Employee engagement is key to your employees’ morale and productivity, which has an important impact on your bottomline. Understanding what employee engagement is and how to leverage effective employee engagement surveys is a great place to get started with creating a more engaged workforce. In this post I’ll explore why employee engagement is important, then outline a highly-effective employee engagement survey template, and finally provide step-by-step instructions on how to get started with quantifying and improving your company’s employee engagement.
What is employee engagement?
Employee engagement is the level of enthusiasm, dedication, and connection employees have to their organization and their work there. Employee engagement measures how motivated employees are to exceed performance expectations and indicates how committed employees are to staying with the organization for the long-term. Employee engagement is the direct results of company culture, management practices, and the overall work environment created.
Why is employee engagement important?
Employee engagement is important because engagement can have a big impact on your workforce’s productivity, which affects your bottomline. Several studies have correlated an engaged workforce with a multitude of business benefits. A survey of over 24,000 businesses conducted by Gallup found that companies in the top quartile of engagement average 18% higher productivity and 12% higher profitability than companies with poor engagement. An additional survey of over 600,000 employees conducted by the UK government found that companies with high employee engagement increased income by 19.2% while companies with low engagement saw revenue drop by 33% over the same period.
Research by CultureAmp also indicates that engaged employees are 20% more likely to recommend their employer on Glassdoor—a critical component to attracting top talent. Their research also showed that engaged employees are 30% less likely to be actively looking for another job.
Engaged employees:
Have higher job satisfaction
Are more committed to the company and its long-term goals
Are more likely to become high-performers
Are less likely to turnover
Want to succeed and want the organization to succeed
Are more willing to go the extra mile to help the company
Support the company’s mission and believe in the vision
Companies with high rates of employee engagement enjoy results like:
Decreased turnover rates
Increased productivity
Increased efficiency
Increased profits
Better ability to attract and retain top talent
Even with all the above benefits, many companies are not doing a great job at creating an engaged workforce. Studies by Gallup found that only 33% of employees are engaged at work. They also uncovered that organizations with a poorly engaged workforce experienced 30-50% higher turnover rates than companies with engaged employees. The good news is that there are several steps you can take to improve employee engagement at your company. This process begins will implementing highly-effective engagement surveys.
How to Get Started With Employee Engagement Surveys
Engagement surveys get a bad rap for being ineffective. This is usually because they’re too long, poorly designed, ineffectively distributed, or lack high-impact questions. However, with the right approach, engagement surveys can provide increased insight into your workforce’s engagement, productivity, and job satisfaction. Effective engagement surveys transform anecdotal employee experiences into hard data, which will allow you to strategically approach, monitor, and refine your employee engagement efforts.
Before customizing your survey questions, your first step should be to identify benchmark engagement levels. Data without the context of industry-relevant benchmarks will not provide useful insights. Because employee engagement varies widely with company industry and size, take these into account when researching benchmarks.
When designing your questions, remember there are several facets that play into an employee’s overall engagement level. These include employee opinion on management, overall work environment, relationships with coworkers, opportunities for advancement, and understanding and belief in the company mission. A good employee engagement survey should include questions that determine satisfaction in each of these areas.
Don’t forget that an employee engagement survey only matters if you plan to act on the results. In advance of conducting your survey, establish buy-in from leadership and put time on the calendar to review survey results.
Here are some key things to keep in mind when designing your employee engagement survey:
Before designing your survey, pinpoint industry-relevant employee engagement benchmarks
Establish buy-in from leadership before conducting an engagement survey
Include questions that cover all facets of employee engagement
Opinion on management
Work environment
Relationship with coworkers
Job enablement
Opportunities for advancement
Understanding company mission
12 High-Impact Employee Engagement Survey Questions (And Why They Work)
1. On a scale of 1-10, with “1” being very unlikely and “10” being very likely, how likely are you to recommend [Company Name] as great place to work?
A Net Promoter Score is a single-digit figure that summaries a customer’s satisfaction with your company. In the context of an employee engagement survey, you can reframe this question to uncover your employee workplace satisfaction, therefore creating an “internal” net promoter score. An employee’s likelihood of promoting your company as a good place to work is a strong indicator of their overall engagement level.
2. I receive recognition for a job well done.
Receiving praise and recognition is one of the strongest influencers of workplace satisfaction and employee engagement. It’s important to help employees understand how their work impacts the rest of the organization. This question can gauge employee satisfaction with the amount and quality of recognition they receive.
