Between rising inflation, uncertain market conditions, and changes in the minimum wage, employers are having a tough time keeping up with employee expectations. And many of them are losing their best people as a result.
According to Breezy's 2024 Hiring Challenges report, limited opportunity for salary increases is the top retention challenge employers face. And according to a 2023 report by Gartner, 82% of employees think their organization should increase their salaries to match inflation.
In the same report, employees now estimate they can earn 11% more by switching jobs.
If you’re looking for better ways to attract and retain talent, now’s the time to explore new compensation methods. Because even if you can’t swing a pay raise, you can still deliver an attractive employer value proposition (EVP) backed by a compelling total rewards package.
Let’s take a closer look at some of the top compensation strategies you probably haven’t tried yet.
What is a compensation strategy?
A strong compensation strategy is the way in which your business approaches employee pay and benefits. From base salaries to bonuses, your compensation plan should reflect your company’s goals, the culture you want to build, as well as external market trends.
What types of compensation strategies are out there?
While there is no one-size-fits-all effective compensation strategy, here are a few of the most common models:
- Salary
- Hourly
- Commission
- Salary + commission
- Team commissions
- Profit or revenue-based
- Equity
For today’s leading employer brands, these standard compensation frameworks are just a jumping-off point – not the total package.
With increased competition for qualified candidates, many companies are rethinking their compensation strategies to stay ahead in the future of work.
5 new ways to reward your employees
The real step one? Increase base pay to match or exceed the going rate.
If you really want to win top candidates before the competition snatches them up, there simply is no substitute for a competitive salary.
But for many companies, budgets are simply too tight. If that’s you, don’t worry. There are still plenty of steps you can take to reward workers, retain employees, and attract qualified candidates.
1. Raise salaries for hard-to-fill roles
For critical roles where there simply isn't enough talent to go around, like data analytics or software engineering, it might be time to give into the laws of economics and increase your salaries and advertised pay ranges for these roles. Just be sure to do it fairly and with pay equity in mind.
Here are a few tips to get you started:
- Use a standardized compensation formula. When calculating salary ranges, use a formula that computes pay grades based on skills, years of experience, and perceived value. This helps you gradually adjust pay for open roles, without totally upending the salary structure.
- Keep it fair. Generous salaries may win you hard-to-find talent, but unfair wage gaps can create tension – especially among existing top performers. So when you bring a new employee with a higher salary on board, keep long-time team members in mind and work to narrow the gap with pay adjustments.
- Update your performance management process. If your business relies on clunky software and glacial bureaucracy for employee performance reviews, engagement is bound to take a hit. Invest in tools and processes that will help you make quick and effective decisions about bonuses and pay raises before top talent starts looking elsewhere.
When it comes to salary increases, even a little can go a long way. For the Sullivan County Sheriff’s Office, a $2.50 an-hour pay increase was all it took to out-hire the competition.
Before the increase, the department had been competing with agencies in surrounding counties for active-duty talent. And after? They now have a full staff, with zero open positions.
“[The raise] has definitely helped with the morale, recruit[ment] and retention of our current employees,” Chief Lee Carswell told the local paper.
2. Adjust benefits to match your ideal candidate market
You can't please all the people all the time. But if you can align your total rewards package to deliver on the top priorities the majority of your workforce is after, you may have an easier time improving your retention rates.
Here are a few ways to align your benefits to meet the needs of your target candidates:
- Offer employee benefits that match your scale. If you’re a venture-backed business with the money to fund top-market rates, do it. But if you’re a small business or a growing startup, don’t drain your bank account trying to outstrip the Fortune 500s. Instead, try offering a retention-boosting benefits package or flexible scheduling opportunities.
- Pick perks that appeal to your workforce. Take a look at your workforce makeup before going all-in on a new benefits package. If your workforce is made up of mostly millennials, this may mean prioritizing work-from-home options, paid vacation, and flex PTO. Or, if your workforce is mostly remote, it may mean providing stipends for home office and remote technology.
- Ask your employees what they need. The best way to figure out what perks your employees are looking for? Ask them! Send out a survey and collect data about which benefits they want most.
According to one study, frontline employees are itching to climb the career ladder, with 75% citing development opportunities as a top priority. So when Chipotle introduced their all-expenses-covered degree program, they gave their workforce what they wanted and saw major retention-boosting benefits as a result.
“Our retention rate is three-and-a-half times higher among employees enrolled in the education assistance program, and crew members participating are seven-and-a-half times more likely to move into a management role,” Director of Talent Acquisition Mike Miller told SHRM.
3. Offer one-off bonuses
One-off bonuses can be a small but mighty way to increase engagement and reward employees for a job well done. This can include sign-on bonuses, retention bonuses, tuition reimbursement, spot bonuses, project bonuses, team incentives, and more.
Here are some simple ways to elevate your bonus program:
- Pair bonuses with recognition. One-time spot bonuses go a long way in recognizing exceptional effort. But if you pair those funds with public praise, private kudos, or a small office celebration, you can communicate your appreciation in a way your employees will never forget.
