In HR management, good compensation and employee benefits are part of the remuneration package provided by organizations to the employee. It is one of the biggest incentives for an employee to join a company. Typically, many employees just consider salary as the only compensation, but in reality, it is much more than just the regular paycheck. According to an SHRM study, the three driving factors of job satisfaction are the respectful treatment of employees, compensation and pay benefits. Compensation and benefits can refer to everything that an organization is offering to its employees. This could be in the form of financial aid, health insurance, incentives, vacation surplus, insurance, and more.
The HR department designs the compensation and benefits programme for each employee and is responsible for maintaining the same across the organization. Creating an attractive package is beneficial not only for attracting potential talent but for also retaining key employees. Keeping the cost involved in retaining and training employees in mind, employers should present a well thought out benefit plan that meets employee needs and employer objectives. The management needs to keep an eye on the competition and the changing industry trends to offer fair and equitable pay to employees.
Employee benefits can be both tangible and non-tangible- i.e it can include both monetary and non-monetary benefits. Monetary benefits can be classified as bonuses or incentives, whereas, non-monetary benefits will include health insurance, sabbaticals, employee discounts, etc. In this era of personalization, many organizations are offering benefits that suit individual needs and preferences, depending on their role and contribution to the bottom line.
Now, let’s go through the steps to build a solid employee benefit and compensation programme:
- Analyze the objectives
To establish a meaningful benefits programme, it is first important to analyze the objectives behind the same. Having clearly-defined goals will keep your programme realistic, budget-centric and focused. The organization’s business or HR strategy will guide the development of the benefits objectives and help in achieving the overall goals. Several factors like industry, competitor analysis, business size, location, employee count, should be considered in the development of the objectives. The key is to remember that these objectives are not static and will continue to evolve as the business scales and the different parameters change. It is also important to analyze the available budget and create a realistic plan. The benefits should be targeted to attract and retain key talent, and operate complying with state and national laws.
- Conduct needs assessment survey
Modern employee benefits programmes are not just designed on employer perception but with careful evaluation of employee needs and requirements. After all, the goal of the programme is to keep the staff happy and engaged, and their opinions do matter. To understand the perspective of the employees, organize a company-wide survey to gather key insights. Common market research techniques like questionnaires, personal interviews, can be leveraged to understand current employee demands. If a current plan exists, then go through its efficacy and frequency of use by the staff to determine its demand. Understanding the benefit of an existing plan will help in drafting a cost-effective future employee benefit that is sustainable and beneficial in the long run. The demographics of the workforce can also be a crucial factor in devising specific benefits. For eg, younger millennials may value paid time off, sabbatical options, while the older employees will value a solid retirement plan.
- Include meaningful benefits
Creating meaningful benefits programmes will not only increase employee productivity but also improve their loyalty to the organization. Be strategic and specific in your approach and spend on what you can afford as an organization. By keeping a track of what your industry competitors are providing, you can retain your top assets and attract potential candidates as well. Depending on the findings of the assessment, the employer can begin to formulate the plan. There are several factors when it comes to including meaningful benefits like can changes to the current plan be cost-saving, can underutilized benefits be scrapped, how much can employees contribute, etc. The benefits package can also include optional benefits like retirement plans or pension benefits for senior employees, paid vacation packages, sick leaves with a full reimbursement, healthcare facilities, disability packages, severance pay, childcare facilities, skill development plan, disability insurance, and much more.
- Communicate the plan to employees
The communication of the benefits package to the employee is of strategic importance and critical for employee buy-in. Your employees should see the advantage of this package and it should compel them to join your company or continue working there. If you’re looking to attract potential talent, then communicate to them the specifics of your compensation and benefits package, highlight how your offerings are different to that of your competitors, and how it may help them in the long run. For existing employees, communicate the changes in the package and how it’s going to affect their current status. If employee input was sought during the evaluation process, then their feedback must be taken into account. Without effective communication, there will be no positive impact on recruitment, retention, or employee morale. The communication plan should focus on providing a high level of understanding of the benefits offered, and encourage its wise usage.
- Conduct periodic evaluation
The recent coronavirus pandemic is a testament to how quickly workplace dynamics can change and how the needs of the modern workforce are evolving. With the rapid adoption of remote working, many organizations are now looking at a reevaluation of their employee benefits programme. Once the new programme has been implemented, it is important to visit it from time to time, analyze its relevance in the current times, and bring in necessary changes. As businesses evolve, many benefits will become a norm and require reevaluation. There will be a change in employee needs, business climate, workforce demographics, regulatory laws, that will require periodic assessment. Consider development goals, assess the impact of the programme, and make adjustments accordingly.
A successful employee benefits programme will attract global talent and make your employees stay for the long haul. An employee-friendly structure is crucial in today’s time to wade off competition and make your organization productive. An HRMS can help in strongly maintaining your employee benefits programme without any hiccups. Compensation is usually managed through a payroll system that manages and records the payment of wages to each employee. It maintains uniformity in the organization and reduces the chance of error. Paylite HRMS is already the #1 choice for HR Management across the GCC and for several decades has helped organizations become productive and profitable.