Employee compensation skills of an individual refer to his ability as an employer to give sufficient monetary value or tangible benefits to his employees in return for the services they have provided. The concept of compensating an employee extends far beyond the payment of wages to include any form of insurance, paying for their vacation, or even employee discounts etc. However, intangible benefits such as job security or job satisfaction etc. are never part of the employees’ compensation.
Employee compensation skills, therefore, encompass one’s ability to evaluate the performance of workers and employees so that all such tangible benefits and monetary value can be given to them accordingly, without making them feel under-valued or vice versa.
Why is employee compensation important
Employee compensation is an integral part of the HR department of any company. However, these skills hold great appeal to employers nowadays because managers in every department have their role to play in the performance evaluation of employees according to which they are then compensated.
Following are some benefits of employee compensation that explain its importance:
- Greater employee motivation. Employees tend to have a greater job satisfaction if they feel that they are being rewarded fairly in return for their services. This helps in escalating the level of motivation of these employees such that their dedication to their job increases.
- Reduced absenteeism and turnover. Once the employees are happy and satisfied with the value they are given in exchange for their services, they less likely to skip a day of work for unjustifiable reasons. The fair rewards they get also make them grow fonder of the company, reducing their likeliness to switch to another company. As a result, both absenteeism and employee turnover are reduced.
How to improve employee compensation skills
Following are helpful tips that can be used to improve employee compensation skills and obtain all benefits without having to give raises necessarily:
- Invest in professional development. Instead of giving your employee a raise, the less costly way of compensating his good performance is to cover the cost of a degree-related course or a certification, which adds up to his long-term professional development. Thanks to the online presence of a number of colleges, retaining a bunch of such loyal talent is made a whole lot easier.
- Blend work and pleasure to boost benefits. The best way to boost benefits without increasing costs too much is to blend leisure with work. For instance, if you are already paying travel allowances, arrange your professional conferences in destinations that are tourist-friendly and allow the employees to bring their families along. This way your work-related travel expenses will cut down the expense of the usual paid vacation.
- Focus on employees’ needs. It is imperative that you understand the needs of your employees before you come up with a compensation strategy in order to adjust it accordingly. Without knowing their true needs, all your attempts to motivate your employees (by compensating them well) will be in vain, adding only to your costs and not productivity.