Compensation thinkers have been raising questions about the structure of existing (and often rigid) pay systems for some time. Businesses have ‘pay’ on their minds. But is that the only way to reimburse employees? No, there’s much more where fair compensation is concerned.
Businesses sometimes tighten the purse strings when it comes to compensation. They may be overlooking the long-term benefits because they’re looking down not up.
Another reason why employers may have their head buried in the sand is because they see this HR task as a mammoth. For a fractional HR team, it’s everyday work.
In this blog post, we talk about how fractional HR provides compensation support to fairly recognize employees and their skills. Contact us if your compensation policy puzzle is missing the fractional HR piece.
Why Fair Compliance?
Old pay practices were entitlement driven, meaning employees felt they were entitled to their pay, and to raises in pay, unconnected with any accomplishments they produced.
Equitable and fair compensation policies and practices attract and retain top talent, enhance job satisfaction and reduce turnover. Competitive compensation is anchored in pay equity and ensures employees are paid fairly for their work regardless of gender, race, or other demographics.
A diverse and fairly compensated workforce can give an organization a competitive edge. It can lead to innovation, broader market reach, and a better understanding of diverse customer needs.
Advantages of Fair Compensation
Fair compensation information gives you wings of courage to question your wage practices. Better compensation ensures optimal retention, employee satisfaction, high morale, and performance efficiency.
Research says a fair compensation strategy should have a threefold goal with respect to the workforce: encourage retention of the best (the top 20 percent), balance inflow and outflow of the middle mass (the middle 60 percent), and encourage departure of the rest (bottom 20 percent).
What is Included in Compensation?
In Canada, there are various types of compensation that are offered to employees.
Wages: This is monetary payment to people in the form of hourly salaries or commissions.
Disability benefits: Employees receive this when they’re no longer able to perform their job due to a disability.
Severance pay: Compensation given to employees when they’re let go from their roles.
Paid vacation: This is money employees are paid while they’re on vacation, away from work.
Other benefits: Any other means of rewarding an employee for their work and dedication to the company, such as extended health coverage, overtime pay, and top-up policies that supplement employee income.
Fractional HR on the Job
Fractional HR experts put a discerning eye on compensation and diversity practices. Once the biases are stripped, they’ll be able to flip the narrative on compensation and create balanced practices.
Once businesses see what they’re missing, they won’t be able to unsee it. The fractional HR team can also help take steps to mitigate what they’ve uncovered with motivation, courage, and fair workplace compensation practices.
Measuring Fair Compensation
Fractional HR experts test and evaluate existing compensation practices both quantitatively and qualitatively using surveys, turnover rate numbers, and exit interviews.
When testing reveals deficiencies, it provides managers with information, training and tools so that they can implement necessary changes with full understanding.
Establishing a Fair Compensation Philosophy
Fractional HR experts know achieving fair compensation isn’t a day’s work. It takes time and the right approach.
- Change your criteria for compensation and link pay ranges to neutral, relevant factors (e.g., skill level, competencies, job description).
- The manager’s job is not only to recruit for ability and motivation but to develop them on the job.
- Link compensation to the individual’s and/or team’s performance and ensure all company pay is tied to the overarching compensation philosophy.
- Put together integrated rewards using both quantifiable elements and intangible, non-cash elements, such as career opportunities, learning and development, work challenges, and a supportive work culture.
- Fractional HR teams track and monitor compensation in comparison with market trends to keep your business competitive.
- Businesses need to emphasize job design, job customization, a good business culture, strong values, and the encouragement of social ties among employees.
- Set goals of production and invite employees, units, and divisions to share in them.
Training Managers on Fair Compensation
Managers play a key role in delivering compensation to employees. Fractional consultants train supervisors on how to make compensation decisions, communicate about compensation to employees, and so on.
Maintaining Fair Compensation
Keeping up with the fair compensation trends is an ongoing task. Fractional HR teams periodically check to see that reality matches philosophy and that wage equity is maintained.
Let Fractional HR Protect Your Business
Experts say traditional employee strategies are a thing of the past. It’s time for some new-age thinking and a fresh start on fair compensation.
Contact us a today if you want to be part of the fair compensation solution.
