The new year can be a time when organizations are reviewing their compensation strategy and ensuring it aligns with their goals and values. Don’t get trapped by these myths in your review:
Myth 1. Top wages = Retention:. Some workplaces that pay top wages still have high turnover rates. Why is this? Well, there are many factors that affect employee retention. Employees want to work for an organization where they feel valued. Some factors that could disrupt this feeling include the work environment, the people, the culture, and the dedication and alignment of mission, vision, and values and everyday actions. If you are paying wages above the average market wage and still having a high turnover rate - it might be worth it to look at some of the other factors. Sometimes, no matter how good the money is, employees will leave because they are simply unhappy. Yes wages are crucial to ensuring you are attracting and retaining your team and as an organization you need to ensure you are paying fair and competitive wages, however are not the only factor and retention needs to be considered with a holistic approach.
Myth 2. Salary / Casual / Part-Time employees are ineligible for overtime: A common misconception is that only full-time and hourly employees are eligible for overtime. In fact, it is important that employers are up to date with Alberta’s Employment Standards to ensure that every employee is being fairly compensated for their work. All overtime eligible employees must be paid overtime, the basic rule is for any time worked that is in excess of the 8 hour work day, or 44 hour work week (whichever is greater).
Some industries have different overtime rules which affect overtime eligibility. These industries and their accompanying rules can be found here for Alberta Employment Standards. In addition employers can utilize overtime agreements and averaging arrangements to manage overtime.
Myth 3. Offering competitive wages means that your compensation strategy does not need regular review: Just because you were once offering a competitive wage does not mean that you still are. In fact, a competitive wage does not indicate the rest of the strategy or structure is completely sound. For example, the strategy should be internally equitable. This means that employees must view the pay structure to be fair or there could be repercussions such as demotivation or turnover. In addition, navigating changes in the external environment like adjusting for cost of living could also mean that it is time to review the organization’s compensation strategy. The market is constantly changing meaning that it is important for organization’s to stay current and align their compensation structures / strategies with external factors as well as internal factors. A review of strategy, industry analysis, or market analysis is necessary when attempting to maintain competitive market positioning. Lakeland HR Solutions can help, click here to book a consultation.
Myth 4. To be a competitive company, wages must lead or match the wage in the market: Sometimes it is unattainable to be able to pay above market or even market average for employee wages. However, this does not mean that an organization cannot be competitive. There are many other factors that can influence the competitiveness of an organization in the marketplace. For your organization it may be okay to choose a lagging compensation strategy (behind the average compensation), however additional advantages can have the power to move the organization to a more competitive position. Some examples of these advantages include: work life balance perks, childcare perks, flex time, community focused organization, travel allowances, comprehensive benefit packages, additional paid vacation days, etc.
Whether you choose to lag behind the market, match the market, or lead the market - Lakeland HR Solutions can help create a competitive compensation structure for your organization to attract and retain top talent. Contact us now to review your compensation, build a compensation structure, complete a market analysis, or navigate employee benefits. Happy New Year!