How do I develop a pay, benefit, and incentive package?
When considering a job offer, many applicants take into consideration the pay, benefits, and incentives offered by a firm before making a decision. A generous package can help sway potential employees as well as keep existing ones at the firm, but it’s important to find a balance between the three offerings to meet the needs of both the firm and its staff.
To put together this plan, the firm has to first look as its financial position to see how much of a cost it can afford to put out for employees of different levels. Retaining top talent is absolutely necessary for any successful firm, so keep that in mind as you determine final numbers.
To figure out what you should be paying your employees take into account:
- Industry average
- What your competitors are paying their staff
- Cost of living[1]
- Supply and demand
Once you’ve analyzed pay levels, you’ll need to decide on benefits and incentives before arriving at any final numbers. Here are common examples to consider:
- Health insurance
- Dental insurance
- 401K plans
- Flexible Spending Accounts (FSAs)
- Vacation time
- Additional time off, for instances such as maternity leave or family medical leave
While most employers want the very best for their employees, offering any of these benefits comes at a cost. For example, the very best in health care plans likely mean either a large payment by the firm to offset the expense or a large payment by the employee. Figuring out which of these to offer requires the firm to review its financials to see how much it can absorb as well as to weigh what current and potential employees find most impactful.
The firm’s pay, benefits, and incentive package will have a significant impact on its hiring and retention[2], so carefully consider each aspect while developing your final plan.
References
1. Cost of Living: The Purchasing Power of a Dollar in Every State
2. Better Pay and Benefits Loom Large in Job Satisfaction