November 4, 2022

Why The Right Compensation And Benefits Matter In The Employment World

Finding out that you have been offered a job is exciting, especially if it's the job that you have been dreaming of. But before you sign anything to accept employment, take some time to review the information provided to you.

Consider this: As an employee, what do you want from that company? According to a Gallup survey, there are other significant factors to take into account besides salary, such as:

1) Greater work-life balance

It all comes down to finding a balance where one gives their personal and professional obligations equal priority. Work-life balance and well-being have also grown in importance over time, with 53% of employees describing them as "extremely important" in 2015, rising to 61% of today's workforce. It’s unfortunate that many previous Gallup workplace evaluations found many staff is stressed, overworked, and burned out. Nonetheless, the considerable increase in remote work has increased awareness of the significance of workplace flexibility alternatives, possibilities that are largely here to stay, even among workers who aren't suffering from burnout.

2) The ability to do what employees do best

It's good to be able to use the talents and skills that each person possesses to their greatest advantage. When given the chance to perform something they are good at, people find their work more stimulating and enjoyable and look forward to going to work. Therefore, it's not surprising that 58% of employees believe that this matter is still very essential for employees. It has been discovered that workers who are not permitted to use their strengths often seek employment where they can, while workers can use their abilities frequently seek jobs where they can use them even more.

3) More stability and job security

Job security is the assurance that one's position will not be terminated. It guarantees that you will be able to continue working in your existing position for the foreseeable future. Basically, employees feel safe from things like layoffs, economic downturns, and other variables that may have an impact on employment. This item's significance hasn't changed since 2015; About half of workers (53%) are looking for jobs that offer more stability and security than their current positions. However, since the beginning of the pandemic, what security means (and what seems secure) has probably shifted. Furthermore, stability and security are predicated on expectations for the future; if these expectations evolve, what job security entails is likely to do the same.

4) Inclusion and diversity

Although diversity and inclusion are related ideas, they are not the same thing. Diversity has to do with representation or how something is put together. Inclusion describes the extent to which the contributions, presence, and perspectives of different groups of people are valued and incorporated into an environment. Gallup asked survey respondents about this for the first time, and it scores at the top for employees at 42%. This demonstrates that societal advancement is evident in the growing support for establishing more inclusive and equal workplaces. Additionally, as many businesses have learned, today's workforce needs real, genuine change in these areas, not just platitudes. In order to discuss these shifts and commitments, recruiters must be ready.

The Benefits/Compensation Are Also Extremely Important! What Does This Mean?

Whenever someone mentions compensation, they frequently consider their annual salary or an hourly wage. However, remuneration or compensation involves much more than that. It's essential to understand the definition of compensation, the different types of compensation, and how it's determined, especially for those searching for new employment.

So, what is compensation? The Cambridge Dictionary define compensation in three ways:

  1. “Money that's paid to someone in exchange for something that has been lost or damaged or for some problem.”
  2. “Something that makes you feel better when you have suffered something bad.”
  3. “The combination of money and other benefits (= rewards) that an employee receives for doing their job.”

In terms of employment, the third definition is most relevant because many businesses provide pay awards for employees' service and contribution. In addition to receiving a good basic salary, employees may be offered a variety of non-monetary or monetary compensation. These are the kinds of incentives that should be considered while deciding on a job offer.

6 Reasons Why Compensation Should Be Very Important To You As An Employee

Finding work should include more than simply accepting a job for the sake of having one. For individuals to be productive at work, they must feel inspired and content with what they are doing, achieving, and receiving. That's why getting compensation and benefits are among the factors that can either make or break employees.

Let's look at some of the primary reasons why this is important for any employee:

1) Maintain your loyalty to the company

Two-thirds (66%) of workers believe benefits have become a more essential element of how they evaluate their overall salary. It stands to reason that three-quarters (75%) of employees consider benefits when deciding whether to stay or leave a job. 44% of workers are more willing to consider choosing a similar job at a different company that offers superior benefits (Compaas)

2) More motivated to complete tasks

Personalised wellness programmes, along with a variety of non-cash incentives such as paid time off, would motivate 80% of employees to participate in company programming (Welltok). Similarly, 90% of workers think that receiving recognised motivates them to perform more (Achievers)

3) Increase your workplace productivity

According to research, employees who receive low compensation are more likely to start their own businesses or take on side jobs. The side business will interfere with the quality of work and concentration of employees. The study also emphasises how evident it is that salary has a significant impact on employee productivity. Employee productivity would increase if it provided more appropriate compensation to employees. Conversely, if it provides lower compensation to employees, the employee's productivity suffers.

4) Satisfied with the employer and the workplace

72% of employees responded that having greater work benefits would boost job satisfaction (Zoro), and 84% of employees who are satisfied with their benefits are satisfied with their jobs (Business Community). On the other hand, dissatisfaction is caused by employees' need for more benefits (57%), desire for benefits they do not yet have (24%), benefits they can’t use (22%), and benefits they feel pressured not to use (8%) (Clutch).

