How to be creative with remuneration incentives to attract talent
…and reduce recruiting costs in Human Resources
Australia is getting better at creative remuneration incentives to reduce recruiting costs and keep quality people for longer, but there is still much room for improvement. To counteract a current job climate of skill shortages and aggressive headhunting, the smart human resources team will look for examples overseas as well as in Australia’s leading creative remuneration companies.
The visible induction and recruiting costs include agency and advertising fees, management time, uniform and stationary costs. The hidden costs, however, are where organisations can be the most affected. These include stress on others covering the role while it is vacant, time for the new employee to get up to speed (often 6-8 weeks), plus loss of productivity costs to management while they recruit and induct.
Then there is the telling cost of not hiring correctly for the role. Research by the respected US recruiting firm Robert Half International (RH) found that supervisors spend 17% of their time, or close to a day a week, managing poor hires. If the poor hire becomes disgruntled, then overall workplace morale can suffer. Removing a hire that is a wrong fit can be a time consuming and costly process too, especially if the probation period has expired.
Obviously, the best way for HR to avoid a bad hire is to invest resources into recruiting well. Providing creative and attractive remuneration incentives can play an important role in attracting high-quality candidates.
ANZ Bank is very public in its remuneration incentives, dedicating a webpage towards outlining the benefits, its family-friendly policies and a choice of flexible or fixed remuneration. They set a transparent culture from the beginning, stating: ‘We aim to provide competitive pay and rewards to attract, motivate and retain employees. Our remuneration framework is structured to reward our employees for demonstrating our values and their contribution to our success.’
The kind of remuneration incentives that will work best for your organisation will vary. A great place to start is by surveying your existing workforce for ideas of what would be desirable for them.
How creative should you be with remuneration incentives?
Be as creative as the situation warrants, here are some ideas:
1. Health and Wellbeing incentives
In a climate where employee health and wellbeing are important to company success, incentives include:
Paid parental leave
Extended unpaid parental leave with guarantee of return to work
Flexible working hours
Access to company subsided insurance cover
Access to health and wellbeing programs (access to massage, gym, yoga, meditation, lunch-time walking or running groups, lifestyle coaching)
Other rewards (annual or end of project celebrations, season tickets, club memberships, discount movie tickets, discount petrol, etc)
2. Practical incentives
Sometimes people want to know basic work expenses are handled, so common incentives here are:
3. Performance incentives
Certain personality types respond better to performance incentives than others. Be transparent and accommodating, while keeping your organisation best interests in mind. Mix and match from the following:
Rewards tied to agreed results in performance cycles
Discretionary bonus plan (formal or informal)
Productivity gain-sharing plans
Clear opportunity for career progression based on performance and merit
4. Profit and Business cycle incentives
In times of change, or high demand/low supply of quality people, incentives that reward loyalty will be highly valued. These include:
Getting the nuts and bolts right
There are housekeeping measures and metrics to be considered when putting remuneration incentives in place. These include:
Systems to measure employee performance (such as enterprise incentive management technology), plus effective analysis of data gathered
Methods to assess if incentives are working
Periodic performance reviews
Employee input into what incentives are wanted, needed and effective
Realistic and clearly expressed performance goals that encourage sustainable behaviours and support the company brand
Incentives that reflect the economic trends – is the economy in an uncertain phase, in recession, or booming?
Clearly communicating changes to incentives and why then being timely in when these changes are implemented
Legal issues and tax reporting/disclosure responsibilities
The role of human resources
While incentives and creative remuneration can promote overall workforce efficiency and productivity, they also enhance the recruitment, engagement and retention of the right talent for an organisation. Your human resources team knows that skilled, top quality candidates are in high demand and your company needs to reflect its brand and stimulate excitement in the marketplace.
Remuneration packages also need to reward your high-performing people for staying and make it emotionally harder for them to leave. HR will consider what is unique to your organisation that can be incentivised in a way that others would find hard to replicate?
Human Resource experts are key to the creation and success of creative remuneration. Ensure your people have ongoing access to qualified and current human resources education.
Last Updated on July 11, 2019 by Aria Schulz