By Sonia Chinnaiyah
Nowadays, many companies are struggling to retain their valued employees and one of the paramount reasons could be due to poor rewarding strategies. Most of the rewarding strategies adopted by such companies are either obsolete, ad-hoc, or based on bias factors, which neglects to recognise those who are truly committed and perform for the betterment of the organisation.
Consequently, it would be obvious that companies would bleed talent due to such anomalies in reward strategies that are not linked to performance and not in line with the market. According to Frederick Herzberg’s ‘Two-Factor Theory’ on motivation, salary is one of the hygiene factors (i.e., factors that cause dissatisfaction at work).
Herzberg argued that although such hygiene factors do not motivate staff, when they are inadequate it could cause serious negative dissatisfaction to employees. Moreover, salary is also identified as one of the factors that build a positive ‘employer brand’ to attract and retain good talent. In this backdrop, it is important for employers to realise that companies that are not up-to-date regarding the compensation strategy offered by the market will find it difficult to set the right tone to attract and retain talented staff.
It is similar to expecting a child to grow without addressing the basic necessities of life like food, shelter and clothing, which would be a paradox. Thus, it makes good business sense for employers to be aware of the prevailing compensation strategy of the market.
Compensation surveys can be useful in tremendous ways to address the above issue to employers who are struggling in the above scenario. Salary surveys will assist employers to be well updated regarding the prevailing market rate offered for similar jobs by their competitors. This will empower employers to formulate their reward strategy on par with the market and also to be confident while negotiating payments with their employees especially, their prospective employees.
However, care should be taken when choosing the right salary survey. The ‘Internet Era’ has made it easy where we can get the details at the click of a button by simply ‘Googling’ the required details. Although there are many published salary surveys floating in the market, one should take careful consideration regarding the authenticity and credibility of the report.
Any ‘Tom, Dick and Harry’ can produce a comprehensive salary survey that may be outdated or based on unreliable sources yet; such surveys could grab the attention of the readers as it could be presented in a manner that will not let the readers aware of such misleading information in the report (e.g., usage of colourful graphs and statistics etc.).
Thus, organisations should be strategic when choosing the right salary surveys from various sources. It is advisable to check the background of the key players who conducts the survey and their level of understanding on human resources management (HRM) to compare ‘apples-to-apples’.
According to salary.com poll, more than 80% of business managers and HR professionals said that their companies either participate or purchase at least one salary survey each year. Companies are willing to pay more for reliable third parties who have the capability to produce authentic surveys, which such companies would find it hard to source by their own effort.
Coke will never disclose their compensation strategy secrets to Pepsi. However, a credible HR consultant will possess the secret ‘know-how’ to source such sensitive data in an ethical manner for the betterment of uplifting the industry standards and for learning from best practices.
The cost of compensation surveys depends on the nature of the survey and the requirements of the end users (e.g.: number of jobs and companies surveyed, geographic locations covered – regional vs. local and other factors.). Yet, for most of the companies, usually the benefit of engaging in a salary survey exceeds the cost for most of the companies. Further, total cost for such compensation surveys would just be a fraction of the total payroll cost.
Moreover, according to recent researches, employee turnover at senior levels is very expensive and stressful to companies so, companies can also save huge employee turnover cost when they are rewarded according to the market rates, as employees will be motivated to be committed to their organisations. Therefore, compensation surveys can make good business sense to companies as it can save huge cost on employee turnover and will ensure their valuable employees are retained and motivated.
(The writer is an Associate HR Consultant at HR Cornucopia)