Employee Retention Tactics, Part 1: Does the Ideal Compensation Package Exist?
My series on employee retention tactics kicks off with a focus on how to stay competitive with your compensation, benefits, and perks.
If you’re wondering whether there’s such thing as an ideal compensation package the first thing you need to pin down is what defines an ideal compensation package, anyhow? I believe such a thing would entail a fine balance between the amount an employer can offer to remain competitive in the market and the amount that is lucrative enough for a potential employee to consider leaving his or her current company (or turning down any competing offers/opportunities) to join your organization.
As I mentioned in my blog last week, it’s simply not enough to provide someone with a basic paycheck and benefits package. These days, it’s all about rewarding strong performers, offering equity in some cases, and emphasizing all the additional and unique benefits and perks that your company has to offer.
Since every company operates differently — in terms of size, industry, location and so forth — these factors have an influence on the type of compensation, benefits, and perks they can afford to offer, so this needs to be taken into consideration. For example, in the San Francisco Bay Area, there are technology companies that range in size from a revenue perspective as well as in terms of the number of employees they have. As the market appears to be very saturated in the region, many employers are competing for top talent in all areas of the organization. One may ask, how are they differentiating themselves, and why would a potential employee consider any one particular offer to be more enticing from another?
When deciding on the actual compensation that you would like to offer your employees, you can choose to use tools such as PayScale to benchmark salaries. In addition, if you are a start-up, you may also want to consider giving some equity as part of your total compensation package. Although in most cases the amount would be minimal, a lot of prospective employees become excited knowing that they could have partial ownership of the company and feel as though their efforts would be directly contributing to the success of the organization.
Pay for Performance is also a common scheme that companies can implement to motivate and reward their employees. This is a great way to incentivize employees who are performing exceptionally well within your organization, as well as encourage those who might not be performing to the level that is expected of them. However, before implementing such a scheme it is important to consider if it is the right type of structure for your organization and to assess the potential impact it could have on employees.
Benefits & Perks
In terms of the benefits and perks that your company can offer, this would normally vary across companies and sectors. For example, when comparing some of the larger technology giants today, companies such as Google, Facebook, Twitter, Apple, LinkedIn offer perks that make many prospective employees excited about working there and help differentiate the organization from its competitors.
Some of the perks offered at these companies include:
- free catered food and snacks onsite
- fitness facilities and classes
- salon and beauty services
- subsidized massages
- dry cleaning services
- and many more
Additional benefits include:
- more flexible work arrangements and time off
- extensive medical and retirement plans
- stipends and reimbursement policies (e.g., maternity/paternity leave, childcare, transportation)
For a detailed overview and comparison of the different perks and benefits these companies offer, you can refer to a recent article by Mashable on “The Perks of Working at Google, Facebook, Twitter and More”.
Of course, most companies are not able to provide all of these perks and benefits to their employees. If you are a smaller organization or start-up, there are many reasons as to why employees would choose to join your organization over a larger one. It might be worth selecting one or two things from the list above and implementing them in your organization to help attract and retain your top talent. Here at OpenView, we have the privilege of having catered lunches every day, as well as an exceptional benefits package — and that makes me very happy!
As you can tell from the above, it would be too difficult to come to a consensus on what the ideal type of package should consist of. The truth is it varies from company to company. However, one thing that you can do to remain at the forefront is staying well informed of the compensation trends in your industry and region. Taking an active interest will allow you to recruit and retain top talent as well as stay ahead of the game amongst your competitors and in the eyes of prospective employees.
Leaders from Twilio, IBM, SurveyMonkey and more share their best tips.
B2B brand and product positioning will only continue to become more important with the rise of the End User Era.