June 15, 2016
In an improving economy, the balance of power can shift. On the New York Stock Exchange, for example, bear markets become bull markets. And in the American workplace, where employers once held the upper hand, employees can suddenly wield more power and demand more in pay, benefits and incentives. This change is happening now; the balance of power between employers and employees is shifting in favor of the employee. But a more favorable economic and corporate employment environment for the employee doesn’t necessarily mean the employer has to lose. Here are some actions that you – as a corporate employer – can take to create a winning situation for your company and your employees:
Become Market Aware
How your company fares in attracting and retaining top-performing employees will depend on how your organization is positioned in a competitive hiring marketplace. To enhance your chances of landing top talent when you have positions to fill, your compensation package will need to be on par or better than your competitors. To make sure that is the case, check the value of jobs in your market. Utilizing third-party-validated data, analyze your market’s employee compensation standards based on industry, company size, revenue and geographic location.
To retain your best current employees, first determine where they are relative to market norms. In terms of experience, education, time in job, and measurable performance, are your employees superior to your competitors or lagging behind. Knowing that, are your current employee compensation packages competitive and market-correct?
Make Baseline Adjustments as Necessary
Doing the analysis above will indicate if your company’s compensation programs are on target or in need of adjustment. Moving from an employer-favorable market to one that favors the employee will, more often than not, mean that your compensation programs might need upgrading. If you want to be seen as a clear leader in the marketplace, one that can attract and retain superior talent, you’ll want to position your company at or near the top of your industry’s compensation and rewards programs. If your business model is one that can withstand more frequent employee turnover, you can adjust your compensation programs accordingly. But be aware that the cost of employee turnover is typically from 1.5 to 3 times the employee’s annual salary.
Craft Competitive Employee Reward Programs
Beyond employee pay, being competitive in an employee-favorable economic environment might require well-crafted incentive and reward programs. These can include referral bonuses for employees who recommend desirable recruits, signing bonuses when top talent comes on board, and performance incentives to inspire productivity and results. You can also consider loyalty bonuses for top performers you don’t want to lose. The right components of an effective reward program should be unique to your company and industry.
The Bottom Line:
Yes, the economic tide is turning. It’s becoming an employee-favorable market again. But you can get ahead – and stay ahead – of the curve by understanding market conditions, knowing where your company stands in the marketplace, and making the necessary adjustments. It can be a complex undertaking on all counts, but if you need help making the transition to a market that favors the employee, contact Total Reward Solutions today at 317.589.8529. We can help you with programs designed to attract and retain the staff you need to stay on top of your industry.