3. I trust my immediate supervisor/manager.
Trust is a crucial foundation for any productive manager/employee relationship. Employees and managers don’t have to be friends—but for it to be a positive relationship there must be a basic level of trust. Employees who don’t trust their manager will struggle to perform optimally and become engaged.
4. I trust the upper management/leadership team.
Similar to the previous question, an employee’s trust in upper management is critical for an engaging work environment. A high level of trust in company leadership indicates employees believe in the leadership team’s company vision and their ability to achieve it.
5. My coworkers are committed to doing quality work.
This question indicates an employee’s perception of the overall work culture. Environments where all employees are held accountable and motivated properly are the best for employee engagement. If employees perceive that their coworkers are not being appropriately held accountable, this can create a toxic work environment. The above question will gauge your employee’s perception of the work dynamic between employees.
6. My coworkers respect each other.
This is another question to help gauge the work environment. It’s important that your team is establishing mutual respect. If your workplace is filled with gossip, harassment, or other negative sentiments it can quickly create a toxic work environment. Use this question to gauge how positive the relationships between employees are.
7. In two years, I still see myself working at [Company Name].
This question can give some insight around your employee retention rate. If employees don’t envision a future with your organization, this indicates unhappiness with the workplace environment and an absence of transparent future career opportunities.
8. [Company Name] motivates me to go above and beyond what I would in a similar role elsewhere.
This question gets at your employee motivation levels. In organizations with high employee engagement, employees are motivated to go above and beyond because they believe in the mission of the organization and understand their important part in achieving this vision. If your employees do not feel motivated to go above and beyond you should identify opportunities to increase performance.
9. I have access to the tools, resources, and training I need to do my job well.
This question gets to the heart of job enablement at your organization. The point of this question is to understand if employees believe they have the resources they need to perform their job at the highest level.
10. I understand what I need to do to be successful in my role.
This question pinpoints if your employees’ job expectations are clear. If employees have a clear understanding of their success metrics, it gives their day-to-day work direction and purpose. It also instills a feeling of upward mobility which helps keep employees on board. If employees indicate their job expectations are unclear, this can indicate a poor relationship between management and employees.
11. I believe there are good career opportunities for me at [Company Name].
This question also hones in on employee perception of future opportunities. If employees perceive good future opportunities for themselves at your company they’re more like to be high-performers and much less likely to look for another job. If employees do not believe there are good opportunities for them then there could be a lack of transparency around growth opportunities or underinvestment in employee training and development.
12. Is there we could be doing better at [Company Name]?
In an employee engagement survey it’s always important to provide an open-ended question. The point of this question is to provide employees an opportunity to give candid, anonymous feedback. While this feedback won’t be quantified, it can provide some anecdotal evidence towards areas of your engagement strategy that could be improved.
How to Use This Employee Engagement Survey Template
Customize the questions with your company name. Also feel free to further customize the questions, omit ones that you don’t believe are relevant to your workforce, and add your own questions. Just remember to keep the survey relatively short (15 or less questions is ideal for maximum impact).
Determine how you will distribute your survey. The easiest way to distribute an engagement survey is digitally. Google Forms or SurveyMonkey are both great options for distributing your survey and analyzing the results.
It’s important to note that the most effective engagement surveys are completed anonymously. If the surveys are anonymous, employees are more likely to be honest and give candid feedback. No matter which platform you opt to send your survey through, make sure your survey does not require employees to entire their name or email address.
Distribute your survey via email. Including a note from the leadership team about the purpose of the survey can help drive forward your engagement vision. Make sure to follow-up with your employees several times to remind them to complete the survey.
After you’ve collected responses, analyze the results. Gather your leadership team to discuss the findings from your survey. Compare your engagement levels to industry benchmarks. Based off the results to specific questions, identify the biggest areas of opportunity for improvement. Create a plan of action as to how you’ll address these areas.
Set a timeframe for when you will distribute another engagement survey to measure changes in engagement (three to six months is ideal).
Key Take-aways
As you can see, employee engagement surveys can be effective if they’re done right and include high-impact questions. Here are some key take-aways from today’s post:
Employee engagement creates a happier, more productive workforce.
Establish buy-in from your leadership team about the importance of employee engagement.
Always compare your engagement data against industry benchmarks.
