Checklist for Forms of Compensation
How can you do a better job of attracting and retaining employees to your governmental entity? Of course, salary is an important consideration, but other forms of compensation may be persuasive. In some cases, you might need to take a more creative approach.
Action idea: Divide employee compensation between “direct” and “indirect” compensation. Then seek to provide an appropriate mix of the two.
What is the difference? Direct compensation is essentially an employee’s base wages: annual salary, hourly wage or some other performance-based pay. In contrast, indirect compensation can range from health insurance to retirement plans to child care and maternity leave.
Note that indirect compensation includes nonmonetary compensation. These are benefits such as job security, flexible work hours and the opportunity for recognition of performance and camaraderie in the workplace that do not necessarily have a tangible value.
To increase the chances of success, you should appeal to the needs and desires of your employees. Here is a quick checklist of the methods you may consider:
Direct Compensation
Basic salary: Of course, offering a higher wage can provide a competitive advantage (even though governmental entities often pay less than other industries).
Indirect Compensation
Some types of indirect compensation are required by law. For instance, employees may be entitled to receive Social Security, unemployment or disability payments upon the happening of an event. By going beyond the basic legal requirements, your organization lets your employees know you realize what they are truly worth.
This is just a partial list of the possibilities:
- Flexible working schedules
- Eldercare benefits
- 403(b) or other retirement plan
- Moving expenses
- Insurance (health, dental, vision, life)
- Paid leave (sick days/holidays/personal days, etc.)
- Cell phones, pagers and other electronic devices
- Child care services
When the labor market tightens, indirect compensation becomes a more important part of the package. Even if your organization isn’t offering the highest salaries, it may still be able to offer benefits that meet the needs of those people you want to continue to employ.
Action idea: Try to structure compensation packages for employees to fit your needs. But remember to stay within the proper legal boundaries.
At Lewis, Hooper & Dick, LLC, we offer comprehensive services in human resources. Please contact David Lunzmann at (620) 275-9267.
To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or tax related matter.