It’s been dubbed the Great Resignation. Millions of Americans are quitting their jobs in the wake of the COVID-19 pandemic. So, what can your business do to convince your people to stay? Here’s why competitive compensation is vital to employee retention.
Why Is Competitive Compensation Vital to Employee Retention?
If you think about it, the connection between compensation and retention makes sense. Let’s consider two positions, Job A and Job B. Assume both roles are comparable in terms of hours, responsibilities, and work environment. However, Job A pays $60,000, and Job B pays $50,000. Which would you choose? If you’re like most people, you’d prefer to make more money.
Nevertheless, this choice goes beyond numbers. The Job, A company, is sending another message, namely, “We value our employees, and we want to pay them well.” And ultimately, this commitment can be even more impactful than the money itself.
How to Provide Competitive Compensation?
- Salaries & Hourly Wages
Usually, the first question on most peoples’ minds is, “How much does this job pay?” Although you can pad compensation with benefits and perks, salaries and hourly wages act as a benchmark. To keep turnover low, you’ll want to make sure your rates are in the same ballpark as your competitors.
- Benefits & Perks
Generally, benefits save and/or earn employees money in addition to their paycheck. For instance, a comprehensive health insurance package can be worth thousands of dollars per year. Retirement plans and 401(k) matching, tuition reimbursement, signing bonuses, stock options, and profit-sharing also embellish pay rates. Other perks, such as flextime, work-from-home options, and free snacks, make people’s lives more comfortable and convenient. It’s important to consider not only what benefits and perks you’ll offer but also how to maximize their potential. After all, if you’re employees don’t understand how to use 401(k) matching, it has no value to them.
How Do You Know if Your Compensation Is Competitive?
- Do Your Research
Your business should have an idea of what other organizations in your market are paying. To accomplish this, watch the job boards and talk to potential hires. You probably won’t find out exact numbers, but you’ll get close. On the other hand, some companies take a more proactive approach. For example, to keep their pay rates competitive, Netflix actively encourages their employees to interview regularly.
- Identify Causes of Turnover
When done correctly, exit interviews can provide a wealth of information. Pay is an obvious reason for people to leave, but it’s not the only one. A new position could offer the same salary PLUS work-from-home options and robust professional development opportunities. In these situations, your organization may need to compete on multiple levels.
Are You Looking for More Ways to Improve Employee Retention?
Halpin Staffing Services publishes weekly blogs on topics ranging from top non-monetary benefits to recognizing burnout. And if you’re striving to build a talented and reliable team, our recruiters can help with that too. We place light industrial workers, office staff and other professionals with top businesses throughout Southeastern Wisconsin and Northeastern Illinois. Contact Halpin today to start hiring smarter!