EFFECTIVE REMUNERATION POLICIES: HOW TO SET THEM UP IN YOUR COMPANY?
When we look at the labour market, we find employees, who are the people who give up their work in exchange for a salary, and employers, those who are willing to hire a benefit derived from the effort. How should human resources departments attract talent? With remuneration policies.
The best way to incentivise employee performance and support business growth is to establish an effective remuneration policy. To do so, factors such as market demand and the internal situation must be taken into account. A reward strategy is a business tool that is generated in efficient working environments. Do you know how to establish an effective reward policy? We tell you.
What types of remuneration can you apply in your company?
When we talk about remuneration policies, we refer to the set of measures and criteria taken into account to remunerate the work of each of the company’s employees. This remuneration policy must be fair for the employees and also for the company. If there is no balance and equilibrium between the two, it will be very difficult to have good workers and it will be difficult to retain talent. If it is unfair to the company, it can lead to a liquidity problem.
There are different types of remuneration, which can be combined to achieve a fair remuneration for workers. What are these? We tell you about them:
- Fixed remuneration: When we talk about fixed remuneration, we mainly focus on financial remuneration. It is established by agreement or contract and is fixed at the beginning of the employment relationship, depending on the job. It is defined by the legal minimum and not on the basis of objectives. Fixed remuneration can be individualised and is determined by the candidate’s skills, knowledge and abilities.
- Variable remuneration: In the case of variable remuneration, which can be financial or not, it is established based on the objectives set by the company. The remuneration is applied if the employee achieves the objectives. It is important that before setting this type of remuneration, the company has clearly defined the objectives to be achieved and the workers have all the information and tools to be able to achieve them. This is usually very common in commercial or sales departments. It is not advisable for this to be the only remuneration and for it to be in relation to the work, since if employees do not achieve the objectives or if it is very difficult for them to achieve them, they may become demotivated and not want to continue in the company.
- Remuneration in kind: This is the only type of remuneration that cannot be financial. It is remunerated with another type of compensation such as services, social benefits, products, etc. It serves to complement fixed or variable remuneration. In this case, it is forbidden for the remuneration to be for work in your area.
Employee training is one of the best benefits in kind that companies can offer. As well as being a benefit to employees, companies can also offer training at a reduced cost or even free of charge. At Classgap for Enterprise we offer customised online training for companies. We are an official training school with more than 10 years of experience in the training sector.
What factors determine pay policy?
- Collective Agreement
- Company location
- Different jobs
- Economic situation of the company
Strategies for establishing effective remuneration policies
Do you know how to implement a remuneration policy plan? Knowing how to plan good strategies will allow you to get more benefits in the company. You should be aware that different employees value different things. While some prefer cash remuneration, others prefer to take shorter working hours to improve family reconciliation or to extend their holidays. A good flexible remuneration strategy allows you to offer the compensation that works best for each employee, allocating part of the financial remuneration to products with tax and economic advantages.
HR should conduct an annual review of compensation policies to ensure that the company maintains its competitive advantage and internal equity. Employee salary reviews allow for the adjustment of pay to the individual. An integral part of merit pay increases are performance appraisal checks, this has an impact on the establishment of an effective pay policy. Pay level policies that define the parameters ensure that pay is equitable across all jobs. Pay for performance policies are similar to merit pay, as both are based on employee performance.
If you want to invest in training for employees, contact us and discover all the advantages of training for business.