Compensation: Consider more than just salary

There’s nothing like a new employee getting their dream job—and there’s nothing like a company getting its dream candidate. But it’s more than just a matter of negotiating salary.

“Good people demand good salaries,” said Steven Osiel, vice-president, compensation and incentives, with Accompass, speaking yesterday at its Negotiating a Dream Salary event in Toronto.

An employee usually has a sense of what their worth is, he said, and they try to validate that with as many sources as possible. But what if their salary expectations are too high? What do you do?

“When we talk about compensation, we need to have a broader conversation than just base salary,” he said.

So as a company, you need to make some decisions around compensation.

Market base pay versus internal equity (fairness) – You have to have a philosophy on this, as people will talk within a company and compare salaries, he said. “You have to have a balance.”

Fixed pay versus variable pay – Will you vary the annual increase for each employee by merit or keep it the same across the board?

Allowing exceptions versus no exceptions – Ask yourself if you want exceptions in negotiating compensation. For example, would you give a potential candidate four weeks’ vacation to start when your other employees started at three?

Use of non-cash and promotion of compensation – Are your non-cash benefits—for example, employee discounts, mat leave top-up—part of the compensation conversation?

It costs an employer about 35% of an employee’s salary in additional (non-cash) compensation: health, dental, life insurance, Canada Pension Plan and employment insurance contributions, cost of statutory holidays and sick days.

Managing expectations—yours and the candidate’s—is where the whole conversation is going, said Osiel. There are other things available, such as the non-cash things.

You want to highlight the exceptions in your company, he said. For example, play up your flex hours and indicate your low turnover rate.

Candidates can do their part, too
Even the perspective employee can help steer the conversation. As a candidate, you can ask what other programs exist in the company and what the company’s position is on bonus opportunities and variable pay. “Make the organization understand its own offering,” he said.

Employers need to expand the hiring conversation to go beyond compensation, Osiel concluded. “If you don’t have anything interesting in your organization beyond cash, start looking.”

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