Recruiting and retaining top talent is one of the biggest challenges for every business, no matter its size. For many organizations, financial compensation is a key differentiator when it comes to hiring great people. While some may interpret this as a case of “bigger is always better,” small- and medium-sized businesses can compete with large corporations when it comes to attracting talent, by offering programs that provide financial benefits in addition to base salaries.
Today’s job seekers are often advised to consider the total compensation package of any potential employer. More often, this now includes a mix of other highly sought-after financial benefits, such as employer-sponsored retirement plans, group health benefits and an annual or performance-based bonus.
Employer-Sponsored Retirement Plans
We are warned almost daily with alarms bells alerting us of the urgent need to start planning and saving now! Images of exciting post-retirement travel and new hobbies are intended to spur us to action on our “fear of missing out,” by reaching out to our friendly financial services institution to see how they can make it happen for us.
So, how can employers help their workers move closer to a more comfortable retirement?
The most common offering from employers is the registered pension plan, where salary deductions are made during employment in order to receive regular payments throughout retirement. Other attractive options for small- and medium-sized businesses are group registered retirement savings plans (Group RRSPs), where employers and employees contribute to a pooled RRSP, or deferred profit-sharing plans (DPSPs), where employees are offered financial rewards based on the employer’s year-end profit.
Group Health Benefits
Group benefits are linked to improved employee recruitment and retention. According to (reference source), almost half of small- and medium-sized businesses in Canada offer some type of benefits plan, and companies without a benefits program say recruitment and retention are their top motivators for starting one. Benefits plans are not out of reach of small- and medium-sized organizations, as they can be tailored to suit business needs and budgets. We will talk about this in greater detail in a future blog.
Annual or Performance-Based Bonus
Bonuses are a common part of employees’ compensation, and can be tied to attaining specific goals, team performance, achieving profitability targets or simply as a way to say thank you. No matter how the bonus is designed, it’s critical that, to be effective, employees must clearly understand what they need to do to qualify for the bonus.
While it may not always be possible to offer a salary increase to help attract, retain and engage employees, it is important to remember that satisfaction and engagement can be influenced by other means. That is: money may not be the only motivating factor for many employees, and there are other forms of financial compensation they may value more than an increase in pay. Do you have employees just starting their careers or a tenured workplace looking for ways to update or sharpen skills? Offering education or tuition reimbursement helps employees develop skills and knowledge they can use today as they help your business move forward. This type of incentive also offers a long-term investment in their career development.
Other ways of sweetening employees’ compensation package without changing base salaries can include: sabbaticals after long service; low-interest loans; and child or eldercare assistance. The ways that employers can “show employees the money” are as varied and creative as the employees themselves.
No matter how you choose to augment your total compensation package, remember that there are many ways you can creatively offer financial compensation beyond the traditional base salary expectation. Don’t forget: whatever options you offer, seek expert advice to help you make sure you have accounted for all the legal, tax and compliance implications of your approach.