Pin Me

Tips for Overcoming Employee Compensation Challenges

written by: •edited by: Linda Richter•updated: 1/17/2011

Business owners and HR managers face employee compensation challenges even more than in the past. It used to be employees were happy to receive a fair wage for a day’s work; however, that’s not always the case with a varied workforce. Here, find out how to deal with these compensation challenges.

  • slide 1 of 7

    Understanding Today’s Workforce

    Compensation Challenges The workforce of today comprises the traditional worker, baby boomers, Gen Y, and Gen Xers. All of them not only work differently, they have different lifestyles, work ethics, and levels of diversity; and each group may prefer one type of compensation over another.

    There are those just entering the workforce with imaginations full of top salaries, those who are more realistic on what’s really out there, and those who are unsure of what to expect. As the employer, it falls to you to face these employee compensation challenges and, often, it can be difficult—especially in changing economic times.

    Image Credit (FreeDigitalPhotos)

  • slide 2 of 7

    Stand Up to the Challenge

    Stand Up to Challenges Everyone wants more money, and that includes your employees. Some may want a higher position, title, or even a better office space. There are those who pray for a benefit plan that includes healthcare or retirement options. Some long for flex time to help balance their work and home lives. Then there are those that want the world and, no matter what you do, you may not be able to please these types.

    To help you face employee compensation challenges this year, consider the following:

    • Identify the Employee – First off, you need to understand each employee and his desires and needs. This can easily be done via an employee salary/compensation survey. Bright Hub writer Linda Richter offers an excellent (and free) employee compensation/benefit survey you can use to determine the “feel" of your employees. Make these mandatory for each employee and you can keep them anonymous. Once you have completed surveys, you can analyze them to identify individual employee wants.
    • Identify Groups – From your employee surveys, you’ll most likely see a pattern. One group may want days off with pay or flexible working hours where others may want more money, etc. Try to break your surveys into categories such as:
      • More Money
      • Specific Benefits
      • Working Schedules
      • Opportunity
      • Training & Education

    Now that you have broken these groups down, how can you tackle the next challenge—what to offer in employee compensation to keep everyone happy?

    Image Credit (FreeDigitalPhotos)

  • slide 3 of 7

    Compensate Within Groups

    Not everyone is of either the vanilla or chocolate ice cream variety, and some surveyed employees may fall into more than one group. Beyond the monetary increase—which will most likely be tops on your list of wants--use these tips to help you work within groups to compensate based on needs. Whatever their desires, you will must deal with compensation challenges personally; it’s best to do this during your annual review process. However, if you can tell your employees are really unhappy, you may want to tackle this challenge immediately.

    Please continue to Page 2 where you'll learn how to face employee compensation challenges based on where your employees fall as far as various benefits desired.

  • slide 4 of 7
    Once employers identify the wants and needs of their employees, it's time to face some employee compensation challenges. While you may not be able to offer everything suggested here, with the various options provided, there's sure to be one or a combination of compensation items you can start implementing now to make your employees happy and build a stronger workforce.
  • slide 5 of 7

    Making Your Employees Happy

    Compensation Solutions As discussed on page one, below is where most people will fall as far as the group scale along with tips on what you can do to improve your compensation issues:

    • More Money Group – You must be realistic here; after all, you can’t just hand out wages you can’t afford—you’ll go out of business. Make a budget on what you can afford across the board based on positions held and employee performance review positives and negatives. As an employer, you may decide to offer a 3% raise across the board, but is that really fair? Really dig deep into your performance appraisals to identify those who really hit the mark and reward them for it with a salary increase that reflects their performance. For those that miss the mark, you can always face this employee compensation challenge by switching their incentives to another group—perhaps more training.
    • Specific Benefits – You’ll also have a group that pleads for healthcare, retirement benefits, an office with a view, or even a company vehicle. If you can’t afford healthcare benefits across the board, offer up small compensation that employees can use toward obtaining their own policy. Realistically, you can’t offer one group healthcare and not the rest. As far as retirement options, ask your liability insurance carrier what types of retirement benefit programs are out there—most likely there is one you can afford to offer. For other incentives, if you can accommodate a request such as a company vehicle or better office, and if the employee review demands it, why not consider honoring the request?
    • Working Schedules – To some employees, they need time for their kids and families—it is indeed what is most important to them. Consider things like job-sharing or four work days with one off, preferably a Monday or Friday. This group of people can be easily accommodated if you review their surveys and then speak to them as a group—as a group, agreements can be captured to meet life balances for each employee.
    • Opportunity – There are those who feel they’ve been in the same position for quite a long time and they’re probably right! Analyze your promotion policy and see who has been missed. Based on performance reviews, even a change in title with a little more responsibility can go a long way—even a business card can mean a lot to an employee that wants recognition. For long-term employees that want to really grow with the company, consider their value and what you’d do if they left—promote when deserved to face this employee compensation challenge.
    • Training & Education – Some employees want either in-house or outside training to help them go further with the company. Others may want educational benefits for a local college so they can rise to a better position. Whatever the reason, offering training or educational benefits will only enhance your workforce—so consider these wisely before denying them.

    Image Credit (FreeDigitalPhotos)

    Please continue on to Page 3 for tips on what you can't do when facing employee compensation challenges.

  • slide 6 of 7
    When facing employee compensation challenges, there are some things you just can't do such as playing favorites, ignoring requests, and not offering annual performance reviews. Learn here how to be realistic about the challenges of compensating your employees in today's workforce.
  • slide 7 of 7

    Employee Compensation Challenges - What You Can't Do

    Be Fair With Employees In today’s world of tackling employee compensation benefits, there are some things you can and can’t do, including:

    • Favoritism – You can’t offer money, benefits or opportunities to only those you “like." Be fair across the board or you’ll lose valuable employees.
    • Saying No – You also shouldn’t immediately say no to any compensation request. Implement surveys and follow through on those surveys. Find out what’s important and to whom before you say no. Employees that realize you’ll be offering nothing will walk.
    • Be Realistic – While all of these compensation tips sound great, you have to be realistic with what you can afford—even if you have a varied group of wants and needs. If you have to decide between the expense of raises or promotions, consider the promotion but perhaps offer a small one-time incentive and explain the expense limitations to your employees. Never leave your employees in the dark just wondering—the imagination is a powerful thing.
    • Performance Reviews – Your employees want guidance and they also want to know how they’re doing or at least how you think they’re doing. Whether you use a standard employee review form or a 360 degree performance review, do use reviews and make sure they come at regular intervals—perhaps based annually after hire date.
    • Follow Through – Whatever path you decide to take when facing employee compensation challenges, make sure what you promise you follow through with. Nothing will make your employees lose trust in you more than if you don’t deliver on promises.

    Considering the needs and wants of all your employees is essential for a happy work environment. Survey, analyze, and reward where you can, and don’t do what you can’t afford. If you can’t afford to offer something, let your employees know why—whether it’s budget or other constraints; chances are they’ll understand and you’ll retain a happier group of workers.

    Image Credit (FreeDigitalPhotos)