This article was adapted from our interview with Patrick Maier from Payspective.
When thinking about improving compensation, most people don’t think much further than simply hiking up their base salaries. In reality, there are many other ways to achieve this. Some might actually be more effective and save some budget to spend elsewhere!
Here are four great strategies to consider if you’re looking to improve compensation without having to increasing salary...
1 - Improve pay-per-hour
You can show your team that they can have a truly balanced life within your company. Whilst they may make more in a huge corporation, a hedge fund, or a professional services environment, the actual amount they earn every hour will actually be better with you, and their quality of life will increase too.
If you can communicate the fact that you’re actually paying really well per hour because you offer a working environment that allows for a balanced lifestyle, that can be very attractive to top talent who may otherwise opt to work elsewhere.
With hybrid working bringing a much greater focus on work-life balance, you can drive home the benefits that your strong pay-per-hour and fair working hours can bring.
2 - Provide powerful perks & benefits
Perks and benefits are always a really interesting topic. You have the opportunity to ensure the culture you’re building is one that excites people and makes them want to join. Maybe having a crazy off-site in Spain goes a much longer way than giving someone a slightly larger base salary.
Structure your perks and benefits in a way that not only align with your company values and culture, but make you more attractive as an employer too. Learn how you can develop a great benefits strategy here.
3 - Bring a bonus structure full of incentives
Based on individual or company performance, this approach can derisk payroll for the company. You don't have to raise base salaries and can still make total compensation really attractive for candidates.
They're also a great tool to align incentives to make sure that people really work on the goals that you want them to work on. Make sure that you communicate them correctly so that people actually take them into account when thinking about their total compensation.
Payspective surveys showed that 50% of people actually prefer a £5k salary increase over a £7.5K expected bonus increase. Don’t let this put you off though, risk aversion is natural. Bonuses are always a valid way to increase compensation while keeping base salaries the same.
4 - Stack them with stock options
Stocks don't cost you any cash and can be a great way to sustain talent acquisition. However, it can also be a brilliant tool for retention and incentivization. In our previous article, Patrick talked about designing your stock options system in the right way. You don't want to treat stock options as a silver bullet, but again, they can be a really interesting mechanism in order for you to have a competitive package without increasing base salaries.
Why is this SO important right now?
The answer is simple - right now, it’s a very candidate-centric market. You have to be very competitive in your offering in order to win the war for talent. Rarely can a business pay the same as Google pays, so they’re becoming more creative in the ways they compete.
Employers are putting way more emphasis on their employer value proposition as a whole. So you should ask yourself, just as many employers are, “how can we communicate the other parts of our value proposition, not just base salary, that make this a really competitive offer?”.
Base salary is important, but don’t let it blind you from what really makes people tick.