With busy season over (for now), employee reviews here, and recruiting season right around the corner, compensation is a hot topic around our office. If employees here are talking about it, it seems safe to say that employees at your company might be talking about it, too.
Without a good pay and benefits structure, you can't attract and retain the best employees. But devising a compensation strategy is tougher than it looks - many factors go into paying competitively without breaking the bank. One such factor is your compensation philosophy.
We try to include compensation as being part of an overall work experience. This experience includes flexible work schedules, personal development plans, teamwork, and participation in firmwide activities (like our M&S Cares initiative). We want our employees to have a great overall experience, with compensation being one of several important factors.
Considering your peers
A good way to start analyzing your compensation philosophy is to consider the practices of your peers. This doesn't mean you have to copy them; you simply need to decide whether you want to distinguish yourself as an employer by paying high-than-average salaries, or by paying salaries that are marketplace competitive and differentiating yourself in other ways to attract and retain top talent.
For example, we benchmark against industry standards, as there are plenty of benchmarks in the accounting industry. These include The Rosenberg Survey and the Inside Public Accounting surveys. We also know that in order to attract the best people, our compensation and employee experience has to be the best in class.
Deploying signing bonuses
Another option is to use compensation to attract employees, but other means to retain them. Few small to midsize businesses can afford to draw, motivate, and retain through lavish compensation.
One idea is to pay a little more upfront with signing bonuses that help you get the best and brightest in the door. Once they're in, you can keep them by using less expensive strategies, such as allowing flexible hours after a set period of service, creating a pleasant working environment, and providing praise and advancement opportunities.
Minding your budget
Try to foster a compensation philosophy that acknowledges your objectives without bringing on a huge financial strain. For example, your rationale might be to pay a base salary that's a little lower than industry peers offer, but provide opportunities for more substantial bonuses for strong performance. Or you may wish to offer equity to everyone, so that each employee can share in your Company's success.
Getting a second opinion
It's not uncommon for a company's ownership and management to spend many hours debating the ideal compensation philosophy. If you're interested in a second opinion, let our business advisory team help - we can review your financial statements and help you develop and implement a philosophy that fits your size and the goals of your business!