In a competitive hiring landscape, it’s important to think about what will attract employees and inspire their loyalty. These days, employees expect to be compensated well. In fact, Pew Research found that 63% of those who left their jobs in 2021 did so because of low pay.
However, employees also care about their total rewards, which refers to all the tangible and intangible benefits received in exchange for their work. When it comes to Gen Z graduates, 65% see retirement benefits as essential, 87% care about learning and development incentives, and 89% deeply desire flexible work options.
This highlights the importance of balancing traditional and creative compensation methods to attract and retain top-notch talent. If you’re looking for a way to achieve this goal, consider how surveying employees, budgeting thoughtfully, balancing short and long-term rewards, and offering holiday bonuses, for example, can help get you there.
Types of Compensation Included in Total Rewards
Total rewards include many different types of compensation:
- Base Salary: The fixed amount an employee is paid for their work
- Bonuses and Incentives: What an employee receives for performance and longevity, including performance, retention, and holiday bonuses
- Equity Compensation: Rewards that align employee interests with company goals, such as stock options and profit-sharing plans
- Non-Monetary Rewards: Rewards that help employees achieve work-life balance, like extra PTO, flexible work arrangements, and wellness benefits
- Healthcare: Health benefits for regular care, vision, and dental for the employee and/or their spouse and dependents
- Retirement: Contributions to 401(k) accounts
It’s important to realize that all of these ways to compensate your employees can accomplish the same goals: paying employees fairly and ensuring they feel supported in their personal and professional lives.
Strategic Tips for Determining and Delivering Your Total Rewards Package
Figuring out what to include and how to structure a total rewards package can be daunting. Here are a few tips to help you consider the important aspects of your plan and deliver something your employees will respond well to.
Understanding Employee Preferences
Your total rewards package must be aligned with employee preferences to positively impact employee morale and engagement. Consider distributing surveys to your employees to see how they feel about their current compensation and what benefits they would like to have. Keep in mind, when conducting a survey, the importance of following up with employees on their feedback, even if you do not elect to offer all of their requests.
Budgeting Thoughtfully for Employee Bonuses
Before you promise any bonuses, you’ll need to ensure that there’s room in the budget for them. Consider tying bonuses to company and individual performance. To help employees stay engaged and understand how their work connects to the greater mission, you may want to give each of them individual goals and metrics, as well as provide transparent company results.
Balancing Short-Term Rewards With Long-Term Incentives
To successfully raise morale and motivation, employees need timely rewards like spot bonuses, public praise, gift cards, and company swag.
However, you can balance this with longer-term rewards for loyalty, such as stock options and profit sharing. This way, employees are rewarded in the near term but encouraged to stick around to see their compensation grow.
Considering Holiday Bonuses for Employee Performance
Holiday bonuses are a great way to help employees beat end-of-year burnout. Consider offering a profit-sharing bonus to celebrate the company’s growth and let employees feel the positive effects of their productivity and engagement.
Employees may also enjoy unique gifts as a holiday bonus, which can include anything from a gift card to a nice restaurant to tickets to sports games or performances. You may want to consider providing a budget to your managers so that each gift is tailored to the individual employee based on what the manager knows about them.
Starbucks: A Successful Compensation Program in Action
Over the years, Starbucks has invested over $1 billion in creating a fantastic employee experience through total rewards.
In addition to raising the wage floor to $15 per hour and offering up to 5% in incremental wage increases for tenured employees, the company is offering paid time off accrual for hourly employees starting 90 days into their employment.
Additionally, the company has pledged to offer credential and certification programs alongside its Starbucks College Achievement Plan. Employees can receive up to 100% tuition coverage for a degree program of their choice through Arizona State University’s online program.
This is all in addition to Starbucks’ Bean Stock grants, which give equity ownership benefits to employees, and employee-centric scheduling that helps ensure employees can get convenient shifts.
The result is that, in a recent benefits index study by Aon, Starbucks was deemed to have more valuable benefits for hourly retail employees than any of the 50 companies participating in the study, some of which are Fortune 500 and 200 organizations.
As a result, Starbucks maintained a turnover rate of just 65% in 2022, significantly lower than the industry average. Additionally, the company was able to hire more than 160,000 employees, ensuring that all stores were well-staffed.
A Competitive Compensation Strategy Is Key to Business Growth and Compliance
Many aspects of your business depend on compensation, including employee productivity, engagement, and turnover, all of which can affect business growth. The ways you compensate your employees can also affect your ability to remain in compliance with labor laws, including minimum wage, overtime, paid time off, and anti-discrimination laws.
Fortunately, VirgilHR not only helps you keep track of rapid changes in the legal landscape, but it can also ensure that your policies are compliant with the laws that apply to your business, even if you operate in multiple jurisdictions. If you’re ready to save time and frustration, schedule a demo today to see how VirgilHR’s automated solution can help you reach your workforce management goals while reducing your compliance risk.
