Saturday, January 17, 2009

Salary vs. Compensation - HR practices

Salary is not the whole, but only a part of the greater compensation package. Here's how managers can tout the compensation package to attract talent...

Key learnings:

  • The whole compensation package is a better recruitment tool than the lone salary component
  • With tools like "rewards on board", both recruiters and recruits can ascertain the real value of the benefits on offer.

Economy may not be riding the high tide exactly, but it holds promise for recruiters as well as the worker population. While organisations are opting for lay-offs and job cuts, experts and industry observers say the effect will not be lasting. Every job position that has been cut is sure to be filled up at a later stage. This is reason enough to encourage recruiting managers to plan their strategies well. When it is time to recruit again, managers are likely to be surrounded by a talent pool that has never looked as promising ever before. A positive aspect of the lay-offs and job cuts is an assurance of better talent availability in future. While this may sound a little farfetched, recruitment managers must brace up for the occasion nevertheless.

Attracting talent in these economically gloomy times is a tough act for recruitment managers. While the demand for talent is more now, resources have become limited. Therefore, recruitment managers need to plan their strategies to counter the mismatch between demand and means to meet the demand.

Better positioning

Positioning is not a term restricted to marketing. Its relevance in the human resources function, particularly recruiting, cannot be undermined. Thus, the need to position jobs in order to attract the right talent is important to ensure that managers get to choose from the best.

Positioning in the context of recruitment is about the way managers project the employment contract they have chalked out for a given position. Typically, managers have flaunted only the salary component in the name of employment package. However, experts and industry observers feel that it worked well in the heyday when the worker population was placed comfortably and had little to worry about since every job offer looked equally good, if not better. But today, when the sheen has worn off and the scene is not as promising as it was before, recruitment managers have to bolster their salary figures with the complete compensation package. Attracting talent by projecting just the salary seems less effective with employees seeking better overall bargain and salary figures capped owing to strained corporate budgets. In addition, compensation packages seem to be the only differentiating factor between employers as there is no room left either to lower or raise the existing salary levels.

The whole, not part

Recruiters have a major role to play in these tough economic times. The responsibility of convincing the recruit about the value of the benefits that an organisation is offering lies entirely with the recruiter. Incorporating benefits such as health programmes, stock options, and telecommuting and flexi-time choices can help recruiters create a wholesome compensation package that may lead to better talent.

Aon Consulting, a Chicago-based HR and risk management consulting firm, has developed a tool called "rewards on board" that enables both recruiters and potential recruits to calculate the value of the benefits offered. It is a web-based tool which helps ascertain the real worth of benefits. However, the downside is that it fails to account for intangible benefits like flexi-time, strong corporate culture, organisational climate and quality of workplace relationships. The onus of projecting these alongside other traditional benefits lies with recruitment managers. If managers underplay the intangible benefits, they risk depreciating the overall worth of the compensation package. Hence, they need to plan their job positioning strategy skilfully.

With worker profile changing and baby boomer population retiring, the "rewards on board" initiative gains greater relevance. The new generation of employees is more drawn to jobs that offer them enough time to pursue hobbies or be with friends and family. Thus, recruitment managers have to be sensitive to the changing needs of staff and offer them a workplace that can enhance productivity and get the best out of them.

Feeling the pulse of the worker population is critical to ensuring better staff productivity. Organisations have to emphasise the strategic nature of recruitment as a function, and keep their recruiter force active and inspired to use the best tools for attracting and retaining the right talent.

Ref: TheManageMentor.

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