Being a competitive force in compensation when it comes to attracting skilled employees isn’t just about offering higher salaries and bonuses to all employees. Paying the highest wages across the board does not inherently make you more competitive as an organization, and is overall a simple approach, rather than a deliberate strategy.
In fact, an organization that simply pays all of its employees more carries higher personnel expenses and requires a full overhaul of the compensation strategy during a company crisis or recession, which can destroy any related employee satisfaction.
To be effectively competitive, consider two general approaches to gain the advantage in your market pricing system:
- Hold a general competitive position on the pay market.
Setting salaries at higher than median positions on the pay market gives smaller companies some competitive advantage as they have to fight bigger organizations for the best talent within industries. However, paying too high could hurt the business with increased costs and too little room for making quick changes, while competitors still have more space to decrease personnel costs in difficult times.
As your organization grows, it will need skilled employees to help it move forward even more. When employees in every department are equally important, it may be a fitting time for you to maintain a higher pay market position.
- Be especially competitive for key positions
For some companies, it may be most useful to designate key job positions within your organization that are especially crucial to operations. These critical positions often are determined by how a vacancy would affect the company in achieving revenue projections, profit projections, or customer satisfaction scores. Sales executives and plant managers are key examples of impactful positions for some organizations based on the above criteria.
Paying these positions at a higher market rate enables you to attract superior talent as well as protecting that talent and incentivizing them to stay for the long term. While agreeing on what these positions are may be a challenge for internal teams, some organizations can better leverage their compensation budget by focusing on higher market rates for specific employees.
Maximizing Efficiencies with Compensation Management Software and Tools
Too many companies are relying on insufficient compensation tools to achieve high level strategic compensation plans. Without the infrastructure to support your research, analysis, and data, you cannot create a strategy that is easily explained and compelling, and therefore cannot make as strong a case as you could. You cannot really know, without supporting tools, how effective your strategies really are or how you could improve them.
Leveraging more than one compensation strategy will eventually be the best way to motivate employees while making sure that individual behaviors and job performances align with company goals. Your business’ unique stage of life will determine if your goals are short-term or long-term, and how your compensation strategy can best support those goals.
Consult teams in key areas of the company when deciding on the best approach to your competitive compensation strategy, and allow your practical knowledge and experience of HR to be informed by the individual department priorities and perspectives propecia pills buy online. With the right tools, such as compensation management software plus others, and the right information from across the business, your organization can build a compensation strategy that addresses all key areas and clinches your company as a competitive player in the market.