Compensation packages have changed a lot in the last few decades. Salary is just one element of that change. Thinking in terms of the total compensation package is the first step to updating your approach to this subject. What is now offered as monetary and non-monetary benefits covers a broad array of options. It’s important, as an employer, to know what people are looking for so that you can offer an attractive package when it’s time to hire.
Remember, if you are actively hiring, you are competing for the best talent. To put it plainly, you need to know your stuff and do what it takes to bring the right people to your team. You should be competing with the intent of winning. Winning doesn’t happen with half efforts.
The Strategy of a Good Compensation Package
Part of your winning strategy must be a total compensation package that gives the right impression. The offer should convey the meaning, “Your skills and experience are very valuable to our company. We want to make it easy to say yes to joining our team.” Unfortunately, low-ball offers convey the meaning “We’d like you to work for us but we’re hoping you won’t be a big expense.”
You also need to be aware of your many competitors. If your top candidate is currently employed, you can expect a counteroffer to be made. We are seeing counteroffers from companies who have historically refused to make counteroffers. Companies are acutely aware of the cost of hiring and training a new employee, so they are willing to break traditional policies to keep their current employees. That’s the kind of fierce competition that is out there.
The other competitors you are up against are other companies who are actively hiring. Most active candidates have more than one offer being extended in a short span of time. Don’t assume your offer is the only one on the table.
How Can You Make Your Total Compensation Package Appealing?
If you are extending an offer to a candidate, the understood assumption is that you want them to accept the offer, come work for you and help make your organization more successful. You may have budgetary limits, but that shouldn’t prevent you from sending a very positive message when you extend an offer, with the attached compensation package.
The total compensation package has the potential to be quite robust. This is helpful when people are assessing the value of a job in relation to what is important to them. Here are some elements that can be included:
- Medical, dental, vision, life insurance
- Disability benefits
- Paid holidays, vacation and sick days
- Retirement savings
- Maternity/Paternity leave
- Work flexibility
- Subsidized training or education
- Job title
- Pet insurance and other automatic payroll deductions
- Childcare – onsite and offsite options
- Gym membership
- Car, phone, Wi-Fi or office equipment reimbursement
- Student loan repayment
- College grants and scholarships
- Investment opportunities
Let’s dig into a few areas where we have seen companies being hindered by old-school thinking. Many times, organizations are simply unaware of what has become competitive when it comes to compensation packages. Keep reading so that you can avoid losing a great candidate because of an outdated compensation package.
If you haven’t done your research, you may have a skewed view of what is considered fair compensation for a role. You may feel very strongly that you know what salary is suitable for a specific role, but you need to be sure the market feels the same way. Everything from apples to airline tickets have increased in price, so you can expect that salaries have done the same. Go into a hiring process with an informed mindset. Robert Half produces an annual salary guide that can be very helpful with this. Salary.com and Glassdoor are other resources available for salary information.
If a generous salary is not an option, consider other monetary ways of incentivizing a new hire. Bonuses are a good option. Specifically, a signing bonus can provide the additional enticement a candidate is looking for, without the annual expense. You can pay the signing bonus all at once or pay portions of it over a period of time.
This article from Payscale provides some additional ideas around bonuses. We recommend working with your new employee to create “Key Performance Indicators” that will measure the outcomes you want and provide the structure for the bonus they want. Get creative with what you can offer in the way of monetary compensation.
Paid Holiday and Vacation Time
This is one area that many companies need to improve in. Two weeks paid vacation is not an attractive benefit – at least not at the executive level. Unless there are built in breaks such as a company-wide closure between Christmas and New Year’s or some other time of the year, people are expecting much more than 2 weeks of vacation/PTO.
Some employers may feel that vacationing for two weeks a year seems extravagant. If that is you, remember that there are many things that require time off that are not truly vacation. Events such as moving a child to college, going on a younger child’s field trip, helping a loved-one during a medical need, having your own medical need, and the list goes on.
To have healthy and productive employees, they need time to disconnect from demands and have an actual vacation. Show your interest in your employees’ well-being by giving them a nice amount of time off every year. Our experience has shown that most candidates, at the executive level, are looking for 4-6 weeks of vacation.
Allowing for unlimited vacation time is a reasonable benefit as well. This Indeed article unpacks the benefits companies experience with unlimited vacation time, along with tips for avoiding abuse of the policy.
Having a flexible work schedule is a high priority for most people. We dedicated an entire article to this topic due to its popularity. The bottom line is that people want to be trusted to manage their schedule in a way that fits their lifestyle. This doesn’t mean their work is allowed to suffer, rather, it means they have the freedom to adjust their schedule to allow for the things that are important to them. You can find more about that topic in this article.
As you develop total compensation packages for new employees, go into it with a competitive spirit. If you’ve identified someone as a great addition to your team, win them over with a package that will help them feel like a winner. Look for ways to customize your offer within the constraints of your system.
The nice perk of working with an executive recruiting firm, such as Centennial, is that we ask candidates, “What would it take to have you make a move to a new job?” We find out what would make the candidate happy, so you don’t have to guess. Because of our constant immersion in the hiring market, we also know what a reasonable request is.
Your goal should be to offer the best compensation package possible so that the candidate is honored and thrilled to come work for you. When someone feels valued, that sense of worth is transferred to their eagerness to do their best for you.
Hire some great people. We’d love to help.