Doing the math
From office culture to employee engagement to work-life balance: Google has long been regarded as being one of the best companies to work for globally. And it can now add another accolade to its ranks.
According to the 2014 Top 25 Companies for Compensation and Benefits by Glassdoor, an online jobs and career portal, Google offers the best overall packages for its staff (See boxout).
The technology conglomerate earned a 4.4 rating for compensation and benefits in the research. Besides its attractive compensation packages, some benefits afforded to Google employees include free meals and free transport services to get staff to and from the office.
Coming in second on the list was Costco Wholesale, the largest wholesale club operator in the US (See boxout).
Not only about salary
While the survey results indicate that salary is a key factor in employees rating their company highly, employees also look beyond pay. So says Hong Siu Ming, Head of Compensation and Benefits and Employee Engagement, Group Human Capital, Great Eastern Life Assurance.
“A classic example of this is demonstrated when you ask a Google employee what keeps them in the organisation. More likely than not, while pay is a key consideration, it will not be the only or main consideration,” says Hong. “To develop creative and effective compensation plans, employers should consider their demographic make-up as well as their corporate brand and develop a holistic compensation framework which helps crystallise the Employer Value Proposition to the employee.”
Hong says this can then encompass creative forms, in which salary is only one of many components. This is particularly useful for Generation Y staff and Millenials, who view salary in relative terms. “What’s more important is whether they have been recognised for what they do, rather than simply paying them,” Hong says.
“Giving them very high pay but not giving them a holistic working and learning experience might work in the short term but it is not going to go down well over the medium to longer term.”
Hong says there are many instances whereby Generation Y staff will resign a position, just to experience something different.
“It’s pretty clear that employees know and have a sense of their market worth,” he says.
Beyond a certain point in salary, organisations are effectively wasting money, as these salaries do not provide any added retention benefit.
Hong’s assertion is also backed by Phan Yoke Fei, Group Head of HR at the Auric Pacific Group.
Phan says a balance of internal equity and benchmarking against the market is appreciated by employees intending to build a career with an organisation, at least for a minimum period of two years.
“In the context of the new generation of employees coming into the workforce, it is internal and market equity in the initial stage, and a fair opportunity for a speedy climb up the corporate ladder that matter more than anything else.”
Angelo Frangi, Vice President, Reward, Asia Middle East & Africa & Greater China, InterContinental Hotels Group (IHG), says that while being remunerated appropriately and having good compensation and benefits are important, there are also other critical elements at work.
“Much of it boils down to the corporate culture,” says Frangi.
“Work-life balance, a culture of skill and career development and a great work environment are all important factors which affect an employee’s perception of value over and above standard compensation and benefits.”
Phan says the plethora of benefits offered to Google employees epitomise the notion that salary is not the be-all and end-all factor.
“Full access to facilities such as a gym, laundromat, billiards, and even pet boarding; free meals all day in addition to free bus transportation services; free electric car usage, very generous health care plans and so much more have become the new utopia for employees to strive to reach,” he says.
Cultivating a compensation philosophy
According to a recent survey by global consulting firm Mercer, close to half of all employers have not altered their employee compensation, benefits and other policies in the last few years.
Tellingly, only one in four firms aimed to boost their spending in attracting and retaining the right talent over the next 12 months, whether for base salary increases, career development programmes or training opportunities.
In order for Singaporean firms to mitigate such issues and craft effective compensation and benefits plans, Hong says it is crucial to understand the workforce and what their company stands for.
“It is a simple equation of seeking a balance between employee needs and wants versus what the company can and is prepared to do,” says Hong.
“While the equation is simple, executing this is difficult and most companies would struggle with this due to the fact that employees are not homogenous, and companies do not have unlimited resources either.”
IHG’s Frangi explains it is important to develop a compelling rewards philosophy and build a financially viable plan that also meets the needs of employees while fulfilling the requirements of the business.
“In doing so, we need to listen and observe: being conscious and receptive not only to your employees, but also the environment and markets in which you operate and recruit from,” says Frangi.
Phan firmly believes that an organisation must agree to a compensation philosophy that can be easily communicated to both new and existing employees.
“They can start off by consciously pitching their positions against market peers in similar businesses in terms of their financial compensation and (then) up the ante on term benefits,” he explains.
“These can be further detailed into a good ratio of guaranteed cash, variable cash (based on annual performance and deliverables), short term, and long term incentives that may keep employees interested in prolonging their career with one particular organisation.”
Nevertheless, Phan adds that not every organisation can afford the utopian benefits offered by many of the biggest players.
Hence, he says that organisations should seriously look at areas such as flexi-work arrangements, providing family-friendly work places, job competency enhancements and transparent progression methods to compliment a predominantly wages- driven environment.
Avoiding compensation pitfalls
Focusing solely on remuneration should be averted as this may not necessarily help strike a balance between what is mutually beneficial for the individual and the company, says Frangi.
“It is essential that a company’s rewards strategy is aligned with its overall business and talent strategies, and ensure that there are no competing priorities,” adds Frangi.
In addition, he says that in developing a compensation and benefits plan, it is also important to consider the long-term impact of the strategy.
“For example, reducing spending on benefits may lower the initial costs incurred to the company, but this can cause lower employee engagement and higher turnover which would result in increased resourcing and training costs in the longer term," he adds.
Frangi says that every company has a different DNA and employees with different needs and profiles that contribute to a unique company culture.
“It is therefore critical for a company to develop a rewards strategy based on its own nuances rather than directly implementing one which works for another in the same industry,” he adds.
While Hong says that compensation and benefits programmes should continue to stay relevant and dynamic to employees while also being aligned to organisational strategy, he adds that many firms formulate strategies based on “what the market is doing” without due consideration to whether this is what employees want or need.
“This leads to what I would term as ‘organisational spillage’ or wastage since the resources pumped into keeping up with the market might not even be effective in delivering what the plan was meant to achieve,” says Hong.
“This is why, despite spending heavily on compensation and benefits programmes, many companies still can’t find the sweet spot towards attracting, engaging and retaining their employees.”
Phan also concurs with this notion.
He says businesses often retain the urge of being on par with the market leaders in lifestyle offerings with insufficient consideration of the affordability of the strategies and whether they suit the values of the organisation.
“Without taking those considerations into account, organisations may risk the long term sustainability of the strategies,” adds Phan.
“In some cases, businesses may fail before they reach their pursuit of being an employer of choice.”
|Google’s sizzling C&B policies|
It’s official. Google has been recognised as the US’ best firm in terms of compensation and benefits programmes. According to Glassdoor’s 2014 Top 25 Companies for Compensation & Benefits, the tech giant sits at the summit of the list with a 4.4 star rating.
Glassdoor utilised data that it collated from its 23 million members as the basis for the rankings through company review forms, with each firm getting reviews from at least 75 of its present or former workers over the past year.
Here are the top 25 companies:
|Costco Wholesale usurps big guns|
Costco Wholesale muscled out some very established names on the list to assume second place behind Google. They attained an overall score of 4.4 out of 5 for satisfaction with compensation and benefits. Costco possesses comprehensive health benefits, a prescription drug plan, a vision plan for contact lenses and eyeglasses and a stock purchase plan, among others.
Some of the review highlights of Costco included: