Table of contents: What is compensation other than wages and salaries?
Estimated Read Time: 5 minutes
Every company should have an effective rewards system. It not only helps to make employees feel appreciated for their hard work, but it will also make your business more attractive to top talent (especially in industries where competition for talent is high, such as finance and technology).
However, individual demands or preferences by candidates can make it tricky for employers who want to determine what is the best rewards system. Some candidates may only focus on the dollars, whilst others may be looking for non-monetary incentives, such as flexible working hours or the option to telecommute from home.
So when it comes to remuneration, does money talk? Or are candidates more interested in non-salary benefits?
Let's take a closer look at the different types of incentives you could offer, and discover how each can affect your hiring and employee retention.
What types of incentives are there?
Employee incentives can generally be split into two main categories:
Monetary incentives
These are money-based rewards, such as cash bonuses, stock options, annual pay raises and profit-sharing.
Non-monetary incentives
An award that provides employees with opportunities, such as time-off work, flexible work schedules, or even positive changes in the workplace.
Whilst monetary and non-monetary incentives work slightly differently, the end goals of both are ultimately the same – to attract top talent and to help retain your best talent.
Does money talk for candidates/employees?
Base salaries will always remain an integral part of attracting and retaining top talent. Even more so with 36% of Australian employers forecasting meeting candidates' salary expectations will be their biggest staffing challenge of 2023, according to research by Robert Half.
It’s important to ensure that your company is offering competitive salaries that are in line (or above) industry standards, especially for high demand roles where specialised skills are in short supply.
No-one likes to feel underpaid in a job role and if competitors are paying their employees more fairly (or generously), top talent will end up leaving. In the finance sector, research by Robert Half found that 40% of Australian CIOs say that one of the main barriers to attracting top talent to their organisation is that they do not offer as much compensation as their competitors.
Does money talk louder than non-salary benefits?
Not all employees are looking for financial rewards. Interestingly, some would even rather have a handwritten thank you note acknowledging their contributions, or rewards such as job flexibility and opportunities to give back to their community.
It’s often said that cash is king, but when it comes to retaining employees and attracting new talent for your business, does money talk, or are non-salary rewards preferred?
Well according to research by Robert Half, 62% of Australian employees say non-salary related benefits have become more important to them than the base salary when considering a job offer.
Furthermore, 80% of employees would consider non-salary benefits if an employer was unable to meet their salary expectations.
Of course, every employee has different motivations and priorities. For example, some high-performing candidates may prefer to receive a financial bonus for achieving KPIs, a working mother may be more motivated by the offer of flexible working, or some may want to be rewarded with social events on Friday afternoons.
Of Australian hiring managers surveyed by Robert Half, the following were popular non-salary benefits offered to employees:
- Flexible working hours and/or option to work from home/Remote working (84%)
- Wellbeing/health programs (e.g. flu vaccinations, discounted gym membership, meditation program) (60%)
- Bonus (60%)
- Paid parental leave/Long-service recognition/Increased holiday allowance (58%)
- Company paid mobile phone (56%)
For an added bonus, 49% of Australian employers say employee engagement and happiness have increased in their organisation since offering more non-salary related benefits.
In a skills-short market, companies have traditionally focused on salaries to differentiate themselves and attract talent. But as priorities change across Australia’s workforce, businesses are seeing the opportunities to use sought-after perks and benefits as a way to attract top talent – especially smaller companies that are unable to match salaries offered by larger competitors. Perks and benefits like flexibility and hybrid working are also becoming increasingly recognised for their ability to address other business concerns that have plagued workforces in the past such as burnout, poor morale, and low staff engagement. - David Jones, Senior Managing Director, Asia Pacific.
Flexibility is key
To decide what is best for your business, take the time to understand your workforce. Run focus groups or surveys, and build your compensation packages based on what your employees are looking for, rather than what you think they want.
Flexibility is key, as being able to tailor remuneration packages to the individual employee’s wishes offers hiring mangers a highly competitive edge in a skills-short market where businesses are vying for top talent. Almost seven in ten (69%) of Australian employers offering a flexible remuneration and benefits plan, and 76% finding it beneficial to their recruitment of talent.
Once you have a defined package, don’t be afraid to discuss it as part of the recruitment process; use it as a selling point to promote your company culture and to manage future employees’ expectations about what their salary (and non-salary) benefits will be, and what future opportunities are.
