Customizing Your Compensation Packages
If we were to do a survey of business owners across the country, the
popular belief would probably be that financial compensation is the
key motivator when it comes to worker morale and retention. However,
that belief is probably more myth than reality. Numerous studies have,
in fact, revealed that high wages fall only about midway on the top-ten
list.
The factors that actually affect employee morale the most are as follows:
- Full appreciation of work done
- Feelings of being in on things—in the communication loop
- Help on personal problems
- Job security
- High wages
- Interesting work
- Promotion in the company—associated with position or responsibility
- Personal loyalty of supervisor
- Good working conditions
- Tactful discipline
These factors have been found to be universally applicable regardless
of geography, business size or industry. For both employee retention
and recruitment, it is important for business owners and managers to
understand these factors and to know where each falls on the priority
scale. Psychologists tell us that we all strive to meet two basic human
needs: 1) to feel appreciated, and 2) to feel secure.
What does this all mean when it comes to customizing a compensation/
benefits package for your employees? Many small business owners think
their ability to provide such a package is very limited due to financial
constraints. Armed with the knowledge above, you may be able to create
a package that doesn't significantly undermine the bottom line of your
business, yet perhaps better meets the needs of your employees.
The key to all of this, however, is to ask your employees
what is important to them. Before you can create or improve your benefits
package, you must know your employees' needs. Perhaps a flexible work
schedule is more important to your employees than having a prescription
drug plan. They may favor quality of life benefits more than traditional
health, leave or financial benefits.
As food for thought, and perhaps as potential content for an employee
benefit survey, consider the following list of traditional and creative
benefits:
- Health (pretty traditional in nature)
- Medical
- Accidental death & disability
- Prescription drug
- Dental
- Vision
- Cafeteria plan
- Long-term care
- Short- and long-term disability
- Life
- Time Off (traditional, plus a few creative)
- Holiday
- Vacation
- Sick leave
- Personal leave
- Funeral leave
- Emergency time pools (employees can contribute vacation/sick leave
for the benefit of other employees)
- Financial (getting a little more creative)
- Yearly raises/bonus plans
- Retirement plans
- Stock options
- Employee discounts
- Education
- Retention rewards
- Generation X raises (raises that are fast and often, rather than annual)
- Fitness center discount
- Quality of Life (this is where creativity abounds)
- Tuition reimbursement
- Childcare
- Flu shots
- Community service opportunities
- Wellness facility
- Casual dress
- Counseling services (stress, grief, nutrition, career)
- Pets at work
- Housekeeping services
- Massage therapist
The key to all of this is to ask your employees what is important
to them, then engage in dialogue to determine what is feasible financially
and logistically.
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Authored by: Jackie Rasmussen, Business and Industry
Specialist, University of Missouri Extension
Source: Creating Quality Newsletter, Volume 11,
Number 5, May 2002
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