There is a lot of expert information out there talking about how engaging with employees and making them feel valued increases retention rates. Engagement and feeling valued certainly are important, but the number one reason people look for new jobs is still compensation related. This should tell company management something very important: they need to take a big picture view of compensation.
A 2017 study conducted by IBM shows that 75% of American workers who leave their jobs do so for better pay. When you break it down into separate demographics, here is what it looks like:
- Millennials looking for better pay – 77%
- Generation Xers looking for better pay – 78%
- Baby Boomers looking for better pay – 70%.
As a specialist in payroll and benefits ministration, we have seen these statistics borne out in far too many cases. Companies can engage their employees and work extra hard at making them feel valued, but those employees ultimately come to work because they have to pay the bills. If the pay is not there, they are going to look elsewhere.
More Than Just Weekly Pay
Raw numbers aside, what does it actually mean to look at employee compensation with a big picture view? It means to understand the compensation is more than just weekly take-home pay. That weekly pay is extremely important, especially because it makes up the bulk of an employee's compensation, but there are other ways to compensate.
Other forms of employee compensation include:
- overtime pay
- bonuses and incentive pay
- commission pay
- paid time off
- health insurance (also dental and vision)
- retirement plans (401(k) plans, pensions, etc.).
Each of these forms of compensation is governed by federal and state tax laws. For example, employers still contribute payroll taxes on overtime pay. That pay is subject to income tax as well. There are also FLSA regulations to consider. For instance, employers are required to pay time-and-a-half on all hours worked in excess of 40 in a given week, for nonexempt employees.
The big picture view also dictates that companies look beyond take-home pay as a way to incentivize employees to stay. Your company could offer a 401(k) plan, for example. Retirement plans are very good incentives because they offer employees tangible benefits that go above and beyond the weekly paycheck.
Compensation Equals Value to Employees
Take-home pay is critical to employee retention. But beyond that, additional forms of compensation can also increase retention rates. Remember the idea of engaging employees and making them feel valued? Well, guess what? Good compensation equals value to a lot of workers.
If your company is willing to offer employees a 401(k) plan along with decent health insurance that includes dental and vision, employees are much more likely to feel valued than they would if they only received their regular hourly wage. Extra benefits demonstrate to employees that their employers are willing to invest in them. That makes them feel valued.
Paid time off is another big one. Allowing employees, a certain number of paid vacation days, sick days, and personal days shows them that you see them as more than just human resources; you see them as people with real lives outside of work. This also makes them feel valued.
There is not much BenefitMall can do to help you figure out how to compensate your employees effectively. But if you do need help administering your benefits program, we might be able to assist. We can definitely offer you cost-effective payroll processing services at the very least. Are you interested in talking about it?