Salary has always been seen as a key component of attracting and retaining staff. Offer too little and you’ll miss out on the best people, offer too much and you’ll impact your bottom line; both are bad for business. Essentially, it’s a question of balance… but it’s not just about the numbers.
Over recent years the focus has turned to the wider remuneration package; things like performance related pay (bonus etc), employer-side pension contributions, healthcare, car allowance et al all contribute to the overall financial package on offer. Added to this you have to factor in non-financial things like holiday allowance, working hours, flexible working etc as, again, these all add to the attractiveness of the total package. Then of course you can ‘finesse’ with the likes of onsite canteen / paid training costs / volunteer days and so on. And there’s the statutory ‘perks’ too – childcare vouchers, bike-to-work schemes. The list goes on…
Quite rightly many organisations are looking to build the most effective total reward packages they can, packages that aim to attract the best talent and keep that talent happy and productive. There are lots of elements – the “nuts-and-bolts” – to consider, and there’s certainly not a ‘one size fits all’ solution!
Of course, any reward strategy has to tread a fine line between being attractive to the talent you want to hire (and retain) and not breaking the bank… it’s all about maximising the impact – and value – of this strategy.
Beyond the basic numbers there are three key factors to consider:
- Firstly, what are your competitors offering? These are the organisations seeking the same talent that you are (so, not competitors in terms of what you sell, but competition for employees). They’re looking to take your top performers, your leaders-of-the-future, your niche skills and your cost-effective early talent. Just as your marketing people look around at those organisations who are looking to take your customers’ money, your Talent and Resourcing people must look around at those organisations who are after your employees. Without a full and comprehensive understanding of what rewards your competitors are offering you’re working in the dark when it comes to crafting your own, so a thorough independent market analysis of who’s offering what is a good place to start.
- Secondly, what does the talent you’re looking for really want? Just because you know what your competitors are offering doesn’t mean you should follow blindly. Nor does it mean they’ve got it right! What they’re offering is, at the end of the day, what you’re up against, but without knowing exactly what your target market (the people you want to hire) actually wants, how can you know you’re going to win them over? If you’re looking for a certain skill set, or people with specific attributes or experience, it’s essential you know what makes them tick. Your marketing people will know the ins-and-outs of your customers’ needs and wants; by so doing they can shape your offering and the way it’s taken to market to achieve the best possible customer value and marketing spend ROI. In the same way, Talent and Resourcing people need to understand the needs and wants of your target talent so as to shape your employer offering. Deep dive employment market surveys and first hand input from your target talent groups will offer up an invaluable source of data to feed into your reward strategy.
- Thirdly – how do salary and benefits fit into the bigger picture of how attractive an organisation you are to work for? So, you’ve done some great work preparing a relevant and attractive salary and benefits proposition for the range of roles you want to hire; now to add this to the overall jigsaw! Here it starts to become tricky. If you’re an established organisation there’s inevitably a perception of you as an employer – and a brand – out there already. People already have an opinion of you. They may think what you make and sell is wonderful, they may know all about your lovely new offices (or your scruffy old ones!), they may think you have some great brand values… or perhaps you’ve had some recent bad press. Whatever the perception of you that’s out there already is essentially your starting point. Specifically, what your target talent already thinks of you is key, so only when you know this can you properly leverage – and if need be, tweak – your new reward strategy. If, for example, there’s a general perception that your location isn’t ideal you may need to top up a little on salaries or offer more flexible working to offset the negative. If on the other hand you are the go-to employer for entry level roles in a particular town maybe you can pull back a little on the ‘added extras’ as they’re just not needed. This context is important. Salary and benefits are just one piece of the talent acquisition and retention puzzle; fully understanding current candidate perceptions of you as an organisation will help you work out how to leverage your reward strategy to attract and retain the people you want.
So, salary benchmarking is just the start. But, with a complete data set comprising full details of your competitors’ reward offering, a thorough understanding of what your target talent actually wants and a clear appreciation of how to leverage your reward strategy as part of your wider talent strategy you can maximise the impact of your salary and benefits offering.
In this way you’ll reach the talent you want with an offering they want.
And that’s good for business.