In a competitive job market, your company’s level of compensation transparency can have a dramatic impact on recruiting and retention.
Here are three strategies to help your company hire, attract, and develop top talent through the power of transparency. We’ll explore each one through the lens of tech solutions.Â
1. Make Data-driven Compensation Decisions
Imagine your company founder asks you this question: are our employees being paid a fair market rate? Would you answer with a yes, no, or somewhere in between?
It all depends on what kind of data you’re using to benchmark compensation. Historically, the way to obtain this data was captured manually or housed in different systems that didn’t talk to each other. Human resources teams were using old, stale comp surveys that only ran once or twice a year.
But if you want to increase your likelihood of fair pay in the future, show candidates and employees that you’re a company that advocates for true marketplace value. Investing in a comptech (compensation technology) solution is a great start. There are many solutions for every type of company, and to make an informed decision about the right one for you, here’s what to look for:
- Does this comptech advance traditional human resources tools and methods in the planning, communicating and benchmarking of employee compensation?
- Does this solution use real-time data to reduce manual effort, human error and salary inequities in organizations?
- Can your company use this tech to make salary, benefits, valuation, cap tables, stock options, and other elements of total rewards more accessible to human resources teams and the general public?
Now that you’re leveling up your HR tech stack, it’s time to build on that foundation to grow trust with candidates and employees.
2. Build Trust Earlier in the Hiring Process
Since working through the last three years of the pandemic, employees see fair, accurate comp planning as a desirable trait in companies.Â
If you’re trying to build trust with employees after they’re hired, it’s already too late. Trust should be built from day one of the candidate experience, from job postings to interviews. Too many recruiters or hiring managers lose out on top talent to the competition because candidates (and later employees) don’t understand the total value of their compensation package. Which means they don’t feel financially secure.Â
Smart people ops teams are helping their employees dream big about things like equity, benefits, and other aspects of total compensation with new comptech platforms. In a world where too many employees have no idea what “equity†even means, managers who communicate proactively and prolifically from the very start grow trust.
Ultimately, what you share with your employees is up to you. In fact, there’s very little that you are legally required to share. However, your choices will have an impact on how employees feel about the company and the level of trust they place in its leadership.Â
Especially when it comes to something as important to your employees as their compensation, why be opaque? Launching a compensation strategy can be overwhelming, but it’s a crucial part of ensuring your culture is intentional and rewards the behaviors you want to see.Â
The recommendations that you put forth are based on a matrix of performance scores, as well as where an employee is in their band. And then, promotions, ranges, and budgets are based on such calculations. Doesn’t that sound like a better system than what human resources did in the past? Dividing up equally based on headcount, total comp, and so on wasn’t an equitable approach.Â
Thankfully, now there are tools to help you build a comp strategy that preserves fairness. Comptech continues to receive recognition in top-tier media. In January of 2022, The New York City CouncilOpens a new window passed a new law that requires employers to post salary ranges in job ads. This bill makes it an unlawful discriminatory practice to not include in job listings the minimum and maximum salary offered for any position located within New York City. Other progressive states like Colorado and California are already leading the charge with similar legislation.Â
Once you’ve benchmarked your company’s compensation and begun using that data as a recruiting tool, the final step is closing the communication loop. That’s what keeps team members engaged for the long term.
See More: 3 Ways To Utilize Data Analytics To Improve Employee Benefits
3. Calculate Your Employee Benefits Creatively and Publicly
Compensation isn’t just about base salaries; total compensation includes salary, equity, and benefits. You should design your benefits package that supports your employee’s development and wellness at and outside of work. And if you’ve implemented a comptech solution, there are likely several customizable portals to help communicate these numbers.
Start by surveying your current employees. What do they like? What might they not care for?
Understanding the demographics of your employee base can also help you decide what’s worth investing in. For example:
- If most of your employees are parents, you might consider a childcare benefit.
- If most of your employees work from home, you might entertain the possibility of reimbursing your employees for their internet costs or offering a home office stipend.
- If your core values include work-life balance, offer employees a monthly house cleaning service to uphold its commitment to saving their time and striking a better work-life balance.
Another benefit that requires prolific communication and creativity is equity. Stock options are confusing, which is why many employees view benefits like equity as monopoly money.Â
Pave works with numerous startups of varying sizes, from fifty employees to five thousand employees, and one comment we frequently hear from our customers is:Â
“Our new hires don’t actually know what equity means!â€Â
If your human resources team is getting flooded with questions about all things equity from confused employees, you’re not alone. It’s more common than you think. And in all fairness to HR teams, understanding one hundred percent of the nuanced details of their stock options is complex and overwhelming. It can get buried under the pile of onboarding and training tasks new employees are working through in their first few months working for you.Â
The good news is that knowing that you have an education gap when it comes to equity is the best starting point. Now you can close that gap through your data-driven, transparent messaging to help employees dream big about their future as the company scales.
Here’s one last recommendation for driving retention through transparency around nonmonetary benefits. Outside of medical or retirement benefits, there are so many more benefits that should be communicated to stand out and remind employees how well they’re being cared for:
Commuter benefits, remote work stipends, health and wellness classes, and other perks are assets that employees value and need to be quantified.Â
Lunch, for example, can cost the average employee from one to two thousand dollars a year. What about the opportunity cost of having more flexibility in commuting? Why not emphasize the amazing managers the company has that make your life less stressful? The money, energy and time savings benefit value is priceless. Companies that aren’t communicating these value propositions through their HR tech stack creatively and publicly are risking higher churn.Â
Ultimately, if your company makes data-driven comp decisions, builds trust earlier in the hiring process, and calculates and communicates benefits creatively, there’s no reason transparency can’t become your best employee retention policy.
How are you using compensation transparency to hire and retain valuable talent? Let us know on FacebookOpens a new window , TwitterOpens a new window , and LinkedInOpens a new window .