Compensation has always been a tough subject, but transparency and innovation can turn it into a bonding agent between employees and employers. Addressing compensation openly can lead to improved trust, satisfaction, and retention. Here are three ways to effectively discuss compensation:
1) What You Pay Vs. How You Pay: We all want to get paid fairly.
Employers have reasons for paying what they do, whether they use industry models or base it off more internal metrics.
However, according to a new study by PayScale, creating a transparent compensation process builds stronger relationships with employees. It’s also important to make adjustments as needed.
The study shows that 8-10% of top performing companies are adjusting their pay strategies based on both the demographics of their workforce and employee feedback compared to businesses that are rated as average.
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2) Strive For Transparency: With 57 percent of organizations saying that compensation is becoming more important to their executives, transparency starts at the top.
Transparency doesn’t mean that everyone knows how much everyone else makes. That can be a slippery slope, where employees start to feel a salary cap at the company.
Pay transparency should involve discussions related to philosophy, strategy and hiring and compensation structuring practices.
As a manager or supervisor, you don’t need to tell people what your making, but you should explain to each of your employees why they’re earning their current salary and review different ways they may be able to improve their compensation situation.
3) Innovate Compensation: Compensation doesn’t need to begin and end with a paycheck.
Innovate how your compensation gets paid out and what forms it takes.
Think about compensation in a more holistic way. Some ways to do this include paying out quarterly bonuses, offering employee recognition rewards and competitions to give out a different type of currency, such as gift cards, that not only bring value to employees’ pockets but also bring trophy value that lasts beyond the moment the rewards are given out.
Creating a culture of pay transparency and innovation is an effective way to make compensation a topic that brings employees and employers together rather than driving them apart.
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