1. Have a Clear Compensation Plan
It is not sufficient to allow an employee’s paycheck alone to communicate the pay policies of your company. Upon hiring any employee and discussing their compensation, there should be a clear and consistent pay policy already in place, and all managers and administration should be fully aware and trained in these policies and procedures. Of course, it is acceptable for an employee with advanced education or skills to have higher compensation than another employee, but this shouldn’t be a secretive process.
By having a clear policy that is written down and available for all to understand, you protect your company against any legal implications. It will inevitably create disdain if employees come to find out that their subordinate or new hire is unexplainably getting paid more than they are. Plus, it just doesn’t send a good message about the company’s priorities.
2. Allow for Salary and Career Growth
It is a pure fact that a company will inevitably waste time, money, and productivity if they have a high turnover rate amongst their staff. Allocating substantial time for new employee hiring and training processes costs the company money. It is much more productive to keep seasoned employees who are good at their job and have been there to grow with the company. Their loyalty actually makes the company more money.
Companies should, therefore, promote and encourage additional trainings, education, and career development that not only helps employees by making them better at their job, but also makes the company better. Employees tend to want to work harder companies that appreciate them and encourage their continual growth.
3. Allow for Discretionary Bonuses and Acting Pay
This means that you take the time to honor employees who have gone above and beyond for you. Perhaps they filled in when another employee was sick or out for an extended period of time, doing more work than is required of them. Perhaps they showed a dedication that deserves compensation. This is where having these discretionary bonuses allows you to reward these hard-workers and build a better and more productive company.
4. Have a Performance-Appraisal System in Place
It is very important that each year you take the time to review the performance of every employee. From the top managers to the workers in the mailroom, every person should be appraised. This involves again having a clear set of expectations as well as continual training and evaluation throughout the year. Then, at the end of the year, it is not a stressful event. It is just a chance for the employer and employee to make sure they are on the same page. This way, any raises or promotions that may be due can be clearly justified.
5. Regularly Review Your Company’s Pay System
As the economy changes, your company’s fiscal bottom line may also change. It is entirely necessary (if not critical) to continually review your pay policies. Perhaps you have to adjust job descriptions to better fit your company’s changing needs, or perhaps demotions or promotions are needed to be more efficient. You have to readjust in order to comply with new laws. Whatever the case is, reviewing your pay system on a yearly basis should be a vital part of your pay policies.
