When it comes to compensation your employees will naturally focus primarily on how much they get on their paycheck each week. There are other costs associated with having employees including health insurance, disability insurance, personal use of company vehicles or cell phones, sick leave, vacation, personal time, 401K or other retirement even daycare or tuition.
Make sure your employees understand the benefits you are giving them and if they do not value them then you should consider eliminating the benefit. We had a disability insurance plan that I though was very important. When presented with the option a majority of my employees chose to option out of the plan and take the premium as salary.
Do your annual salary review a few days after one of your quarterly Employee Evaluations. If you make it part of the review the only focus of the meeting will be on the salary.
List all the benefits and the cost of each. Your employees will likely be amazed at the cost of these items. I would make a list for each employee giving the annual cost of each item then adding it up and the increases in benefit cost became part of the cost of living raises. If the cost of health insurance went up ten percent but the cost-of-living only three percent the cash contribution to accost of living increase may be negligible.
If you plan to give a raise more than cost-of-living make sure it is tied to an increase in responsibility you discussed at the Employee Evaluation.
Original content copyright Thomas Robinson 2010
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