Companies depend on their compensation and benefits package to attract talent. If you offer too little beyond a standard benefits package, you’re making it easy for your competition to lure your best workers away from you. On the other hand, if you offer benefits that no one really wants or cares about, you’re wasting money. You need to get it just right, and a compensation and benefits review can help. Here’s how to conduct a review of your compensation and benefits package.
The Talent War Is Heating Up
A good compensation and benefits package is always important, but the Great Resignation is making it more critical than ever.
The U.S. Bureau of Labor Statistics (BLS) says that 4.3 million people quit in August 2021. The quit rate was 2.9 percent. It was a record at the time, but it didn’t take long for it to be broken. BLS says that 4.4 million people quit in September 2021. That’s a new historic high, and it put the private industry quit rate at 3.4 percent. Some industries are seeing even more people quit. In the leisure, hospitality, accommodation and food services industries, the quit rate reached 6.6 percent.
The result is a labor shortage that’s putting the squeeze on businesses. CNBC says that there are more than 10 million open jobs in the U.S., a record, and nearly one-third of small business owners say they have had open positions that they’ve been unable to fill for at least three months. Business Insider says that small businesses are being forced to turn down business, and their revenues are dropping as a result.
Employee Benefit Needs Have Changed
A compensation and benefits package that worked a decade ago might not cut it today. Employee needs have changed, and benefits need to keep up.
Stress, burnout and mental health issues are on the minds of many workers. Indeed says that 52 percent of the employees surveyed report feeling burned out, and 67 percent says burnout has worsened over the course of the pandemic.
Work-life balance has also become a key issue, especially for many of the working parents who have had to juggle caregiving responsibilities with job responsibilities. A Bankrate survey found that 55 percent of Americans in the workforce expect to look for a new job in the next year, and 56 percent are prioritizing flexible work arrangements. In comparison, only 53 percent are prioritizing higher pay.
But money is also important. CNBC says that 88 percent of Americans are worried about high inflation rates. Many Americans are planning to buy less. The study also found that 13 percent plan to drive less, a notable finding in light of the push for remote work arrangements to continue post-pandemic.
Better Compensation and Benefits Could Convince Employees to Stay
Employees have many reasons for quitting, but benefits and compensation could address many of the factors driving workers away from jobs.
There have been widespread reports of employers offering expanded benefits and higher wages in an attempt to attract more workers. In one example, CNBC says that Macy’s is raising its minimum wage to $15 per hour and adding an education program that covers 100 percent of tuition, books and fees. NPR says that Starbucks is also raising its starting pay to $15, and Costco is offering a starting wage of $17.
There is evidence to support the idea that better pay and benefits could convince workers to stay, especially if the benefits are the ones employees truly want right now.
Flexibility and remote work arrangements are prime examples. Fortune says that 27 percent of U.S. workers say they would look for another job if their boss ordered them to return to the office, and another 18 percent of workers aren’t sure whether they would quit.
Mental health benefits are another attractive option. According to Healthcare Finance, one survey found that 79 percent of non-managers and 81 percent of managers say they are more likely to stay at a company that provides high-quality resources to support mental health, while 19 percent of non-managers and 36 percent of managers say that they are currently considering leaving because their employer provides poor mental health support.
Conduct Your Compensation Benefits Review
To stay competitive in the talent war, employers may need to conduct a compensation and benefits review.
You will need to gather information on the employee benefits and salary you’re currently offering. Key elements to consider include the following:
- Salary, wages, bonuses and commissions
- Health insurance
- Retirement plans
- Other insurance types/voluntary insurance (vision insurance, dental insurance, critical illness insurance, long-term care insurance, life insurance, disability insurance, pet insurance, etc.)
- Mental health support
- Tuition and student loan support
- Financial wellness
- Childcare benefits
- Flexible hours and remote work arrangements
- Paid time off (vacation, sick, personal, parental leave, etc.)
Then you will need to assess your current compensation in terms of what your employees need and what compensation is available elsewhere. As you review your compensation and benefits, consider the following questions:
- How do your offerings stack up? Consider what you offer compared to other companies in your industry and other businesses of the same size.
- Are you keeping up with benefit trends? While you don’t necessarily need to hop on every trend, if a new benefit is becoming popular, there’s probably a reason for it. Pet insurance, student loan repayment programs and financial wellness are all relevant examples.
- Are any benefits being underutilized? If so, is the problem that employees don’t know about the benefits, or that they don’t want them?
- Do employees have needs that are going unmet? Look at problems that your workforce faces and determine which benefits could help.
Finally, you will need to decide what changes, if any, should be made. When deciding between options, determine which changes would provide the greatest value to both your employees and your company.
Do you need help with your employee compensation and benefits package?
There’s a lot to consider when you conduct a compensation and benefits review. If you need help with your employee benefits, we’re here to help.