Use short, high-impact surveys (and make sure they’re anonymous to receive honest feedback).
Use the results of engagement surveys to discover areas of opportunity and create an action plan for increasing employee engagement.
Do you already use an employee engagement survey? Will you start regularly distributing and analyzing engagement surveys? How important do you think employee engagement is in the modern workplace? I’d like to hear your thoughts—drop them in the comments box below.
Creating career paths for employees can be a challenging but worthwhile initiative. In today’s ultra-competitive job market, it’s becoming more and more important to invest in your employees, so you can retain them in the long-term. The problem is, many companies are simply not doing a great job at providing tangible vertical career paths for top-performing employees.
A recent survey by Gallup found that 93% of people advance their career by taking a position with another company. This means that just 7% of employees are being promoted internally. For high-growth companies, recruiting might seem like the only option to quickly obtaining the best talent.
However, promoting internally can save you the time and money that would traditionally be spent on recruiting external candidates. Beyond this, internally recruited employees typically have a far shorter “ramp-up time”—meaning they can start making a big impact in their new position immediately.
In this post I’ll explore the benefits of creating clear career paths for your employees and outline a step-by-step process to launch your own career pathing program.
What is Career Pathing
Career pathing is a structured employee development program which helps employees visualize career progression within a company. When done right, career pathing not only helps employees see their potential for career progression, but also sets clear milestones and provides the development opportunities necessary to reach these goals.
Career pathing involves, on an employee-by-employee basis, taking an inventory of career aspirations, skills, necessary knowledge, experience, and personal aptitudes. This information is then used to create a custom plan for achieving what is necessary in these areas to reach key career milestones.
As mentioned, organizations with the most successful career pathing programs provide employees with the support they need to develop the necessary skills and aptitudes in accordance with their career path.
Benefits of Career Pathing
For any growing business, implementing a formal career-pathing program is essential to developing and retaining a high-performing workforce. Investing in the creation of a strategic career-pathing program can bring your company many benefits including:
● Improved ability to attract top talent: In today’s competitive job market, many growing businesses are struggling to attract top talent. A robust talent development program can play a big role in your ability to bring in the right people for the right jobs.
● High employee engagement and improved employee performance: with effective career-paths in place, employees are incentivized to become top-performers and reach their career milestones. A motivated, engaged workforce means better outputs for your company.
● Reduced employee turnover: In organizations without clear career paths, entry-level employees are more likely to become stagnant in their roles and begin looking for other opportunities. This turnover can quickly become costly. By creating crystal-clear career paths, you give employees a vision for their career progression and help incentivize them to stay onboard for the long-term.
● Increase diversity in the leadership team: by investing in and recruiting internally, you ultimately build a more diverse leadership team.
Setting Goals for Your Career Pathing Program
Before implementing any new employee development initiative, you should set goals for your program. For example, if your company struggles with turnover, reducing turnover might be a good objective for your career pathing program. Or, if your team struggles with productivity issues, then increasing employee engagement might be a good objective.
To develop your goals, it helps to sit down with the leadership team of your business and discuss what they believe are the biggest retention and engagement challenges. After this conversation, decide on and document the goals of your new program.
Some examples of career pathing program goals might include:
● Build a strong internal pipeline of highly-qualified talent
● Reduce employee turnover
● Increase employee engagement
● Increase diversity in the upper management team
Creating Your Career Pathing Program
1. Create Career Roadmaps
For each of the key function areas of your organization, you should create a career roadmap. This is typically a graphic or diagram which represents the potential vertical and horizontal position changes with any given business function (i.e. marketing, sales, HR, operations, customer support, etc.). This framework will be the cornerstone of your career pathing program, as it highlights the opportunities for vertical employee career progression.
2. Create Position Profiles
Next, you should create “position profiles” for each of the roles highlighted in your career roadmaps. For each role you should outline and document the core responsibilities, skills, and general requirements. To add clarity to your career pathing program, you can outline more detailed specifications for each role. These might include recommended or required education, technical trainings, licenses, and certifications necessary for success.
3. Define Performance Standards
Next, it’s important to document expected performance standards. To do this, you should document the behaviors and benchmarks that are typically shown by top performers at your company. These behavioral competences will translate across all horizontal and vertical role changes.
4. Incorporate Training and Development
To further enhance your career paths, you should identify key training and development milestones for each position profile. These milestones might include leadership training courses, cross-functional training, revenue responsibility, or international exposure. Outlining key development experience in relation to relevant career paths will help upper management have more meaningful career progression discussions with employees.
Communicating Your Career Pathing Program
As with all employee engagement programs, effective communication is key. Sharing your career development philosophy with staff is a great first step in launching your new program. You should make it clear that you value your team and are committed to investing in their growth.
In organizations with particularly effective career pathing programs, providing new-hires with a document that overviews their progression possibilities is a commonly used tactic. This document should overview key progression milestones such as clearly-defined goals, timely training opportunities, and dates for performance reviews.
Establishing buy-in from your management team is also important in facilitating a new career pathing program. Managers should be kept in the loop on career pathing objectives and be encouraged to continuously have candid conversations with employees about their career aspirations.
Setting Up Systems to Optimize Your Career Pathing Program
When launching a career pathing program, you should establish systems to track and optimize its performance. A great way to do this is to conduct a company-wide survey. You might choose to do a career development survey before launching your program and then do another survey a few months after launch. Completing an initial survey will mean you’ll have benchmark data to compare.
In additional to using career development surveys, in the months after implementing a career pathing program you should also monitor changes in turnover rates and employee performance metrics.
Career Paths Key Takeaways
Developing and implementing a proactive career pathing program isn’t easy, but it can have a big impact on your organization’s long-term growth. Here are some key take-aways from today’s post:
• Career pathing affords many benefits including higher retention rates, increased engagement, reduced talent acquisition costs, and increased leadership diversity.
• Documenting career roadmaps and clear position profiles is the best way to start a career pathing program.
• Communicate your career development philosophy across all levels of your organization.
• Establish buy-in from management so employees can have more productive career path conversations.
• Leverage a career development survey to benchmark and monitor the impact of your career pathing program.
Does your company provide clear opportunities for career progression? If not, do you think you’ll implement a career pathing program in 2018? Drop your thoughts in the comments box below.
In today’s market, it’s becoming more difficult to attract and retain top talent. Offering competitive benefit packages has become increasingly important for organizations looking to add top-performers to their team. Standard benefits packages with medical, 401K, and two weeks vacation are quickly becoming overshadowed by more diverse, unique, and impactful employee benefits packages. One unique benefit competitive companies have begun to offer is unlimited PTO.
The concept of “unlimited PTO”—offering employees paid time off with no cap—originated in Silicon Valley as part of the emerging startup scene. Startups offered this perk to help attract top talent they might otherwise have not been able to afford. However, what was once a “trendy” employee benefit limited to emerging startups has now begun to appear in more established companies. Research by the Society for Human Resource Management (SHRM) indicates unlimited (or unstructured) PTO programs are becoming more popular. In fact, General Electric recently implemented a “permissive time off” policy, which effects over 30,000 salaried employees in the U.S.
That being said, current research estimates the total percentage of companies in the U.S. offering unlimited vacation time at around 2%. A survey by HR association WorldatWork indicates that only 1% of large companies offer unlimited PTO.
With such a small amount of companies offering unlimited PTO, it could be your secret weapon to build an attractive, high-impact benefits package that stands out to top candidates. However, there are several pros and cons to implementing an unlimited PTO policy.
In this post I’ll explore the pros and cons of an unlimited PTO policy, the financial implications of unlimited PTO, tips on deciding if unlimited PTO is right for your organization, and guidelines to successfully implement an unlimited PTO policy at your company.
Benefits of an Unlimited PTO Policy
Implementing an unlimited PTO policy can have several positive impacts on your organization including:
Less time spent managing accrued time off. With unlimited PTO, HR staff is no longer making constant changes to employee PTO for taking a half day off, a one hour dentist appointment, etc. They also no longer have to field inquiries from employees about how much time off they’ve accumulated, or what they have left for the year.
Reduced financial liability. Under an unlimited PTO plan you no longer have to pay out accrued, unused PTO when an employee leaves the company. Research conducted by Oxford Economics found the average vacation liability per employee to be $1,898. This translates to $65.6 billion in accrued time-off liabilities on the books of U.S. companies.
Fewer time off conflicts. In organizations with “use-it-or-lose-it” PTO policies, there is often a mad dash in November and December to use up any leftover PTO. This can cause severely understaffed departments at year-end. With unlimited PTO, there’s no end of year rush to use up expiring PTO.
