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Need to Revise Your Method of Compensating Employees? Featured

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 Every business would love to hire the most qualified employees and retain those who are loyal and productive. This is often determined by many factors, one of them being the compensation packages in terms of money and incentives, and other benefits. Unfortunately, most small and mid-sized businesses lose top performers due to a lack of proper compensation schemes. They end up incurring costs of hiring and training new employees. However, the main risk is that relationships with customers and the morale of other employees can be damaged with regular change in people working and teams. Studies indicate that the most profitable organizations are the ones that have the highest rates of employee retention. Here are some compensation strategies that you should enforce in your organization to improve your retention rates:

  • Ready all the paperwork

Before everything else, collect all the paperwork of each employee and fill them out correctly. After correctly filling out forms that include IRS W-4 form for federal tax withholding, state form, USCIS form, and any other form needed, submit them. If you are paying your employees via direct deposit, you have to collect their banking information and pay on time.

  • Pay your employees their salaries and incentives

Organizations with high retention rates and productivity pay their employees a mix of salary and incentives. The salaries are the money paid to employees after completing specific tasks regularly, mainly at the end of every month. On the other hand, incentives are things that will motivate your employees to keep doing better. They can be in terms of commission in the case of salespeople. Unlike salaries which are consistent, incentives are not consistent and are mainly meant to motivate.

  • Determine the amount that your competitors pay

One way of attracting and retaining the most performing workers is by keeping them motivated through good pay. One way of achieving fairness in pay is understanding the pay of your competitors to ensure that you are not the only one paying low salaries and incentives.  This should be done regularly to identify the amount of salaries being paid by the competitors so that adjustments can be made accordingly. You can achieve this by asking employees in other companies their compensation plans or hiring a consulting firm with broad experience in this area the right compensation strategy that should be adopted.

  • Reward top performers using merit-based increases

In most instances, many companies often poorly allocate funds in their budget for annual merit increases. They do so by giving all the employees the same increases. On the contrary, companies need to prioritize the star employees and motivate top performers. The next group to be prioritized should be the satisfactory employees. Therefore, only the top performers or the star employees in your organizations should be the first to receive incentives. Modest increases should be awarded to satisfactory employees.  

  • Pay employee benefits

Employee benefits are crucial in every workplace. Depending on your company, employee benefits are the critical component that will improve your relationship with the employees and motivate them to perform better. As such, contribute to health insurance, retirement benefits, commuter benefits, and health savings. Taking this into account makes employees feel honored and taken care of by the company.

  • Offer employees non-financial rewards

Apart from cash, employees should be motivated by other forms of rewards and recognitions. For example, you may consider establishing an annual trip for your employees or setting up team-building events away from the workplace. Besides, train and develop your employees into close-knit teams ready to help one another and reward teams that perform better. Doing so is one of the critical ways of getting their support and motivating them to achieve better results.

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Scott Koegler

Scott Koegler is Executive Editor for PMG360. He is a technology writer and editor with 20+ years experience delivering high value content to readers and publishers. 

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