By Monica Mendoza
April 10, 2024
Conventional business wisdom says that offering a competitive compensation package is key to attracting and retaining talent, and this remains largely true to this day. Unfortunately, not all small businesses have the cash flow or reserves needed to reliably offer compensation at the level of larger, more stable competitors. Even if you want to offer the best salary and benefits to your employees, the current business environment may not make it possible.
Fortunately, navigating this dilemma can be made easier by following these clever tips:
Offer Non-Monetary Perks
When it comes to employee benefits, giving cash bonuses isn’t your only option and not always viable. A good alternative is offering non-monetary perks. This will help you conserve your capital, while still encouraging employee loyalty. Look into offering such perks as flexible or hybrid work arrangements or free breakfasts at the office. These benefits tend to be more sustainable than giving cash outright and can still serve to boost employee morale.
Look into Salary Advances and Employee Loans
If you truly want to give our cash-based benefits, you may want to consider allowing salary advances or setting up an employee loans program. These benefits may impact cash flow somewhat, but they shouldn’t have a huge effect on a business’s bottom line—provided the employees pay up, of course.
For easier tracking, these benefits can be disbursed through the same system as the employees’ regular salaries. When updating their payroll system, Philippines-based small businesses should look at flexible solutions like Maya Disbursements that could effortlessly accommodate these perks.
Discontinue Underutilized Benefits
Sometimes, benefits that look good on paper are unsustainable for a business. For instance, free food at the office seems impressive, but if employees aren’t eating it, it won’t make sense to continue this benefit. In these cases, you may want to replace the benefit with something that promises better employee utilization.
Prioritize Essential Benefits
It’s become fashionable for small businesses to offer a wide variety of unusual benefits that set them apart from their competitors, such as free gym memberships or having a pet-friendly office. While a diverse benefits package can look great on a job listing, experienced employees—the ones you need the most—are going to be focused on the essentials like health insurance, retirement plans, and paid time off.
Knowing this, it makes sense to prioritize these core benefits rather than trendy ones that probably won’t be fully utilized. In other words, don’t buy that break room foosball table and instead use the cash for something more meaningful.
Negotiate with Benefit Vendors
The larger your business gets, the more room it has to negotiate with insurers and other benefits vendors. Take the time each year to discuss plans with your vendors to secure competitive rates for insurance plans, retirement accounts, and other employee benefits. To improve your position during negotiations, explore different providers and leverage your learnings to negotiate favorable terms.
Offer a Direct Stake in the Business
If your business does not have a stable cash flow, flexible benefits that directly correlate with your growth as a company can be a good way to retain top performers. Some flexible compensation options you can try including bonuses, profit-sharing, or stock options.
Implement Performance-Based Pay
Performance-based pay structures can be used to reward top performers while conserving your capital. As with offering business shares, pegging bonuses and salary increases to predefined metrics can also elicit a shared feeling of stewardship over your business among your employees.
Keep in mind, though, that performance-based pay must be fair and transparent. If the system is being run in a way that makes it impossible to get a decent raise, it will eventually engender resentment and cynicism among your employees.
Educate Employees on Benefits
If your employees don’t understand the implications of the benefits they receive or are supposed to receive, they will not appreciate their value. In turn, this will make the benefits you offer ineffective at encouraging loyalty and probably useless at attracting people to your organization. For these reasons, you need to set aside time to educate employees about the value of their entire compensation package.
It’s not enough to provide resources in a shared folder, either. Education on benefits should be done upon onboarding new employees and refresher needs to be scheduled at least annually to remind your workforce about what’s available. Whenever there’s a change in benefits, block off some time to discuss them. Importantly, you must be ready to provide information on key benefits like health insurance and retirement planning.
Seek Professional Advice
Budgeting employee salary and benefits isn’t something that can be easily mastered. Fortunately, there are professional HR and payroll consultants who can help you develop a strategy that matches your business’s goals and financial constraints. Their services won’t come for free, but the potential savings and the improvements in recruitment and employee relations make engaging with these professionals well worth considering.
Smarter Compensation Means Sustainable Small Biz Success
Small businesses generally operate with many constraints but, with some creativity, most can provide competitive compensation and benefits without endangering their financial position. The benefits described here might not always be as effective as an outright raise, but they do give smaller businesses the ability to conserve cash reserves while still providing potent recruitment and retention capabilities. Ultimately, the conservation of both cash reserves and talent can pave the way for business longevity along with a much bigger pie for all the business’s stakeholders to partake in.
Monica Mendoza
Monica Mendoza is a content writer and marketing professional. She spends a lot of time studying how technology continues to transform lifestyles and communities. Outside the office, she keeps herself busy by staying up to date with the latest fashion trends and reading about the newest gadgets out on the market.
monica.mendoza00111@gmail.com
https://cllax.com/author/monica-mendoza
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Disclaimer: The ideas, views, and opinions expressed in this article are those of the author(s) and do not necessarily reflect the views of International Institute for Learning or any entities they represent.