Employees take off time when they actually need it. Under traditional PTO plans employees (especially those with young children) are inclined to save up their PTO days in case of unexpected illness or another family emergency. However, it’s important to encourage employees to take time off to relax and rejuvenate, so they can function optimally when at work. Unlimited PTO policies help encourage this behavior.
Attracting and retaining top talent. Most high-performing employees are self-sufficient and self-motivated. This means they appreciate work environments built on personal accountability, trust, and autonomy. Unlimited PTO programs can help foster a work environment where top talent thrives.
Empowering employees. Motivation studies indicate that when employees feel trusted, their motivation, morale, and productivity increase substantially. Unlimited PTO can help foster an environment of trust.
Challenges of an Unlimited PTO Policy
While there are several pluses to implementing unlimited vacation time, there are also several challenges related to this policy including:
New logistics. Although an unlimited PTO plan might eliminate your team’s need to meticulously track each hour taken off, you’ll still have to have a system in place to track PTO days used.
Policy abuse. When it comes to unlimited vacation time, there’s always a risk of policy abuse. Many companies worry that employees will take off frequently or take off for long periods of time. This policy abuse can have an impact on the company through performance problems and project delays.
Low policy usage. In some cases, an unlimited PTO policy may discourage employees from taking time off. Some organizations with unlimited PTO have found that unclear expectations around what amount of PTO is appropriate have encountered issues with employees taking off less than what is recommended. In organizations that prioritize work-life balance, this can be a potential con.
Unmanaged PTO. Unlimited PTO can quickly become unmanaged PTO if the proper procedures are not in place. A more formal time-off policy means more formal procedures around how vacation time is requested, approved, and tracked.
Unclear expectations for employees. In some cases, employees are unsure what amount of vacation time their manager finds acceptable under an unlimited PTO policy. In highly competitive organizations, employees might fear taking any time off. This creates a stressful, highly toxic work environment.
How to Decide if Unlimited PTO is Right for Your Business
Several small-to-mid-sized businesses have tested unlimited PTO policies at their organization to see how it would impact employee engagement and retention. Most organizations that implement an unlimited PTO policy find their employees take off roughly the same amount of PTO as the year prior. Studies have found employees at organizations with unlimited PTO are taking off between two and three weeks of vacation annually, on average. This figure includes time-off for vacation, personal reasons, and sick days.
When employers are considering implementing unlimited PTO they often fear employees will take off for extended vacations. However, organizations with unlimited PTO have not found this to be the case. More common is that employees are taking one or two day tips, long weekends, or extending holidays rather than leaving for long periods of time.
Surveys ranked unlimited PTO as the third most popular employee benefit at organizations that offered it. Unlimited PTO came in just behind health insurance and 401k plans. This means unlimited PTO beat out vision insurance, dental insurance, and professional development as the more desired benefit.
Whenever you’re thinking about offering an additional employee benefit or perk, you should consider if it’s inline with your company’s values. Offering unlimited PTO might be right for your organization if you believe strongly in the following values:
Autonomy
Trust
Freedom
Mutual Respect
Accountability
Work-life balance
Beyond core values, you’ll also have to consider industry limitations. For example, businesses in the retail and manufacturing industries have a difficult time implementing unstructured PTO policies.
Also, when you’re considering changing your benefits program, it’s important to consider the make-up of your workforce. Would your employees find an unlimited PTO program valuable? In organizations with a younger workforce, unlimited vacation plans may provide a huge value. However, in organizations within more structured industries (such as finance or healthcare), employees might prefer the traditional PTO plan they’re used to.
Building Your Unlimited PTO Policy
If you’ve decided you’d like to roll out an unlimited PTO policy to your employees, you’ll need to make some decisions about the structure of your policy. As you go about creating a formal written policy, here are some questions you can answer to begin formulating an outline for your new policy:
What will you call the policy? “Unlimited PTO” or “Unlimited Vacation” might be too ‘startupy’ for an established business. Some alternatives might include “Flexible PTO” or “Self-Managed PTO.” What you the call the program will greatly impact how employees and job candidates perceive it.
Will you offer a required minimum amount of PTO per year?
Will you provide guidelines as to what amount of annual PTO is recommended or acceptable?
Will you require employees to submit time-off requests or let them entirely self-manage their PTO?
If time-off requests are required, what process should employees follow?
Will you require employees to submit a work completion plan for longer time-off requests?
