Sometimes, it is abundantly clear in the interview room that a prospective job candidate is only interested in how much pay they will receive for the work they perform. It is hardly surprising to realize that most people take on a new job to earn an income and provide for their families. However, the value of a given job does not end at the dollar figure offered as a salary for that work. Instead, the value of a job should be measured based on the total employee compensation offered for that work.
Total Employee Compensation: What is it and What Does it Consist Of?
It is perfectly understandable to think of employee compensation as the dollar and cents figure that is paid to that employee on an hourly, weekly, or bi-weekly basis. However, there is so much more involved with calculating an important figure like this. Helpside.com offers this useful and more comprehensive definition of what total employee compensation is:
Total employee compensation is made up of employee salaries, benefits, and other incentives. The employee salary, or base salary, is what an employee is paid as wages. Benefits might include things like paid time off, health insurance, or 401(k) plans. Incentives can include annual bonuses or profit sharing.
These are all forms of compensation that are offered to an employee when that employee accepts their paycheck. There are also costs for the employer who must provide these benefits to the worker. That said, it can be worthwhile if the employee contributes more to the bottom line of the business than they take away from it.
Employers should think about what the total employee compensation is for a given job. This is not only because they don’t want to overpay for a given position, but also because they want to ensure they are offering enough. Attracting the top talent in the employment marketplace means offering potential hires a total employee compensation package that is appealing to them.
Pay Transparency is Popular Now
Both job-seekers and employers alike have started to call for greater pay transparency across all jobs. It is considered an essential element of a good job for many job seekers. They believe in it because they think it is only fair that they are allowed to know how much they will receive for the hard work they put into a business. Many job seekers are also tired of feeling like they have to be secretive about the wages that they earn. They want to have the ability to compare and contrast what they earn to what their peers are being paid. This matters to them because it can be used as a point of leverage to negotiate for a higher salary if it is appropriate to do so.
On the surface, pay transparency might seem like a net negative for the average employer, but that isn’t necessarily true. SHRM reports that many employers are also pushing for greater levels of pay transparency. It promotes a more level playing field. It can also allow an employer to get a better understanding of the wages that its competition is paying. That may allow the business to alter its compensation structure as necessary to better compete with others in its niche.
Legal Considerations for Pay Equity
A total of 44 states have enacted their pay equity laws since 1963, when the Pay Equity Act was signed into law at a national level. Still, it is clear to most that pay equity is a goal we are striving for. But, we have not yet achieved.
The goal of these laws is to level the playing field for all employees. However, there is still some debate about the extent to which they work. Regardless, they are something employers must consider any time they put up a job posting. It is their responsibility to ensure they are taking the time to remain within compliance. Failure to follow the law in this respect can open one’s business up to a number of legal liabilities that are best avoided if possible.
Finding the Right Blend of Offerings
Some among us have no problem whatsoever putting in 80 or 90 hours a week. Earning as much money as they possibly can as quickly as they possibly can. However, that is certainly not for everyone. You also shouldn’t assume this will be the kind of offering most of your employees are looking for. It is far superior to try to zero in on the perfect combination of pay and benefits to attract the type of talent you need for your workplace.
Companies are experimenting with different types of offerings in a bid to attract the most talented and productive employees that they possibly can. There are many different routes that one can take to attempt to achieve the same goal. They may use the Pay Range Market Research to research the value of a specific job and how much that particular role contributes to the organization. Knowing this can help decision-makers decide how much compensation they should offer to a specific type of employee. Some of the extra forms of compensation that they may offer include the following:
One popular offering right now is unlimited PTO. This seems like a system that is designed to be abused. But, studies show that employees who are offered unlimited PTO are generally happier at work and more productive as well. Employees are generally respectful of the fact that their employer allows them to take as much PTO as they want. Where unlimited PTO runs into conflict with state and local PTO regulations, employers may still look to flexible time off as an option.
Health Insurance Offerings
It is expensive to purchase health insurance. Many employees would also not be capable of affording it entirely on their own. However, when their employer chips in to assist them with this expense, they can remain confident in their ability to afford their insurance coverage. Offering a variety of different plans to meet the myriad of needs of employees is a great way to incentivize employees to stick around.
Free Lunches and Other Perks
It is not necessarily reasonable for many companies to offer free lunches every day. But the occasional free lunch offering is a great way to keep morale high and let employees know you truly care about them. Also, you want to provide them with something they will appreciate. It is an occasional expense most companies can afford. It can also be thought of as part of the total employee compensation package.
These are just a few of the additional components of an employee’s compensation package that are worth taking into account. Always create a complete list like this when explaining exactly what you provide to your new hires. Highlighting everything that you offer is an excellent recruitment tool. All business owners should make it a priority to do so.
Interested in other current employment trends? Click the link to view the recent blog: 10 Ways to Keep Employees Happy Without a Pay Raise or check back for more on human resources, payroll, insurance, and benefits.