I am Preeta Saxena, Human Resources Director, Teachmint writing about retention and benefits strategy for Champions of HR by Pazcare. I am a seasoned HR professional with experience in both start-ups and established organizations across industries. An avid reader who enjoys traveling and interacting with people.
Compensation and benefits is a strong strategic talent optimization tool and help companies to be proactive in managing market forces in the war of talent.
When compensation is managed carefully, it aligns people’s behavior with the company’s strategy and generates better performance. Hence, it is imperative for companies to design a clear comp and ben strategy by understanding the basic elements of compensation and then linking it to the desired outcomes. There are complex nuances to setting compensation strategy like thorough understanding of your market, expectations of your people, company growth stage, profits and revenues of the company, and many more.
In short, a good compensation and benefits strategy should be tailored to suit both—the type of business and the stage of growth of your company.
Different companies have different ways of calculating CTC for their targeted talent pool. The basic fact is that good compensation can ensure a talent walks into the room but the question is, will the talent stay in the room? The answer demands a bigger analysis. This is influenced by multiple factors like work culture, onboarding process, sense of belonging in the company, upskilling employees and L&D programs, and of course compensation and benefits. Compensation and benefits have a great influence on employee experience. And employee experience is tied to employee engagement, talent acquisition, retention, growth, employer branding, social branding and many more. This ultimately puts focus on laying a strong compensation and benefits foundation.
Designing the right-fit compensation strategy
The first step to designing the strategy starts with identifying all the elements of the role and then tying those elements to performance. This enables one to communicate clear expectations with the candidates. Candidates, today don’t join just for the compensation so a strong comp strategy allows you to be clear on your value offering.
When you devise the strategy for a person or a role there are a lot of factors to consider. To point a few,
- What are the goals expected to achieve?
- Are the goals short-term or long-term?
- Is the role more into strategy or execution?
- What will be the level of growth?
The common factors all HR professionals should take into consideration are
- Is it fixed versus variable?
- Is it short-term versus long-term?
- Is it individual versus team?
- Or is it cash versus equity?
Now, these are too many parameters, right? But you have to put them in a matrix and then you come up with the right fit compensation design absolutely tailored to suit the company’s overall goals. Having a clear-cut comp strategy also makes it easier for prospective hires/current employees to understand the expected deliverables. You can clearly tell your employees that you need to achieve X to get Y and after achieving Z to be eligible for YZ. When your communication is this clear, even when, what you're offering is not that much that the prospective hires/current employees were expecting, they’ll understand the bigger picture you have for them. Comp strategy and communication need to go hand in hand for the success of the strategy.
A good comp strategy needs to work parallelly with a robust performance management system. Workplaces that keep measuring what matters and keep realigning themselves, are the ones that thrive!
HR professionals have an important role here in ensuring the adoption of OKRs and alignment of personal and professional goals to come up with interventions best suited to their unique workforce.
Personally, I would give equal weightage to all three –Comp Strategy, Communication, and performance management system to build a thriving work culture.
Fitting benefits into your comp strategy
Today, offering employee benefits isn’t enough. We have to personalize and be inclusive about it. I would suggest having buckets of benefits that contain diverse things like performance shares, ESOP, restricted shares, benefits related to mentoring, training, work flexibility, fitness allowance, group health insurance, group term life insurance, etc.
Every employee has different needs. For example, an employee with some personal problems may not be keen on growth. He/she will be interested in having the flexibility to survive and achieve results. So it's extremely important that you have their personal and professional goals aligned. You understand your employees, not as employees, but as your own people. Employees should be able to choose benefits from these buckets as per their requirements. They shouldn’t feel as if it is being thrown at them but they should feel involved in the process.
Another important benefit is the opportunity to expand and enrich one’s network by signing up for the workplace – this benefit remains underrated during most hiring conversations and if you have a workplace culture that makes you feel proud then it needs to be flaunted as well! At Teachmint, we take immense pride in calling ourselves Teachmates and the culture we have created together as one team, and needless to add that we flaunt it at every given opportunity!