The last few months have been filled with rising wages, steep job competition, and continued uncertainty. Practice owners are being approached by staff about pay increases and are receiving higher wage requirements from job candidates. Many businesses are advertising their starting pay, putting wage comparison front and center.
As the economy always does, the current environment will ebb and flow. However, there are some universal truths in compensation strategies:
- Pay and responsibility need to be in balance. If an employee has too much responsibility and compensation is not in line, the employee will struggle with engagement and productivity. On the flip side, if wages are high without appropriate levels of responsibility, you get complacency and change resistance.
- Pay doesn’t drive performance results. More money for more performance or engagement at work is unrealistic. We have a perception that if we pay more or if we make more, things will be better. Compensation will drive short-term improvements, but often does not address underlying issues.
How to Create a Compensation Package
Creating a compensation package that works for employees as well as your practice requires taking inventory of financial wellbeing and ongoing profitability before making any changes. Making informed and thoughtful decisions about your employee compensation plan will prevent uncontrolled salary creep and keep total payroll costs in check. In this environment, it feels impossible not to give sweeping pay increases in a panic to “get ahead,” but it is important to resist this urge.
There are things you can do to quickly address compensation competition before requests start coming in or your staff decides to seek other opportunities:
- Calculate current payroll costs. Cost of Goods and Staff Compensation should be about 50% of the total gross revenue of the practice. This gives you a guide to follow.
- Assess when staff last received pay increases. This ensures you are not over-correcting.
- Review salary data for similar roles in your location. This provides comparison.
Communicating the purpose of the increases is as important as giving them. Don’t miss the opportunity to connect with your employees about their performance and value. As discussed, increases only create temporary engagement and commitment. Revisiting ways to achieve lasting engagement in tandem with pay increases will help your practice reap the greatest benefits from increasing pay.
5 Ways to Achieve Lasting Employee Engagement
- Set Goals
- Set specific goals for each of your team members or the practice as a whole.
- Keep track of the goals and encourage your employees to do so as well.
- Discuss Performance
- Conduct frequent check-ins with your employees.
- Address concerns when they arise.
- Recognize Success
- Celebrate wins, even small ones.
- Maximize employee performance by identifying strengths and assigning corresponding responsibilities.
- Hold Staff Meetings
- Bring everyone together at least monthly to receive updates and discuss opportunities and wins.
- Use the time to connect with your team as a whole.
- Communicate Expectations
- If your employee is not doing what you want them to do, they likely don’t know better.
- Be clear with your team about your expectations.
Evaluating your compensation strategy is a common practice and should be done at least twice a year to ensure that wages remain competitive and that you retain quality employees.
Struggle with Designing a Compensation Package?
If you’re encountering challenges in creating a compensation strategy for your practice, managing staff or other human resources concerns, contact IDOC. We’re here to help. IDOC HR Services offers a variety of optometry HR services including everything from helping you create the best compensation package for your practice to staying HR compliant with COVID. Reach out today to get started and find the guidance you have been looking for.