How will employees be held accountable for project deadlines and general job performance?
What system will you use to track PTO usage so you can evaluate your new unlimited PTO policy’s effects?
Will you require employees to designate someone to take over their responsibilities in their absence?
Considering and answering these questions is a great first step in building a formal unlimited PTO policy.
How to Implement an Unlimited PTO Plan at Your Company
Once you’ve make decisions about the structure of your new PTO plan and created a formal written policy, there are several key things you should consider before implementing the new plan.
When switching from a traditional PTO plan to unlimited, long-term employees may see it as a loss of deferred compensation from accrued time-off. To combat this, institute a process to offer payouts for accrued time-off when the new PTO plan is rolled out. Certain states have strict regulations over pay-outs regarding PTO, so make sure you’re being compliant.
Give advanced notice to employees that a new benefit type will be rolled out soon. Explain the impact of the new PTO policy and how it will become part of the company’s culture.
Create, document, and distribute a written policy that outlines the structure of your unlimited vacation policy. Make sure to include details on eligibility, the proper procedure to request time off, and any rules on how this benefit will be managed. Make sure to put this new policy in your employee handbook.
Educate management staff about the new policy and how to administer it in accordance with your new documented policy.
Put systems in place to track the new PTO policy usage. Even if employees are not held accountable to a specific number of vacation days per year, it’s still important to have a system in place to track vacation time. This will allow your team to monitor trends over time and watch out for over or under-usage.
Remember that unlimited PTO does not have to mean “unmanaged PTO.” You can offer your employees unlimited PTO but still hold them accountable for appropriate request-off procedures and accountability protocols.
Key Takeaways
In today’s post, I explored the pros and cons of unlimited PTO plans and offered some guidance in selecting if this policy is right for your organization. Here are some key take-aways from today’s post:
Unlimited PTO can reduce your financial liabilities, empower your team, and help you attract top talent.
An unlimited PTO plan presents several potential challenges including unmanaged processes, policy abuse, and unclear expectations.
When deciding if unlimited PTO is right for your company make sure to consider your company values, industry limitations, and workforce demographics.
When implementing a new PTO policy, it’s crucial to formulate and document a formal, written policy.
What do you think: is unlimited PTO a good or bad idea? Does it work for specific companies but not others? Drop your thoughts in the comments box below!
Your employee compensation strategy is an important component of your company’s overall hiring strategy. You already understand that compensation is very important to be able to hire and retain top talent. What you might not know is that there are some simple strategies you can use to increase the value of your compensation without increasing base salaries. In today’s post I’ll explore how to understand your total compensation package and offer six unique strategies to increase the value of your total compensation offered.
Understanding Total Compensation
When considering making changes to your compensation strategy, it’s important to first understand the difference between base salary and total compensation.
Base salary is the amount per hour or year an employee is paid. This is the figure that appears on the employee’s paycheck. This number does not include bonuses, benefits, or any other perks.
Total compensation is everything that an employee receives in exchange for working for your company. This figure includes base salary, bonuses, incentives, benefits, on-site amenities, and any other perks you offer.
Some typical benefits induced in total compensation:
Health insurance
Vision and dental insurance plans
Retirement plans
Performance bonuses
There are many creative ways that companies add additional value to their total compensation package. Here are just a few:
Gym memberships
On-site child care
Casual dress code
Flexible schedules
Creating Goals for Your Compensation Strategy
When you’re considering making changes to your company’s compensations strategy, there’s a couple of key things to keep in mind:
First and foremost, employees must feel they’re being compensated fairly. If employees don’t feel this way, high turnover is inevitable.
Your compensation strategy should ensure employees are invested in the long-term success of the company.
Communicating your company’s benefits and perks programs to employees will help them better understand the value of their total compensation package.
When creating your total compensation package you should set one or two goals. This helps make sure that as you add incentives to the package, they’re in-line with your overall compensation goals. Here are some examples of goals related to total compensation:
Recruit great talent
Motivate employees
Reward top-performers
Reduce employee turnover
Improve your career brand
Six Creative Compensation Tactics
Now that you understand total compensation and have set some goals for your compensation strategy, you can get to work building your total compensation package. Here are six unique compensation tactics you might opt to include:
1. Delayed signing bonuses
Many companies offer a large signing bonus as a particularly enticing component of the compensation package. However, a highly-effective yet often-overlooked compensation strategy is to offer a deferred bonus. For example, offer a $5,000 signing bonus up front with an additional $5,000 bonus granted at the six-month mark. This way the signing bonus works not only as a compensation tool but also as an employee retention tool.
