Designing Unbeatable Compensation Packages for New Employees

Want to win the War for Talent in 2022? Attractive compensation packages are key to attracting new employees. Read on to learn more about how to develop a strong compensation strategy that will help your company stand out in the candidate’s market of today.

 

 

What is A Compensation Package? 

 

The term “Compensation Package” refers to all of the monetary and non-monetary compensation that employers give to employees in exchange for performing their work. A Compensation Package brings together salary, benefits, cash and non-cash incentives, as well as perks and freebies. 

 

Why Are Compensation Packages Important? 

 

1. They Bolster Your Recruitment Efforts

According to a recent poll carried out by Berkley, 63% of respondents agreed that salary is the ultimate deal-breaker when it comes to job offers. This goes to show the critical importance of compensation in a company’s recruitment strategy. This is especially the case in today’s strong candidate market, where in-demand professionals can essentially name their price. Building an attractive compensation package that is in line with the current market will empower your organisation to win the war for talent against other employers. 

 

2. They Increase Retention & Lower Attrition

 

“Employees rated compensation as the second-most important aspect of job satisfaction in the Society for Human Resource Management’s 2016 Employee Job Satisfaction and Engagement Survey.“

 

Today’s professionals are significantly more mobile than previous generations and they often vote with their feet if they are dissatisfied with an employer. Research tells us that employee compensation is a major contributor to satisfaction levels and, this, in turn, can lead to improved productivity, morale and loyalty among staff all of which can help to greatly reduce an organisation’s churn rate. As such, taking the time to design attractive and futureproof compensation packages for employees can help to support staff retention and reduce attrition. 

 

3. They Offer an Opportunity to Put Company Values into Action

 

“A compensation philosophy is simply a formal statement documenting the company’s position about employee compensation. It explains the “why” behind employee pay and creates a framework for consistency. Employers use their compensation philosophy to attract, retain and motivate employees.” ~ SHRM

 

A well-thought-out compensation philosophy can support the promotion of certain core values within an organisation. Certain benefits (e.g. childcare, paid volunteer days, upskilling opportunities) that tie in with core values provide an opportunity to show employees that their employer cares about more than just the work. By implementing a compensation philosophy that works in tandem with your core values, you can build a strong Employer Brand Proposition that will ultimately help to attract new employees who share these values, leading to a more cohesive workforce.

 

Common Components of A Compensation Package

The elements that comprise Compensation Packages can be broken down and separated into two distinct categories: direct and indirect compensation.

 

Direct Compensation

Direct compensation describes a straightforward monetary reward given to employees. It can be broken down into two types – fixed rewards (e.g. base salary) and short-term and long-term incentives (e.g. commission, bonuses).

 

Examples of Direct Compensation

 

 

Indirect Compensation

Indirect compensation encompasses any perks and benefits that an employer offers to their employees. It consists of two categories – indirect financial compensation and non-financial compensation. One of the main purposes of indirect compensation is to highlight how much the organisation values its staff. 

 

Examples of Indirect Compensation 

 

 

How to Ensure You’re Offering a Competitive Compensation Package

 

“Supposing is good, but finding out is better.” ~ Mark Twain

 

In order to ensure that your organisation is offering fair and competitive compensation packages to new employees, you will need to regularly research the market. Stay up-to-date with employment trends and make sure your compensation strategy is in line with the latest market developments. 

 

Salary Guides are an excellent place to start. At Berkley, we create annual reports detailing the latest salary trends across the Business & Technology, Life Science & Engineering, and Supply Chain & Procurement sectors. In 2022, we launched our inaugural Contracting Rate Reports which detail daily and hourly rates for IT and Engineering Contractors in Ireland.  

 

You should also make a habit of conducting salary benchmarking exercises against your competitors. Don’t forget to include benefits and perks in your research. For a step-by-step guide on how to do this, check out our dedicated article, “What is Salary Benchmarking? A Guide for Employers in Ireland.”

 

If you need support, we highly recommend partnering with a Recruitment Consultancy that has specialist expertise in your area. An experienced consultant can advise you on the market and how to build a compensation package that appeals to today’s candidates.