As businesses, large and small, cope with the realities of the workforce shortage, everyone is trying to figure out how to keep their employees. With many industries facing catastrophic shortages, where even losing one or two staff means closing the doors, retention is the number thing on many business owners’ minds. Compensation is not everything, but in a competitive labour market, it is becoming more a factor than in recent years. When there are many jobs and not enough workers, they can also be choosy when comparing salary and compensation offers.
How do you know what “competitive” means when so many variables are industry, tenure, education, experience, and pay equity? If pay is increasingly becoming a factor jobseekers consider when looking at job offers, how do you know that what you are offering aligns with what others in your industry are? Businesses that have never thought beyond the annual cost of living increases will need to do the work of compensation alignment if they want to keep the people they have and attract new talent. The most effective way to do this is to conduct compensation surveys at least every two years. While it can be time-consuming, it is not complicated and can be done by any business leader. Here’s how.
Be Clear About Your Compensation Philosophy
Before you spend the time conducting a compensation survey, you need to be clear about what is important and how you want your compensation structure to look. Your compensation structure can be:
1. A strict salary grid based on specific parameters i.e. years of service, education, job level
2. Salaries that range based on factors even if it means some employees earn more than others for the same role
3. Lower base wages with bonuses for top performers
4. A combination of all of the above
Preparing for the Survey
- Job Analysis and Description
To conduct the survey, you should have job descriptions for every position in your organization. If you don’t, have everyone on your team fill out a structured template outlining their tasks and subtasks. You should also become familiar with the outcomes expected from the job (customer satisfaction, production quotas, staff morale, sales, etc.). Alongside the job description, gather employee information such as their job title, length of service, education, level of responsibility, certifications, and other factors for your industry that puts them in a higher earning bracket.
Conducting the survey and research accurately, you should have job descriptions for every position in your organization. If you don’t, have everyone on your team fill out a structured template outlining their tasks and subtasks. You should also become familiar with the outcomes expected from the job (customer satisfaction, production quotas, staff morale, sales, etc.). Alongside the job description, gather employee information such as their job title, length of service, education, level of responsibility, certifications, and other factors for your industry that puts them in a higher earning bracket.
- Market Comparison
The survey you conduct will help you match your jobs to common ones in the labour market. Pay data for these jobs are readily available in various formats, from PDF format salary guides to online salary calculators. If the job title meets these standards, the average salary from the salary surveys can be taken as the going market rate. Most of the survey tools will provide a low, median and high range for the job title. This will allow you to see who in your company is being under-compensated based on their job’s market value. To be competitive, businesses should strive for the median level or beyond.
- The Labor Market
Knowing the basic elements of the job and the employee is not sufficient for a complete survey. Salaries range across the country by city and geographic region. Salaries are also industry specific. The relevant labour market may be the organization’s product market or the geographical market. The survey you choose will need to match the jobs, industry, and geographical region of your organization. From which markets do we hire employees?
It’s important to note that surveys obtaining regional, national, or international data are usually determined by trade or professional organizations or consultants.
The infographic in this newsletter also provides ways to consider how to value job tasks equitably.
Survey Sources and Tools
Once you’ve got the base data on your employee team, you can decide which tools you want to use to conduct this research. Here are a few options.
- Internet Surveys – there are many online surveys available where you type in specific parameters (job title, geographic area, years in the role, education, etc.), and it produces a low/median/high range for that particular job. Some of these are free with paid options if you want to dig deeper and provide more parameters. The more information you provide, the more accurate the numbers are. However, we’ve found these tools to be fairly accurate for a general analysis. Internet-based surveys can be interactive, real-time, and reflect data gathered up to the minute. Make sure whatever tool you are using is providing information from Canada. Here are some links to get you started:
- Employer Group/Recruiter Surveys – employer groups, either geographically based or industry-based, offer salary surveys. These are typically operated by Compensation Professionals or Recruitment companies, or Compensation Consultants. These are offered in comprehensive reports for most industries and jobs across the country, and many are free downloads. Here are a few we’ve found to be useful:
- Professional Organization Surveys – many professional and trade organizations conduct salary surveys for their members. Data for these surveys are usually collected from the members of the organization. These are employee-centred surveys that tend to produce high wage rates. If your business belongs to a professional organization or association, check if they have industry wage information they share with their members.
- Professional HR Firms – if all of this seems overwhelming or you don’t have the time, capacity, or personnel to conduct such a survey, consider hiring an HR professional or firm to assist you with gathering the data so you can make those important decisions. What it costs you to hire someone to do the research for you may be small compared to the time it would take you away from your business and the results you’ll have to work with.
Consider Total Compensation
Regardless of where the research shows you trend on the salaries, consider adding another layer to the numbers that help employees to see the total compensation picture. For example, if you provide a training allowance, that figure is added to their compensation. So are bonuses or commissions. If you pay benefits premiums, the amount the employee saves is part of their total compensation, as are matched RRSP’s, wellness benefits, or additional paid time off – such as over the Christmas holidays. When you factor in all the things your company provides, it increases the total amount of compensation and can be a way to entice and/or keep great team members.
While the reality of the labour market shortage stares us all in the face, knowledge is power. When you know where you stand in terms of your employee compensation, you can adjust where necessary to become competitive in your industry.
At the end of the day, compensation is just one retention factor. A dynamic, engaging culture where employees are appreciated, given meaningful work, connected to the big picture and their contribution to it, enjoying the people they work with and opportunities to grow are still significant factors in deciding whether to stay or go. Another vital part of retention is great leadership. Employees remain loyal to companies where they are supported and inspired by their managers. Flexible work options and/or opportunities to work from home are increasingly more important to workers. This means that while pay is important, you have many options for making your employees want to stay.