- Communicate bonus programs to all employees. When creating a bonus program, make sure you communicate the criteria to all employees so no one feels out of the loop. For example, if you plan to offer retention bonuses to employees who stay with the company for five years, put it in writing so that everyone is striving for the same goal.
- Be prepared for post-bonus disappointment. Signing bonuses are a great way to meet a candidate’s payment expectations without the annual expense of a higher salary. But when year two rolls around, you may need to take extra steps to keep them engaged. Consider pulling other rewards levers, such as stock options, extra vacation days, or an annual pay raise to bridge the gap.
When it comes to one-time bonuses, companies like Airbnb are thinking outside the box. Every year, workers get $2,000 in Airbnb travel credit that they can use to book stays or experiences on the platform.
This generous perk is like a vacation package and retention incentive wrapped up in one. It’s also a great example of how employers can build employee loyalty while reconnecting workers with the company mission.
4. Offer as much flexibility as possible
In an age where demand for remote work has exploded, it's easy to see why the crème-de-la-crème candidates are actively seeking roles that allow them to work from anywhere. In fact, more than 47% of employers surveyed by Breezy are embracing workplace flexibility in order to boost employee retention.
The following tips will help you strike the right balance with flexible work:
- If you can’t go remote, try hybrid. Fully remote isn’t feasible for every business. But rather than forcing employees to return to office full time, why not try a hybrid model? By designating one or two in-office days per week, you give employees a chance to collaborate side-by-side, while also cutting down their commute time.
- Build trust with your team. Going remote can feel like a leap of faith, but the best partnerships are grounded in trust. When you give people the space to fulfill their personal commitments and a clear framework backed by clear metrics for measuring their performance, they can approach their work with the confidence of knowing they’re focusing on the right things.
- Offer a technology stipend. As anyone who’s ever had to reboot six times just to get their workday started can tell you, janky equipment is terrible for productivity and morale. Make sure your team is remote-work ready by offering a technology stipend to help employees purchase the equipment they need to succeed.
When TELUS went fully remote during the pandemic, they had a distinct advantage: they’d been flexible working through their Work Styles program since 2006.
From the start of the program in the mid-aughts, employee engagement soared to 84% and absenteeism decreased by 32% – with no loss in productivity. Examples like this are proof that workplace flexibility is a sustainable solution, not a pandemic-era fad.
But their workers aren’t the only ones who are happy – the environment is, too. Since starting the program, TELUS has avoided over 20,000 tons of CO2 emissions, saving 102 million miles and 3.4 million hours of commuting. Talk about sustainable initiatives!
5. Re-evaluate your employer value prop
At its core, an employer value proposition (EVP) highlights the value an employer provides to employees in exchange for their work, skills, and experience. A successful EVP is tailored to the needs of your workforce, but it’s not just about salary – especially for the 32% of employees switching to lower-paying jobs in pursuit of better work-life balance.
The following steps will help you strengthen your EVP by communicating your compensation philosophy:
- Take a “did you know?” approach. According to one Gartner report, some companies have had success with “Did You Know?” programs that focus on building awareness for underutilized benefits, like retirement savings plans and wellness programs. By emphasizing perks that fly under the radar, you can highlight the work your company is already doing to support employees without increasing your compensation budget.
- Create a total rewards statement. Total rewards statements communicate the true value of your employee compensation package. By sharing additional info on the cash value of healthcare, stock options, or retirement benefits, you can go beyond salary to demonstrate the full picture of the value you offer as an employer.
- Highlight non-monetary incentives. A healthy salary is a beautiful thing. But it’s not the only thing that matters to modern workers. Communicate your company’s culture in your EVP by highlighting non-monetary perks, such as flexible working, paid time off, mentorship opportunities, subsidized childcare, and more.
As your company and the labor market change, so should your EVP.
Take it from Garry Ridge, the recently retired CEO of WD-40. When his employees asked to continue working remotely after the pandemic, he created a new policy that drew on the company’s strong corporate values.
“We came out with a philosophy called Work from Where, in which we said, ‘We don’t care where you work from, but we do ask that you use our corporate values to make your decision,’” Ridge told Harvard Business Review.
This values-informed approach to flexible work went over well, with 90% of employees saying that WD-40’s culture improved over the last year. The company also saw triple the revenues and increased shareholder returns across the board.
Totally awesome total rewards
By creating a competitive compensation package that meets employees’ needs while aligning with well-defined company values, you can attract and retain highly qualified talent no matter how weird the talent market gets.
When you’re ready to deliver constructive feedback in minutes instead of hours, Breezy Perform can help.
With the ability to share virtual high-fives for work well done and then see them clearly during 1:1s and performance reviews, you can start building a productive, recognition-rich environment top candidates can’t wait to be a part of.
Learn more with a 30-day full-feature trial of Breezy Perform.
