Definition: In financial terms, the salary and wages you pay to your employees
for the work they do. Other, nonfinancial forms of compensation can
also be offered to attract and retain staff.
Ask any human resources consultant where financial compensation
ranks in the hierarchy of employee requirements, and you're likely
to get a range of answers. Some say it's the most important thing.
Others declare wages are the only important thing. Still others say
that while financial compensation isn't the most important thing,
it's important enough that if your pay isn't fair, all the other
employee benefits in the world may not be enough to keep employees
on board.
Obviously, it's important to know whether you're paying enough
and how to get the most for what you're paying. In addition, you
have to know how to bolster the actual dollars you lay out in
salary and wages with nonfinancial compensation.
You don't pay employees in a vacuum. That's another way of
saying that the level of compensation that will attract and keep
employees is set primarily by other employers. While there's no
formula that will tell you the ideal salary for each position
within your company, there are appropriate ranges. Some of the key
sources for determining suitable salary ranges for your employees
are:
- Classified ad listings for specific positions, both in your
daily newspaper and on the internet
- Professional and trade organizations for the specific fields in
which you're hiring. Most organizations regularly publish salary
data.
- Human resources consultants
- Specialized recruiters in the appropriate fields
While no one can discount the importance of financial rewards,
keep in mind that today's job candidates are more concerned with
corporate environment and quality-of-life issues than ever before.
In an executive survey conducted by Robert Half International,
corporate culture rivaled employee benefits in importance for
candidates during job interviews. Many small businesses use this
trend as a competitive advantage, offering such nonfinancial perks
as flexible work schedules, casual dress days, additional vacation
time and telecommuting opportunities. The costs of this approach
are minimal, particularly when compared to the value-added benefits
of improved recruitment, productivity and retention.
Regardless of the monetary and nonmonetary ways you compensate
your employees, creating an employee-friendly environment and
determining competitive compensation ranges take time. Both require
being flexible and adaptable to changing workplace trends and local
conditions. The investment is worth it--the difference between a
good company and a great company is its people.