A business decides how much it will pay its employees, and which benefits and incentives it will offer, based on several factors: the company’s labor budget, salary structure within the organization, and comparable wages offered by competitors, to name a few. Monetary compensation, however, in terms of basic dollars and cents, may be the only thing many potential employees will weigh before deciding where they will work. Compensation says a lot about how a company values its employees; and it also speaks volumes about what it expects from employees in the future. Companies seeking to attract – and retain – top talent may choose from one of the differing, creative direct-pay compensations detailed below.
Progressive, pre-scheduled raises throughout the year on a quarterly basis are one example of specific direct-pay compensation. In this type of a structure optimal first-year performance is the focus. Specific achievement requirements may be established to further focus the employee’s talents and energies on maximum output for this first year. In this progressive raise structure a year’s four quarters may look something like this:
• $2,500 Q1 raise – $1,875 (75 percent of total) to be paid as a raise to annual salary with $625 (remaining 25 percent) paid as lump sum bonus
• $2,500 Q2 raise – $1,250 (50 percent of total) to be paid as a raise to annual salary with $1250 (remaining 50 percent) to be paid as a lump sum bonus
• $2,500 Q3 raise – $625 (25 percent of total) to be paid as a raise to annual salary with $1875 (remaining 75 percent) to be paid as a lump sum bonus
• $2,500 Q4 raise to be paid solely in the form of a $2500 lump sum bonus
Sign-on bonuses are one way companies can attempt to lure new recruits. Many firms are specifying that employees who receive a sign-on bonus must sign a 1.5 year contract stating that if they quit of their own volition they would have to repay this entire bonus amount. Those that are laid off or terminated by the company would not have to repay the bonus. Sometimes a signing bonus is the one financial incentive that sways a candidate into selecting one company over another. In a scenario wherein all things are equal – including salary – between competitors, the sign-on bonus may grab the best talent for the position. And, with contractual obligations to stay or repay, their loyalty to the organization may be solidified.
Direct-pay compensation tells an employee how well they are valued within the company. Celebrating one’s anniversary with the organization via pay raises or pre-determined bonuses is one way to acknowledge the longevity and performance of a worker.
Sometimes employee compensation will be maximized only after specific skill sets required by the position are attained. Job experience is what many recruiters are seeking when hiring, but what if the employee hasn’t worked in a similar position or lacks the full extent of knowledge about their new job? Companies may offer starting pay or training pay for the first initial – say 3 months – the employee puts in. After this initial period, and after critical training is achieved, the full salary kicks in. This is one way in which the direct pay compensation package is used to farm the best talent for the company. Training and education is sponsored by the business itself, and future, successful employees are attracted and further developed as workers.
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Tags: bonus ideas, business, compensation, HR
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