Tyler Meuwissen, Xenium’s Compensation and HR Analyst, contributed to this post.
Say your company purchased a huge piece of complicated machinery for $1,000,000. You would want to take the time to understand it and put time and energy into maintaining it regularly, right? You want to get your money’s worth, after all! So you continually fine tune it and examine it. You may also research and identify the most common issues that type of machine has, and ensure that those specific belts and nuts and bolts that could cause a catastrophic and costly failure are regularly updated and replaced.
What the machine represents
You may have figured it out by now, but the machine in this analogy represents your company’s compensation structure!
Think about it: your company’s payroll is a huge expenditure. For many companies, it can be close to 50% of their annual expenses and often their overall largest expense. Something that extreme in cost ought to be regularly reviewed and updated to ensure you are getting the most bang for your buck.
In this thriving economy, we’re seeing more and more companies look to the future and become strategic in their compensation planning. Additionally, with the large supply of high-skilled jobs available, job searchers have more and more offers to consider and compare. Ensure your organization is an employer of choice for those searchers by refining your compensation structure—including your total rewards package.
3 Steps to building a compensation structure for your organization
Here’s a breakdown of how to go about maintaining your compensation structure, ensuring you aren’t losing top talent to your competitors, and attracting the right new talent with your total rewards package:
- Identify your “hot jobs.” There are two kinds – positions that are booming in the market, and positions that are key to your specific organization. Essentially, who in your organization might be getting calls from recruiters and sought out for other opportunities, and who in your organization you really don’t want to be calling recruiters and exploring opportunities. Examples of current hot jobs out in the market are IT, tech, healthcare, sales, and finance.
- Establish the following routines:
- Each time you hire, look at market data for the specific position and see how your offerings compare.
- Annually compare your salary and benefits information to market data for your industry.
- Every other year, do a complete evaluation of your compensation strategy.
- Think holistically about your total rewards package when comparing to market data. Benefits, both in terms of healthcare as well as “softer” benefits such as flexible schedules and remote work capability, are a key part of your offerings. Ensure that you have internal equity within your company as well as external competitiveness.
Where to get market data and support
Consulting with a compensation analyst or a vetted wage survey company is most ideal, as they have access to an abundance of data.
However, you can absolutely get a general idea on your own. When comparing data, ensure that you are matching your positions’ duties, as titles won’t tell you everything. Also consider industry, revenue, and company size to get a full understanding of your labor market.