Might your employees want something different in their compensation-and-benefits packages, besides just fatter paychecks?
You’ll never know unless you ask them.
“Ask employees more details about their current and past compensation packages to understand base pay, bonus, benefits and perks. This can help leaders understand the different types of packages,” Dawn Fay, district president of Menlo Park, Calif.-based staffing firm Robert Half, told Bloomberg BNA.
“Leaders can then ask employees: What did you like or dislike about the package? If you could change one thing, what would it be and why? The answers to these questions will help you better understand and plan,” she said. “Remember that compensation is a very personal issue, and certain parts of a compensation package may be more important to a person depending on personal factors or life events.”
Incentive pay, for example, can be a complicated issue. “Generally speaking, at the lower levels of the organization, incentive pay is only 3 to 5 percent” of total cash compensation, Kerry Chou, senior practice leader at WorldatWork, a nonprofit HR association based in Scottsdale, Ariz., told Bloomberg BNA.
CEOs, at the other end of the scale, may have 50 percent to 70 percent of their pay determined on a variable basis, according to Chou. He said the reason is twofold: lower paid employees can’t absorb as much risk as higher paid ones, and they have much less direct impact on the company's bottom line.
“If you ask the average employee about base pay versus variable pay, everybody would say they want all of it in base pay because it’s guaranteed,” Chou said. “Most employees place a premium on base pay. To offset that, most incentive plans have some upside,” such as paying more if certain goals are exceeded.
“Base pay has been and was this year at the top of the reasons to join and the reasons to leave an organization,” Laury Sejen of Willis Towers Watson, told Bloomberg about an annual study the consulting firm released Sept. 9.
“There’s a mandate for companies to get base pay right, to ensure that it’s competitive in the marketplace where they compete, and fair internally,” said Sejen, who is managing director in talent and rewards.
Cash-strapped companies may choose to pay employees less but offer other incentives such as a short commute, better work-life balance or more time off, Chou said. Other companies might pay top dollar to get top talent so they can be innovators in their field.
“In a free labor market, employees will gravitate to that company where they can get the best return for their time and talent,” Chou said.
Bloomberg BNA’s HR Decision Support Network is your comprehensive solution with reliable, up-to-date guidance and analysis covering a full range of employment policies and HR administration. Start your free trial today!
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)