Many factors to balance in employee compensation More than money

The 2011 employee satisfaction survey conducted by the Society for Human Resource Management (SHRM) in the United States found that only 54 per cent of employees were concerned about their compensation. Although I haven't seen a 2012 survey, I am predicting this number will rise.

Why? As of January, several source deductions from employees' paycheques have increased, which means less money in employee pockets. At the same time, however, many of our citizens will benefit from increases in benefits.

As well, I am certain that employers have also been experiencing concerns about their total compensation practices. While wage growth has been kept in line, health-care benefit costs are increasing and they may feel there isn't much room to bargain any salary increases. Of course, this downward pressure puts strain on employee/employer relations and results in threats of strike such as with Air Canada flight attendants and/or outright strikes such as with the postal workers in 2011.

Most employers don't wish their compensation issues to get to the point of strike. Yet, what signs can you pay attention to that will suggest employee dissatisfaction regarding compensation exists? If you are experiencing any of the following four key issues, then it's time to take action:

-- Employees at all levels are leaving your organization for better paying jobs.

-- It is becoming increasingly difficult to attract new employees, and the reason is always related to compensation.

-- Employees are raising a number of complaints, especially as it relates to equity in the marketplace and/or among fellow employees.

-- Employee morale is visibly slipping and this causes poor productivity, interpersonal conflicts and general disgruntlement.

What can be done to ease the issue of employee compensation? The following strategies will serve to help increase employee satisfaction and eliminate many of your issues.

Clear up the inequities -- First and foremost, it's important to ensure compensation equity within an organization. This is accomplished through a process called job evaluation. Job evaluation enables an organization to value each job against 11 different factors such as education and experience, level of problem solving, level and scope of communication, independence of decision making, and supervisory and financial responsibilities.

Ensure effective job classification -- Job classification or job "families" are one of the results of the job-evaluation process and provides a framework and structure that helps to explain the different levels of responsibilities found in jobs. Employees can see that high graded jobs require a higher level of duties and responsibilities, education and experience. Explaining how the job classification works creates a sense of "fair felt pay" among employees and reduces dissatisfaction.

Conduct a market survey -- While there are many published salary surveys that include multiple job titles, in many cases there aren't enough cohorts to accurately measure the jobs you are seeking. In this case, a special market survey conducted in your industry sector would be of value.

Establish accurate wage scales -- Wage scales must reflect the value of the work performed for your organization. Utilize the job evaluation process to measure value and determine the wage scale based on responsibilities and position requirements. Be sure the wages set will attract and motivate your employees.

Communicate, communicate, communicate -- Employees want to know how their pay is determined. They want to know when and how they will be eligible for a raise. They want to know what pay grades their job falls in and what needs to be done to move into other levels. Quite often organizations maintain secrecy around the issue of compensation and to do so creates the risk that information is spread through the rumour mill. Practise explaining at least one compensation and benefit element in each of your employee newsletter editions.

Create employee understanding -- Employees need to know that salary is only one part of their total compensation. Share your pay philosophy with employees and help them to understand where you are coming from. Help them to understand all of the elements of compensation and how benefits fit in with the total compensation strategy.

Ensure legislative compliance -- There is nothing more upsetting than perceived inequities in the workplace, especially when it comes to compensation. Be sure your organization is compliant with local legislation such as minimum wage and vacation time. The area of overtime and flextime can be particularly problematic as many organizations operate on an informal basis that causes difficulty in tracking. Informality leads to confusion and inequity and violates local legislation.

Regularly review the benefits package -- The world of benefits is changing quickly and new needs and challenges are continually occurring. This brings new opportunities and new trends such as "menu" planning where individual employees can select the benefits they require. This provides choice for employees and serves to increase independent decision making and job satisfaction.

Focus on a healthy workplace -- While compensation makes up a great deal of an individual's dissatisfaction, other work-related strategies can help to overcome this. Over the past several years, organizations have found that focusing on creating a healthy workplace has paid off. This includes offering health assessments, flu shots and other employee assistance with their health and wellness requirements. As well, employers who care are also focusing on early return to work and disability management.

Create a strong reward and recognition program -- Employee reward and recognition programs are another way to increase employee satisfaction. These programs can contain "at risk" financial rewards such as bonuses and profit sharing. Others offer non-cash awards such as gift certificates, thank-you cards, nominations to employee of the month and/or celebratory lunches and news articles.

Employee dissatisfaction with their personal compensation is usually more than just about money; it's about a combination of "satisfiers" found in the workplace that help individuals gain a sense of "fair felt pay." When attempting to rectify a situation where dissatisfaction exists, all of these elements must be considered and incorporated into a comprehensive compensation, reward and recognition program.

However, one key piece of advice to employers is to act quickly once dissatisfaction about compensation arises. Allowing dissatisfaction to fester only spreads to more employees, which will result in turnover, low morale and poor quality work.

Source: Employee Job Satisfaction: The external forces influencing employee attitudes, SHRM, Issue #4

Barbara J. Bowes, FCHRP, CMC, CCP, is president of Legacy Bowes Group and vice-president of Waterhouse Executive Search. She can be reached at barb@legacybowes.com

Republished from the Winnipeg Free Press print edition January 21, 2012 H2