Want to learn how to attract, engage and retain top talent?
Check out our new e-book and discover 9 powerful strategies for becoming an employer of choice.
While a healthy work-life balance and a cultural match are essential, fair compensation remains a top priority for employee motivation and retention. ‘Remarkably, few European companies succeed in offering a fair reward package or fail to communicate about it’, says Virginie Verschooris, Managing Consultant Reward at SD Worx.
Don’t let anybody tell you otherwise: employees who are duly recognised for the value they bring are more likely to be motivated, loyal and productive than those who’re not. And if that doesn’t motivate you, dissatisfaction with pay is the number-one reason European employees leave an organisation. Mainly Finnish, Spanish, and UK employees, in particular, would abandon ship in case of poor pay. But even in countries that are less pronounced, such as France, Belgium and Norway, inadequate compensation is a major dealbreaker. And don’t expect that to change anytime soon.
Considering these figures, one could easily jump to the conclusion that the most attractive employer is the one who puts the most money on the table. But that’s not the case. Overpaying your team won’t necessarily result in people lining up at your door. Above all, employees want to be compensated fairly compared to their colleagues and professionals in similar organisations. But, as it appears, that’s exactly where the problem lies. Less than half of the European employees perceive their salary package as fair. Justified or not, employers should turn the tide before people start flooding out.
If you want to revise your reward policy, listing all positions in your organisation is one of the first things to do. Which positions do you have today and which will you need tomorrow? Can you eliminate, add or group positions? The goal is to get a clear, consistent and future-fit framework. This exercise is particularly beneficial for companies that have grown fast or acquired other businesses.
Then, the idea is to weigh each position based on a proven methodology. For example, the well-known Integral Grading System assesses 5 elements: problem-solving, decision-making, leadership, degree of specialisation and relations. On top of that, you could also add language and working conditions. The outcome: a ranking of all your positions, which allows you to improve internal fairness.
To safeguard competitive compensation within the market, you need to go further. First, decide on a relevant market segment to compare to. There’s no point in comparing a warehouse manager from a rural SME to one in a multinational based in the capital and active in a different sector. Second, team up with a partner who offers reward benchmarking – preferably one with a large and up-to-date database. Important: the idea is to benchmark complete reward packages, including financial and non-financial compensation, individual and collective compensation. Third, decide if you want to be below, on or above the market average.
Finally, your internal ranking and external benchmarking come together in pay scales. Each pay scale contains positions with the same weight and offers some leeway. After all, your starters won’t receive the same compensation as senior employees in the same position.
Using reliable data and a proven methodology will get you the foundations of a strong reward policy, but the most attractive employers also optimise their rewards. And optimising largely equals personalising. In other words, you could offer your employees a flexible budget to spend on benefits they choose, such as extra holidays, mobility options, insurances and multimedia. Obviously, this approach implies complying with certain rules and regulations, but it’s a great way to relieve financial stress in your team.
‘Even if you succeed in setting up an attractive and motivating reward system, chances are that your employees will perceive it differently. To counter misguided perceptions, I can’t stress the importance of clear communication enough. Explain to everyone what they are getting and why, because on average employees are only aware of 60 to 70% of their total remuneration. Whether you organise information sessions or create Total Reward Statements, transparency should be high on your priority list. It’s a cornerstone in financial wellbeing.’
Global Payroll Week is an annual opportunity to put the world of payroll in the spotlight. At SD Worx, we have relied on our payroll specialists during the past month more than ever before.
In this increasingly globalised world, there is a vast array of opportunities for businesses to explore. For companies looking to expand their international reach, payroll is one of the biggest consideration factors.
In today’s business landscape, an agile workforce needs an agile workplace. Whether you’re a large multinational organisation or a small, growing business, we must all adapt to the changing demands of the workforce. Employees are looking for fast-paced and fluid environments that can cater for the ever increasing gig economy, alongside the growth of short-term or freelance contracts that fit around the specific needs of individual employees.