Determining compensation for roles within your company can be challenging. Depending on the availability of talent, skill set required, industry competition and changing workplace dynamics, remaining competitive can seem anywhere from difficult to nearly impossible. Recognizing this, I’ve put together a list of ideas you can use to remain competitive for top talent without engaging in an endless stream of bidding wars.
1. Start Benchmarking Compensation
You should know who the competition is and if you are offering more or less than the industry standard. There are a variety of ways to compile data and learn how a role is valued in the marketplace. Interviews and onboarding are great opportunities to learn what candidates value and what other employers are offering. Exit interviews also provide a learning forum from employees who are leaving. Invest in studies and surveys. Websites like LinkedIn provide some general data that can be useful, but a full compensation study will ensure you understand what you are up against. Executek provides compensation analysis services that can give you insight to other companies’ pay structure, benefits, and strategies. This will ensure you have the info necessary to remain competitive. Used correctly, they can pay for themselves in the long run.
2. Know How Much Expertise is Needed
Of course, a critical position requires a qualified person. But how much expertise is required? Do you have a senior staff that will allow for you to hire or promote someone with less experience? Perhaps your staff lacks expertise, and you need to supplement with an extremely seasoned candidate. Knowing these answers can help you target the right person within the proper pay spectrum. Don’t expect to recruit a top performer from a competitor by offering a lateral move. Promoting from within is an option that allows for organizational growth and employee development. This can aid with retention, as well.
3. Base Versus Variable Compensation
It can be tempting as an employer to offer lower salaries and greater variable comp (commission and/or bonuses) based on performance. This can be a useful strategy but should be applied appropriately. Realize that you are asking candidates to take more risk and bet on themselves. In this scenario the reward and should be significantly greater than a similar role with a higher base salary. It is also rare for someone to accept less than they currently earn in base salary, unless the earning potential is substantially greater. In the end, be sure to understand a candidate’s complete earning potential and the potential your company offers.
4. Pay What the Role is Worth to Your Company
It doesn’t matter much what the marketplace bears if the role means less to you and your company than it does to others. By contrast, if leaving a position open is costing your organization money, then the role may be worth more to you and you’ll need to approach the top of the industry scale. Perhaps you can dilute the impact of a position remaining open by dispersing responsibilities among your seasoned staff. We never recommend throwing money at a problem but be prepared to compensate talent commensurate with your needs.
5. Be Creative in Other Forms of Compensation
Flexibility in schedule, commute, perks, and opportunities for professional development are all examples of ways to offset a company’s compensation limits. Know what your current employees and prospective hires want and value. You may be able to make up in work-life balance where dollars actually fall short. The modern workforce’s expectations for culture and flexibility are changing rapidly… even more so since the pandemic. Be sure to remain competitive beyond traditional compensation, by promoting a progressive culture. You can read more on direct and indirect comp ideas here.
There is never one fool-proof answer that can be applied to every situation but employing these strategies will help to keep you competitive in the compensation arena. You can read more on this topic at Forbes. I always recommend transparency when speaking with employees and candidates. Don’t be afraid to disclose what you aren’t able to offer and why. Conversely, also show a willingness to be flexible and creative to make employment with your company more than just a place to earn a paycheck. Show employees you care about their ability to realize their personal goals, too.
Executek Recruiting Partners is an executive search and recruiting firm dedicated to helping manufacturing and industrial companies. If you need help with compensation analysis, recruiting assistance, or just have general recruiting questions, Contact us today. We never charge a fee for a phone call.