Five Innovative Ways to Increase Employee Compensation Without Breaking the Bank
Do your compensation plans attract and retain skilled, loyal employees? Look beyond conventional approaches and implement wage strategies that incentivize your workforce and protect your bottom line. Here’s a few innovative ways to increase employee compensation while ensuring your company remains financially healthy and attractive.
Employee Compensation via Performance-Based Bonuses
Variable Pay is Not Just for the Sales Team Anymore!
Performance-based bonuses are a dynamic way to reward any employee for meeting or exceeding specific, measurable targets. A recent survey by WorldatWork found that 88% of companies use some form of variable pay. By tying bonuses to project milestones or goals, employees feel directly connected to the company’s success, driving efficiency and achievement.
Employee Compensation via Profit-Sharing
Sharing Success Builds Alignment
Programs where employees receive a portion of the company’s profits enhance a sense of employee ownership and align the efforts of employees with the company’s overall success. This strategy requires careful and consistent communication about company values, goals and performance, but when done correctly, it can create an organization where everyone works toward the bottom line. Besides driving out waste and enhancing profits, a profit-sharing plan can improve company culture and morale…when the company is profitable!
Employee Compensation via Ownership
Investing in the Future Together
Granting stock options or equity to employees, particularly key performers, can significantly boost employee commitment to the company’s long-term success. Deloitte research indicates that companies with Employee Stock Ownership Plans (ESOPs) see higher productivity growth, proving that when employees have a stake in the company’s future, they’re more likely to contribute to its development.
ESOPs, however, are expensive and complicated. They are not recommended for companies with fewer than 100 employees. And stock grants sound like a good idea, but many employees simply do not want to hold real equity and have the (perceived or real) liabilities that come along with that.
So look broadly at new equity-like options, including Co-Ops and Employee Ownership Trusts. There are exciting new things happening with employee ownership, and the research suggests that it is one of the strongest ways to build a sustainable culture in the company.
Employee Compensation via Flexible Work Arrangements
Flexible Hours and Location are a Popular Benefit
Offering hybrid and remote work options can increase employee satisfaction. Workplace flexibility recognizes your employees’ diverse (and modern) needs and can reduce overhead costs, making it a win-win for your employees and the company.
And these days, it’s not just where they work, but also when. Many employees report that they would rather have more time off than a pay raise. Consider going to a 35 hour work week, or a 4-days schedule to give everyone more time for their lives outside of work. This will heighten employee morale, making the time they are working more productive and profitable.
Employee Assistance Programs (EAPs)
Support Beyond the Workplace: EAPs that offer mental and physical health resources, financial counseling, and other personalized support underscore your commitment to your employees’ overall well-being. A well-curated and high quality EAP offering reinforces a caring workplace atmosphere and can enhance loyalty and productivity.
The Road Ahead
Adopting innovative compensation strategies is vital to attracting, motivating, and retaining top talent. By embracing a holistic approach that offers financial and non-financial incentives, your company can develop a rewarding and productive work environment. What do your employees need? Strategies from performance bonuses to flexible work arrangements and wellness programs can help build a culture of appreciation, loyalty, and shared success.
Need more ideas about how to roll out compensation plans that make sense for both the employees AND your company? Schedule your free business analysis with us for more insights and personalized strategies to enhance your company’s financial and operational success.