5) Having a positive attitude toward everyone and everything at work

According to EBRI, almost two-thirds of employees who rated benefits satisfaction as extremely or very high rated their morale as outstanding or very good, while Healthcare Trends Institute found 68% of businesses believe health benefit plans have an impact on their reputations and can boost employee morale and satisfaction.

6. The sense of being treated fairly

59% of those who discovered they were paid less than peers with the same experience or rank sought a new job within a year. In comparison, only 23% discussed it with their bosses, and 12% went to HR. Nearly half (46%) of those who did not take action did so because they believed speaking up would be futile, and 23% were afraid of retaliation. 66% of men who met with their supervisors or HR had their salary changed, compared to 43% of women (Compass).

What Are The 8 Different Types Of Work Benefits/Compensation?

Since compensation meaning any benefits or incentives provided by employers to employees, the possibilities are countless. Compensation may be anything from a commission to a housing allowance and medical benefits. Some firms might provide some of the best benefits, such as Adobe, which ranks first in the Comparably Best Compensation Award.

Depending on where and which industry you’re entering various elements can make up an employee’s compensation package, including:

  • Overtime pays: A monetary reward for any work completed outside of normal working hours or on public holidays. Employees in the United States who work more than 40 hours per week are eligible to overtime pay for the extra work. Employers are required by federal overtime requirements to compensate employees who work more than 40 hours per week at least time and a half for the extra time they put in.
  • Bonuses: Financial bonuses may be part of some pay packages; these bonuses may be awarded at the end of the year, if the company meets certain milestones, or if an employee performs particularly well. This is given in addition to a guaranteed paycheck or salary and may attract and retain employees who prioritise financial rewards at work.
  • Commissions: The compensation made to an employee after they finish work is referred to as a commission. For instance, some businesses provide staff members in sales a percentage or flat rate commission when they close deals. Some businesses provide higher commissions than others, depending on the sector.
  • Compensated time-off: Employers may provide a variety of benefits, such as paid sick days, personal time off, paid parental leave, paid vacation days, and paid compassionate leave, as detailed by Patriot Software. For workers to manage their lives, taking time off from work is crucial.
  • Insurance benefits: Insurance protection is excellent for fostering a sense of security among employees. Since healthcare plans can be costly for individuals to purchase on their own, many businesses offer employees various insurance policies such as medical, life, and dental to attract potential employees.
  • Retirement plan: Essentially, this is working while building up funds for the future. An employer can invest in the financial stability of its employees once they retire by providing them with a retirement plan. In certain circumstances, companies can contribute by matching employees' contributions up to a specified sum.
  • Profit-sharing and stock options: A profit-sharing plan is a type of retirement plan that allows employees to partake in a company's profits. An employee earns a share of a company's profits based on quarterly or annual earnings under this type of arrangement. Employee stock options are popular with both start-ups and highly successful organisations where the stock options reflect the significant value added to a remuneration plan.
  • Professional development: Employees who receive regular professional development can develop new perspectives and abilities that affect how they approach their work. Some examples of opportunities to develop new talents include tuition fees for continuing education, allowances for job assignments, or multiple trainings to enhance skills in a specific field.

How Will Employers Determine The Benefits And/Or Compensation You Receive?

Companies may choose from a variety of approaches to determine an employee's compensation. Some examples are provided below.

1) Market standard comparison

According to Christy Pruitt-Haynes, head of Performance Practice at the NeuroLeadership Institute, a global neuroscience-backed consultancy, employers consider "how much similar positions are paid within this company, and how much competitors are paying for similar positions" when making a pay offer to a prospective new employee.

In other words, an employer strives to strike a balance between making an offer that's equivalent to or more desirable than those made by other businesses and abiding by the restrictions placed on how much current employees can be paid.

2) Basing on the individual's experience

When giving job offers to candidates, employers typically have a range of options at their disposal; seasoned applicants or those with appropriate experience typically qualify for the higher end of the range.

Pruitt-Haynes advised using a statement like, "I am certain that my five years of experience dealing with your specific client base will allow me to make an immediate positive impact on sales," if you have a strong work history to rely on. These assured and unambiguous claims may aid in raising the total compensation proposal.

3) According to skill sets

The skill set of a candidate is another aspect that affects pay. Do you have any extra abilities that will help you in the position, or will you require some training to be effective?

According to Pamela Mattsson, Outreach's SVP for People and Organisational Development, having desired abilities and competencies may justify extra consideration for an offer.

Even if they weren't requested, highlight any specialised abilities you have, such as being bilingual. Pruitt-Haynes noted that you can never be too sure that they won't make you a more appealing prospect.

