The Importance of Fair Compensation: Building Trust and Retaining Top Talent

September 27, 2023

The Importance of Fair Compensation: Building Trust and Retaining

It’s never been a secret: if you want to retain your best-performing employees, paying them well typically works like a charm. 

Still, many employers make the mistake of trying too hard to play tough and consider impressive performance as something that should be a given. 

It’s only when things start not working out because they’re missing key people from their organisation that they start realising how important they were in the first place. 

Fair compensation is important for retaining and attracting top talent. Learn more strategies with mentorship from a business coach.
[Source: Freepik]

Key Takeaways on the Importance of Fair Compensation

  1. Retaining Top Talent: Fair compensation plays a vital role in retaining high-performing employees who contribute significantly to your organisation.
  2. Talent Attraction: Offering fair pay not only keeps employees motivated but also helps attract top talent, as your reputation for rewarding skills and hard work spreads.
  3. Fairness Matters: Fair compensation demonstrates your commitment to fairness, which fosters trust and loyalty among your employees.
  4. Motivation and Performance: Clear signals of performance-based salary increases and advancement opportunities motivate employees to excel, leading to better results.
  5. Building a Positive Brand: Fair pay contributes to your company's reputation as a just and meritocratic employer, attracting talent beyond traditional recruitment methods.
  6. Competitive Compensation: Reward employees based on their performance, problem-solving skills, teamwork, and dedication, rather than a one-size-fits-all approach.
  7. Positive Work Culture: Cultivate an inclusive work culture that prevents bullying and uncooperative behaviour, ensuring all employees feel valued.
  8. Flexible Work Options: Offering flexibility, including remote work and flexible hours, can enhance job satisfaction and attract top talent.
Robin Waite - Business Coach

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How Compensation Affects Talent Attraction 

Imagine an organisation where the boss only wants to pay you as little as possible to get you to use your smarts and talents to resolve their issues. Once the tough day at work is gone, they want to go home to their jacuzzi + a cocktail and forget all about you and the other workers. That's exactly the kind of place an employee would avoid like the plague. 

Other than providing high-quality coffee and regularly servicing and rebottling the water dispenser (especially during the summer), a great way to make your employees happy is to pay them fairly. 

First of all, fair compensation for the work your employees do will make them stick around when the going gets tough for one of the projects or the company as a whole. (Which it inevitably will at some point.) 

Secondarily, however, the word will go out that your company is a place where skills, talent, and hard work are appropriately rewarded. This way, rather than bending yourself backward and attempting to embellish your ‘We’re hiring!’ online posts, good old word of mouth can help you attract some of the best specimens from the local and international talent pool. 

Here are the most important ways in which compensation affects talent attraction. 

Fairness 

No one likes being on the receiving end of a power move from a higher-up. 

No one likes having to carry the workload of other, less competent co-workers, who are paid the same as them. 

To keep a high-achieving employee, compensating them fairly for their input and the results they’re securing for your company is not only a way to hook them with money but also to show you understand the concept of fairness. 

Motivation 

If an employee with potential sees other folks who have potential stagnating in the same spot for years despite their excellent performance, they will likely stop trying as hard themselves and approach work in a more non-competitive way. 

As a result, you will end up with a team of people who are only putting in minimal effort in their work, which will inevitably eventually show when it comes to the overall results. 

On the other hand, receiving clear signals that an increase in performance and more palpable results will also mean a higher salary and prospects for a better position in the corporate hierarchy can make your employees motivated to try harder. A simple look at this salary calculator Florida can tell us what employees expect from their prospective positions. 

How much is going to get eaten up by tax? What part of their salary will disappear due to inflation? The questions add up, and the answer should be a competitive salary that can increase with great work performance. 

Fair compensation is a basic part of motivating employees. More strategies and guidance from a business coach.
[Source: Freepik]

Branding 

This goes back to attracting the right sort of talent, not just through online and offline job advertisements, but also by establishing a reputation as a just and meritocracy-appreciating employer. 

No amount of frappuccino-making coffee machines, lazy bags, and team buildings can replace getting paid fairly and recognised for your achievements. (Although go-karting and having a coffee at the office are always nice touches.) 

Different Factors That Can Help Attract and Retain Top Talent 

As we have seen, attracting and retaining top talent is not just about being a company with a good name, generally speaking. It’s also about earning a reputation among the new employees themselves. 

Some of the most impressive businesses in the world are known to exploit their employees and impose, at times, inhumane work conditions with inadequate pay because they can get away with it. 

For a small-to-medium-sized company, however, you cannot afford to have your reputation tarnished like that, as hiring the best of the best in your line of work is essential for achieving the results you need. 

Competitive compensation 

… does not mean simply showering anyone who looks smart with money from the get-go. 

What it does mean, however, is paying attention to how your employees perform and rewarding the ones who can get stuff done. 

Problem-solving, being a good team player, and having the grit to see a tough project through should be the main motivating forces behind considering increasing a worker’s salary. 

A positive work culture 

Another major aspect of attracting talent is setting up a positive work culture where everyone feels included. 

While some workplace competitiveness can get a tad rough at times, what you as an employer must do is prevent bullying, deliberate exclusion of some employees by others (a form of mobbing), and other uncooperative and unprofessional behaviour. 

You don’t want to risk losing some of your best workers because they were pestered to no end by a coalition of jealous coworkers. 

Flexible work options 

If there's an option to work remotely, why not allow your employees to have a day of walking around their laptops in slippers?

(The employee's cat might insert itself as a part of the new project, though. Other than that minor inconvenience, everyone would jump at the opportunity to have a day or two out of the office.)

Flexible work hours and working out of the office at times can be a great way to introduce some variety to your workers' schedules.

And you get a couple of 'cool boss' points. It's a win-win-win!

Conclusion 

In a culture where money makes the world go round, paying your employees decently is an important part of ‘exercising fairness’ that you should not overlook. 

This way, when the word gets out that you are a fair and just employer who recognises and rewards talent, skill, and hard work, you will start attracting the kind of people that "match the description" too. 

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