After your customers, your employees are the life blood of your business. Maintaining good morale and loyalty is essential to retaining them – and avoiding the costs associated with replacing employees who leave.
Perhaps your employees have been asking for raises, claiming they are underpaid. How do you know they're not right? You sense your employees are lookingat the job market, seeking new positions. How do you encourage them to stay? You've heard your competitors are providing their employees with incentive plans. Should you, as well?
Do you know what other businesses in your sector pay their employees? Can you afford to match them? Should you? Is it necessary to close the gap if your compensation is lagging or are there other ways of providing your employees with added value to keep them happy?
These questions can be answered by working with an experienced compensation consultant who can provide you with the expertise to sift through the haze surrounding employee compensation and create a plan for improving employee morale, recruitment, and retention.
How compensation consultants can help your middle market company
A compensation consultant will start by interviewing your employees and consulting information resources, such as compensation surveys. Also called salary surveys, these tools are used to gather pay data from numerous businesses in similar sectors to document salaries and bonuses for specific positions. When used appropriately, surveys can help businesses determine if they are paying employees at, above, or below market rates. With survey and interview results in hand, your compensation consultant can help you establish new compensation policies that place your company on better footing.
The compensation expert can also help you tie the new compensation plan into your business strategy, which can help you maximize your growth potential.
Attracting and retaining qualified employees
McDermott Associates recently worked with a manufacturing company’s senior management who were concerned about their frontline hourly workers. Hiring rates and methods of determining raises for these employees had not changed in 15 years, and company leaders suspected they were not attracting and retaining qualified people for those jobs. They also wanted to determine how a performance-based compensation plan could be implemented; and reward employees for skills and performance.
Our assessment started with in-depth management interviews. From these, we developed a picture of existing compensation practices and why there was inertia around updating roles and responsibilities for manufacturing line positions.
We also analyzing wage levels within the broader industry and the company’s specific industry segment as well as wage practices among the various operating units.
Surprisingly, though management had initially expressed a desire to change, they pushed back when we challenged existing assumptions and pay practices. We cleared this hurdle by relating everything – including employee compensation – back to their business plan. While management always had a business plan, prior to our work they had not seen the importance of relating their compensation practices and procedures back to it.
Senior leadership came to see the importance of tying compensation practices and a performance management program to the business plan. We helped them implement a comprehensive communications program to explain the rationale of the new program to supervisors and frontline workers. As a result, pay levels were raised for selected employees based upon performance, and the company became better positioned to attract and retain the qualified employees it needed to grow.
Get your compensation program on track
If our manufacturing client sounds a lot like your company, then we should talk. Schedule your complimentary initial consultation by contacting Don McDermott at email@example.com or 732.842.8634.
If executive pay is of particular concern, learn more about our Middle Market Executive Compensation Survey for Private Companies.