2. Think Beyond Cash Incentives
Rather than offering a performance-based cash incentive, consider offering a different incentive such as an annual company trip. Other great ideas for incentives include: bonus vacation time, sports-related activities such as group outings to a game, or free catered lunch. Any of these incentives can add variety to total compensation and provide tangible incentives for employees to work towards.
3. Employee Stock Ownership Programs (ESOPs)
In an employee stock ownership program you offer employees stock in the company as a benefit or performance-based bonus. This program helps align an employee with the long-term company vision, as they become personally invested in the company’s growth.
4. Phantom Equity
Unlike ESOPs, phantom equity does not transfer any of your company ownership to employees. Rather, it’s a contractual agreement which gives your employees a right to a certain percentage of the profits/proceeds of your company. This process allows you to incentivize long-term commitment and high performance without giving up any ownership of the company.
5. Employee Discount Program
An employee discount program is a great way to provide additional incentives beyond an employee’s base salary. Employee discount providers will partner with your organization to offer your employees competitive discounts on retail goods, phone bills, hotels, and much more. Studies show that Millennials, who are often on a tight budget, are particularly enticed by attractive employee discount programs.
6. Paid Training Stipend
Including a training stipend in an employee’s compensation package accomplishes three things:
Shows your employees that you want to invest in them and their career success. According to a study done by Deloitte, most loyal employees believe their company offers a lot of training and support.
Develops your employees, so they can perform their job more effectively and become strong leaders.
Increases the total compensation value of your employee benefit package.
Employee Compensation Key Takeaways
Here are some key take-aways from today’s post:
When thinking about compensation, you must consider the total value of your compensation package, not just the employee’s base salary.
When discussing compensation strategy, it’s important to have clear goals in mind.
A competitive compensation strategy will help your company attract, develop, and retain the best talent.
Continuous communication around the total compensation package is key.
It’s only February and “employee retention” and “employee engagement” are already emerging as top HR buzzwords of 2018. In this post I’ll explore ten data-backed reasons why employee retention must be at the top of your priority list this year.
1. The Real Cost of Employee Turnover
A study by the American Center for Progress indicates it can cost up to 20% annual salary to replace a mid-level employee. That means replacing a manager making $40,000 would cost your business $8,000! And these figures increase substantially for high-level positions. CAP estimates the cost to replace an executive level employee to be 213% of annual salary. This translates to $213,000 in expenses to replace an executive making $100,000.
Beyond these alarming stats, there are several other costs associated with employee turnover. Some indirect costs of employee turnover include:
Onboarding and training a new employee
Lost productivity
Negative employee morale
Proactive investments in employee retention can save your organization the significant financial burden that comes along with turnover.
2. Time Value of Employees
It’s important to think about your employees as appreciating assets; the longer they’re part of your team, the more value they provide. As employees become increasingly familiar with the systems, products, processes, and teammates at your organization, they’ll drive more value. The figure below demonstrates this phenomenon.
Figure 1: Economic Value of an Employee to the Organization over Time (C) Bersin by Deloitte
If you have to replace a top performer, it could take their replacement years to scale up to the same level of productivity. When employees turnover, you’re losing the value from all the time, money, and other resources you’ve invested in them.
3. It’s a Job-Seeker’s Market
For companies with high turnover, replacing employees has become increasingly difficult due to jon market conditions. Extremely low unemployment rates (4.1% as January 2018) has a created a “job seeker’s market”. In a job seeker’s market, attracting and hiring talent becomes more difficult because candidates hold most of the power throughout the search and negotiation processes. In this job market, employee retention should be a top priority as replacing turned over employees will be incredibly costly and time-consuming.
4. Increasing Turnover Rates
The Burea of Labor Statistics shows increasing quit rates over the past four years. As this trend continues, employers need to be more vigilant of turnover. One cause for increased turnover is the larger presence of Gen Y and Gen Z in the workforce. On average, 60% of Millennials are open to a new job opportunity and 21% of Millennials have changed jobs in the past year. In today’s workplace, employee retention efforts are a critical component to tackling increasing turnover rates.
