A common concern for employers is knowing what fair market price is for talent. If you want a quick and simple assessment you can check posted job ads and compare your job offering to your competition based on gross earnings. If you are looking at an entry level position that typically has high turnover you can gain enough insight this way. However, if you are looking at a mid to high-level job or one that has little turnover, you may want to consider a compensation study. To gain the best comparison information there are components in compensation that are often overlooked but that should be included. A complete compensation package includes factors such as:
- Hourly wage or annual salary – Break an annual salary down to an hourly wage to ensure a true comparison (i.e. some jobs based on 37.5 or 40 hours per week)
- Vacation time – Statutory vacation, non-statutory vacation such as earning an extra day per year of service or starting with more than two weeks
- Holidays – Statutory holidays, non-statutory holidays such as Thanksgiving Day, Easter Monday, Gold Cup and Saucer or Lobster Carnival Day (PEI)
- Benefits – group insurance, premium cost sharing, paid for special leaves (many do not require pay under legislation), professional development funding
- Perks – Gym memberships, company vehicle use, discount prices, group buying power, computer purchase plans
- Bonuses – Commissions, incentives, profit sharing, Christmas bonus
You will also want to compare your information to comparators which are similar in location, labour availability, cost of living rates as well as industries and sectors. While these are never perfect, they do add validity to your findings and subsequent decisions.
Other components that can’t be easily translated into dollars but are still important when comparing one employer to another can include:
- Working from home arrangements;
- Flexible hours;
- Social corporate responsibly;
- Mileage rates and travel rewards;
- Employer-sponsored wellness programs; as well as
- General work environment – filtered water, coffee/tea anyone?
There are so many pieces in compensation that you need to limit what you are comparing before you start. Determine what is essential to know and how you are going to quantify it for comparability. The qualitative information, which could include having a well-decorated office area or having an accessible leader who has a coaching style of managing, are great to know but can be subjective and difficult to calculate.
Most employers want to be fair to their employees and provide compensation that attracts and maintains the best employees. Paying top dollar for that isn’t always possible, nor is it necessarily desirable. Instead, an employer should know the “going rate” and aim to be competitive. Then the focus can turn to the qualitative pieces that create a positive employer brand. The end result of retaining employees through loyalty and engagement rather than the proverbial golden handcuffs is so much better.