the most important things you need to keep in mind at all times is perception! Because the ultimate purpose of compensation and benefits offers is to appeal to employees, it would be silly of us not to consider their perspective.

Regardless of what you give your employees, if they don’t perceive their package to be good and fair, all of your efforts will be in vain. But now, the question becomes: how do I know what my employees think about their compensation offer?  Easy; just ask for feedback during their performance appraisals!

It’s really just a simple formula: if your employees view their compensation to be equal to, or larger than, what they believe they are giving in return, then your plan is working well. Otherwise, you have some serious re-evaluation to do!

Your offer should encourage desired behaviors

If you want loyalty: reward it. If you want high performance: reward it. If you want innovation: reward it!

You should think of your compensation and employee benefits offer as a communication tool. When you provide commission for sales, you are communicating that you want a high performing sales team. When you offer long-term bonuses, you are communicating that you want loyalty from your employees.

Think of what your current offer is communicating to your employees. Is it, indeed, the message you want to be sending? Think it through and make sure you are encouraging positive organizational behaviors.

Give your employees what they want

There is no other way to put it; give them what they want! Not only would it make your efforts more effective, but it could also save your company a lot of money! When you know what they are seeking, you can stop spending money on benefits your employees like and start spending it on benefits they love.

That being said, there are a couple of ways to find out what your employee want in terms of compensation:

  • ASK! – Yep, it’s that simple! Ask them what they want, what they value, and what they need. Not only does this promote positive communication between the employee and the organization, but it also increases employee commitment and engagement.
  • Know who they are – when you know a person, you will be able to identify what they need. Will they become more motivated if they are paid short-term or long-term bonuses? Does commission give them the necessary drive? Or do they value job security over temporary monetary incentives?

Align your compensation strategy with your business strategy

It is imperative that you do this. In fact, everything you do in HR should be aligned with your business’ strategy. After all, as the HR department in an organization, you are not only responsible for ensuring HR matters related to employees, but also how these matter affect the company. You are, in essence, providing a service, both to the employees and the organization.
So how exactly do you align your compensation strategy with your business strategy? It depends on your strategy (and your organization!), but here’s an example:

You are an organization who is committed to providing the best possible service. In fact, you not only specialize in providing that service, but you also charge your customers a premium for it. Now, since it is your employee who are going to be providing this service to the customers, you need to make sure that they are performing well – through your compensation strategy!

Motivate and reward your employees when they provide such exceptional service – make their compensation performance-based to achieve your goals.

It’s not just about money and benefits

This is a point that cannot be stressed enough; mainly because it is so often forgotten. Remember that employees get more than a salary and benefits from an organization. They want more than that, too.

“Relational returns” are the non-monetary, psychological returns that employees also receive from their work. Recognition, status, security, challenges, and even learning opportunities are all returns you can provide your employees as part of their compensation and benefits offer. Find out what matters most to your employees, as well as what drives them to perform, engage, and commit.

Working out your compensation and employee benefits offer is not an easy feat, but if you keep these points in mind while creating it, then you are on the right track! Don’t forget – know your employees, ask for feedback, and make sure everything is aligned; from your employees’ needs to those of the organization. Are you ready for the challenge?

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