Compensation is a Reflection of your Organization

Many times, when people consider compensation, they think hourly wages or salary. Money is an important part of compensation, but it is not the only measure of performance and experience, nor should it be the only reward. I specifically mention performance and experience because these are two important factors in determining compensation (and rewards!) for employees at any level in your organization.

Benefits of employment are provided to most employees, especially if they are full-time, but the law does not require employee benefits. This is something of an eye opener when considering and designing your own benefits package because you don’t have to provide what everyone else is providing – you can increase or decrease your benefits package as needed for your budget, or you can offer different types of benefits that better serve your employees.

The reason you create a benefits package in addition to money, thus creating your compensation package, is because you want to send the message you value employees and reward them for their performance and contributions by providing more than cash.

However, what tends to get overlooked once the employee is hired is that compensation across your employees may not be consistent. This became strongly apparent during the Great Resignation when higher than normal salaries were offered just to get someone to take the job. Competition for employees was intense so employers felt they needed to increase salary offers significantly to get the attention of potential employees.

Unfortunately, this meant that people already employed at similar levels were still making the same lower salary because organizations scrambled to fill positions without reviewing the pay scale for current employees. It’s easy to overlook the need to adjust your pay scales for everyone when you are in the midst of a crisis situation. But compensation is not just about money, and it’s not just about benefits. It is a reflection of what type of organization you are.   

What of the loyal employees who stuck with you that are making much less than the new employees? Is it their problem or yours that there is now a sudden and cavernous pay equity in your organization?

As time goes on, it is human nature to neglect systems that are in place and seem to be working. Why mess with success? Why fix it if it isn’t broken? To that I say: then why do you get a tune up on your car? It’s working right? It’s not broken. It still runs. But it could run better after being driven for many miles, so you get that tune up.

The same thing goes for your employee compensation system. It may be working, and it may not seem broken, but is it working at its highest level? Is it serving your organization and your employees in the best way possible? Is it up to date and providing fair and equitable treatment for everyone?

Compensation is about a lot more than money. It’s about doing what’s right and reflecting the type of organization you want to be.

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