5. Tough Competition
Small-to-mid-sized businesses are often competing against big-name players in the space. Sometimes it seems like these larger players have infinite resources: more resources, more money, a bigger sales/marketing budget, and more. But you just might have an underestimated your biggest competitive advantage: your team! For small businesses, a stellar team can be the differentiator between you and major competitors. Investing in employee retention will mean you can better attract, develop, and retain your top performers.
6. Employee Morale
Frequent turnover can have a negative impact on your entire team’s morale. When team members see frequent turnover they can lose faith in the organization. A more intentional approach to employee retention can help avoid negative morale.
7. Protect Your Greatest Assets
For any business, your two more valuable assets are your people and your cash. Paying attention to employee retention can help you protect both! A strategic approach to retention can help you protect your cash by avoiding the financial consequences of employee turnover (recruiting costs, employee training, lost productivity, etc.). For small businesses, anticipating and managing cash flows can be a challenge. Strategic employee retention helps prevent unexpected changes to cash flows (for example, a top sales performer quitting). Additionally, a high-impact employee retention program helps you invest in and retain the top performers that help your business thrive.
8. Good People Practices Directly Correlate to Financial Gains
High-impact employee retention practices have been shown to directly correlate with increased revenues. In a case study conducted by Maia Josebachvili, she estimates the purposeful onboarding and retention of a top sales performer would bring in an additional $1,300,000 in revenues over a three-year period.
Figure 2: via Maia Josebachvili.
9. Customer Success
When you’re unable to retain employees, you’ll constantly be onboarding and training new employees. And when several inexperienced employees are working, mistakes are more likely. These mistakes can ultimately harm relationships with customers. Beyond this, when a customer’s point-of-contact changes, they take notice and ask why.
10. Your Employer Brand
A study by Jobvite showed that 59% of job seekers research companies on social media and career sites prior to applying. If your company neglects employee retention, you’re more likely to accumulate less favorable reviews on Glassdoor, Indeed, and other career sites. Potential job candidates may be skeptical of a company with high turnover. These reviews can have a big impact on your ability to attract talent in the future.
Employee Retention Key Takeaways
Here are some key take-aways from this post:
Neglecting employee retention can have a big impact on your bottomline.
Replacing turned over employees is difficult, time-consuming, and expensive.
Your workforce is one of your company’s greatest assets, and it should be invested in accordingly.
A great retention strategy can pay off with big financial gains.
It costs nearly 20% of an employee’s annual salary to replace a current employee.
Roughly 63% of employees are actively looking for a new job.
Engaged employees are 87% less likely to leave their organization.
The majority of turnover (52%) occurs in the first year of employment.
One in four employees would leave their job for a 10% raise.
Only 17% of organizations are aware of the costs of employee turnover.
About 65% of employees believe they can easily find a better position that pays more.
5 Strategies to Retain Your Top Talent:
Know who to retain. How do you identify top performers at your organization? Pinpointing rising stars is crucial to your overall retention strategy. Look for employees with the following traits: dedication to high-quality work, desire for growth, self-starter, decision-maker, critical thinker, and great communication skills.
Provide realistic job expectations. Be explicit and clear on the responsibilities entailed in a position from the beginning. Employees should have a clear understanding of the scope of their position and have a general idea of what their day-to-day will entail. Unrealistic/untrue expectations lead to employee disappointment, frustration, dissatisfaction, and ultimately attrition.
Get compensation right. Compensation is a critical component of your overall retention strategy. If you can afford to compensate over-market, you should. You should also factor in the value of your total compensation package, which includes all the benefits you offer. It’s important to make sure the value of your total compensation package is clearly explained to new employees. Your current employees should also be continuously made aware of the benefits offered to them.
Provide clear career-pathways. Annual performance reviews can be stifling for goal-oriented, fast-moving top performers. Instead, design an individualized career-path with clear goals and quarterly performance milestones for each employee.
Connect employees beyond their manager. In a study completed by The Herman Group, 75% of employees leaving a position claimed they left due to a bad manager. This figure demonstrates the importance of helping employees connect with the organization beyond their direct manager. Some effective ways to do this include providing each employee with a mentor, implementing 360 degree performance reviews, or leveraging peer reviews.
![A Simple Yet Effective Employee Engagement Survey You’ll Actually Use [Template]](https://www.launchways.com/wp-content/uploads/2018/05/Employee-engagement-survey-template-1.png)
