Rising employee concerns over the high wages of executives while neglecting lower-income employees has led to heightened tension over compensation fairness in the workplace. Employers must balance salaries so that they stimulate employee performance and encourage loyalty without raising expectations of regular raises and bonuses that could upend the business. To do so, salaries should express the value of the employee and their role at the company, and companies should be ready to explain their reasoning behind whatever that salary is as employees become more open to discussing wages. There are several strategies companies can utilize to promise compensation fairness and attract employees that are drawn to companies with salary transparency.
Examine The Market
Take a look at the competition. What are other businesses paying their employees in similar locations with similar company sizes, education levels, qualifications and experience? Those wages can reflect accurate compensation amounts. Online searches can supply ample results, but a market survey may be more beneficial. Contacting the HR departments of competing businesses is a straightforward way of actually determining where desirable employees may be looking to work.
Furthermore, if the market is changing drastically, it will influence compensation rates too. Increases and decreases in job and skill supply and demand could necessitate a higher or lower compensation depending on competition between employees.
Check Government Sources
A good place to start research is with national data collected by the government. The U.S. Department of Labor determines and reports minimum wage for the country and individual states, respectively. Build wages from the compensation floor up taking into account perceived market value, experience and so forth. The Bureau of Labor Statistics publishes data acquired by the federal government on present wages for specific job roles based on a variety of factors to help determine the best and most fair compensation for employees.
Stay Updated
Most companies conduct surveys and end up updating their salary structure far too late to maintain and attract employees to engage in their roles. To remain current and avoid employee loss, employers should re-evaluate their salary structure every three to five years and during events that require re-evaluation such as mergers, acquisitions and drastic market changes, according to the Society for Human Resource Management (SHRM). Ideally, businesses should perform regular job analyses every 18-24 months to collect data vital to making salary decisions.
Conduct Job Analyses
Advantageous job analyses should gather information on every aspect of a job for insight necessary to make successful decisions without focusing on employees themselves. Job analysis provides a guide for future performance testing and job training while encouraging accurate employee compensation. Data on a job’s essential functions and responsibilities, required knowledge and skills, job stress, supervision, schedule and the necessity of that position to the overall goals of the company can be used to best determine fair wages for a job based on an employee’s individual qualifications.
Consider Creative Forms Of Compensation
Alternatively, wages can be less if a company can promise compensation in ways other than monetary. Employees are not drawn to money alone and are more likely to take a job with less compensation if the company culture and perks reflect their own values. Benefits like flexible schedules, health insurance, vacation time, bonuses and retirement plans can be just as supportive and tempting. Resources like tuition reimbursement, child care, gym memberships and company cars can also sway employees into accepting less.
Salary Transparency Can Encourage Fairness
Companies like Buffer are popularizing strategies like total salary transparency and proving that it can be beneficial to employee satisfaction and recruitment. In fact, Buffer received 2,866 resumes after publishing their employees’ wages online. Applicants were encouraged by the information revealed and the philosophy behind it. Buffer created their own salary formula that incorporated base compensation, employee location, that location’s standard cost of living and the competitive market there as well as their experience and seniority. The transparency and simplicity of the equation provided employees with an all-around understanding of the fairness of their compensation and illustrates that employees are more concerned that they are receiving fair compensation than what they are each getting paid.