4) Depending on the supply

Whether or not qualified candidates are competing for a position as opposed to a candidate shortage affects compensation. In so-called "job-seeker markets" or highly sought-after industries like technology, employers must increase their pay packages. However, if there are a lot of applications, employers don't have to worry as much about letting a few walk away.

(Source: The Balance)

The 4 Strategies For Negotiating Better Benefits/Compensation

Companies can frequently still negotiate some benefits and compensations with you in the early stages before you take the employment. It doesn't harm to attempt because many people missed out on opportunities because they were too hesitant to ask or even begin to negotiate. Here are some suggestions for negotiating higher perks and remuneration.

1) Be creative with asking

Don't let other ideals be compromised just because there may not always be much leeway available in terms of pay or perks. Professional development expenses are an important perk that many people often overlook. You may, for example, suggest that your company pay for a certification or training course to help you execute your job more efficiently.

2) Demonstrate your worth

Remind your prospective employer of your value and the reasons they wanted to recruit you during the bargaining process. Describe how you expect to add the same value to their company while highlighting your professional accomplishments. Therefore, the benefits you earn should reflect that. Employers might be more willing to adjust to your demands if they are aware of the skills and advantages you provide.

3) Provide detailed justification

Giving the justification for your demands can help your case. Explain why certain benefits are required and how they would improve your work performance. You may cite how having more vacation time or the option to work from home occasionally could prevent burnout in the office. Employers may take this into account since it can help them achieve their corporate objectives.

4) Get the final offer in black and white

A written offer should be obtained once the bargaining process has been completed. Save the document somewhere safe after reviewing it to be sure it contains everything you both agreed upon. Keep all additional correspondence, including emails, that are pertinent and contain information about the bargaining process. Having this proof on hand can help avoid future misunderstandings and guarantee that you obtain the benefits you agreed to.

Why Do Benefits/Compensation Motivate Employees (Apart From Salary)?

While a better salary is an obvious component in increasing employee motivation, other sorts of remuneration and benefits have also been identified as key aspects of an employee's motivation to work. Compensation such as bonuses, incentives, stock, share-sharing, and gain-sharing has been utilised by employers as a motivator for superior job performance.

When employees are fairly compensated, they feel appreciated as both employees and as people. They will consequently feel better about going to work as a result of this. The motivation of employees to produce greater results is also increased when they are aware of potential bonuses or commissions.

Furthermore, plans for bonus and commission earnings become a target goal for employees’ achievement. The best part of it all is that general company morale improves and people are motivated to show up for work and perform well.

What Can Employers Do To Create An Attractive Benefit/Compensation Package That Stands Out From The Rest?

With an attractive compensation structure, employers will be better positioned to attract and retain top talent. Although developing a compensation plan is not a simple task, adopting the measures outlined below may promote business growth and morale in the workplace.

  • Compensation philosophy: Create a compensation strategy for the business that aligns with its goal and objectives before anything else. It needs to cover basic salary, overtime pay, overtime commissions, bonuses, tips, and other relevant compensations.
  • Competitor research: Conduct market research on competitors to find out how much and what kind of compensation they are providing for similar roles. Use websites like Glassdoor, PayScale, or comparable ones to find out about wage comparisons and salary surveys. Have at least an approximate idea of the budget before moving on to the next step.
  • Salary or wage: Now, using the knowledge or data from the preceding investigation, determine a base compensation level or hourly pay rate for each position. Make sure the salary and earnings are reasonable for the city, state, and industry. Consult HR experts when determining how to pay employees.
  • Annual pay raise: Investing in employees will boost productivity and profitability because they are a crucial component of every organisation. If workers are aware that they can earn a pay raise through diligence, performance and loyalty will increase.
  • Performance-based plan: To encourage other employees to perform better and with greater intensity, develop an incentive or performance-based plan for top talent. Offering regular pay raises is another option.

(Source: CheckMark)

A Competitive Pay And The Right Benefits/Compensation Package Can Help Retain Employees

When an employee is being paid fairly, they are more likely to stay with your business and are less inclined to hunt for other career opportunities. A poll by Indeed found that 39% of people hunt for jobs because they would like to earn more money. This demonstrates that salary has a significant impact on how long employees stay with a company since satisfied employees are more likely to feel that their needs are valued by their employer.

Paying well helps businesses retain employees for extended periods and recruit better talent. In fact, according to 66% of the companies surveyed, having a solid remuneration strategy is essential to ensuring employee retention, which is followed by stronger hiring practises and compensating for in-demand talents. A high retention rate is crucial because it ensures employees remain with the company for a long time, saving time and resources on training new hires and demonstrating the loyalty needed to manage a business.

Keep in mind that attracting new employees and keeping them on board depends on employers’ ability to comprehend the nuances and create an effective plan. The remuneration package provided to employees plays a significant role in luring and keeping talent. In addition to improving retention, a generous compensation plan may help boost brand advocates and engagement.

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