It’s that time of year again when credit union management begins budgeting for the next year’s merit increases for their employees. But is giving an annual increase to most employees really impacting their engagement and your profitability?
Since the recession, more and more organizations, including credit unions, have begun utilizing variable pay programs to supplement the base salaries they give their employees. According to HR association World at Work, the number of companies using variable pay programs rose from 79% to 82% in the last year alone.
In addition to variable pay, the total rewards package can be quite motivating – both for recruitment and retention. Alison Avalos with World at Work stated, “There are a lot of things we get today for rewards. Yes, you come in to work for a paycheck. You do expect to be paid for working, for performance, but there is more to a job than pay. There is social interaction, the challenges, the benefits, paid time off, perks. None of this works on its own. Companies need a comprehensive pay package.”
Many organizations are pursuing low-cost options such as an ergonomic work environment, positive atmosphere, flex time, job sharing, etc., to supplement their base pay packages. These options are certainly worth consideration when the money is tight and your budget must be stretched farther.
According to the staffing company Randstad U.S., 46% of companies use performance reviews as a means of improving employee engagement, despite the fact that only 16% of employees actually said this influenced their engagement positively. Jim Link of Randstad reported that compensation is typically near the top of employees’ list when indicating the items that influence engagement. However, compensation alone will not keep employees engaged permanently. Utilization of spot bonuses, promotional and training opportunities, and challenging work have been found to be quite effective.
Just remember, according to Randstad, 56% of respondents indicated they thought it would take less than three months to find and land a new position. Will it be that easy and cost effective for you to fill that vacancy?
HRN Performance Solutions provides variable pay and total rewards consulting services to help credit union leaders determine if adopting these programs can help control compensation budgets, improve retention and overall worker engagement. For more information and a no-obligation initial consultation contact Mike Dougal, director of HR Consulting at HRN Performance Solutions. He can be reached at MDougal@hrnonline.com or by calling (800) 940-7522, ext. 752. Or click here to learn more about our HR Consulting Services.