F5.003 (Employee Capitalism) START WITH THE BASICS - PAY, BENEFITS, AND JOB SECURITY - WILLIAM EASTMAN

Today's show will cover the foundation of building a total compensation package that attracts the right talent, provide reasons to stay, and incentivize performance.

INTRODUCTION
In writing these show notes, I benefit from several "tours of duty' in the HR (Human Resources) field. Although not a HR expert, I have served in the C Suite of major organizations grabbing with how to =create the right mix. The challenges of billion dollar companies is no different than a startup about to make its first round of hiring - how do I use pay and benefits to attract the right people based on what I can afford?

OBJECTIVES

1. Understand what pay, benefits, and pay for performance buys me?
2. How to build a basic package that will scale rather than starting over as the company grows?

WHAT YOU NEED TO KNOW
Let's start with one of the oldest rule in the HR Business:
"Pay is a Recruiting tool, Benefits are a Retention Tool, and if you want Performance - you must Pay For It!"

Let that sink in. How many times have you been unhappy with an employee that works at the same level after getting a pay raise? A salary increase has a momentary positive impact (a week or two depending on your pay period) and then is taken for granted. As for benefits, its impact is to create golden handcuffs making it difficult to leave. Neither of these have any real impact on performance.

We are not going to handle the "Pay4Performance" aspect in this show. In fact everything we are doing  On Finance Monday and People Thursday is driving to that result. Today we are going to cover the basics - these must be right before you can move on to the big payoff.

WHAT YOU NEED TO DO
PAY

1. Develop pay bands - based on the local market what is the minimum, average, and maximum paid for the position
2. Evaluate where in the band each employee falls
3. Create a plan to bring everyone to comparative levels - slightly below average 
4. Determine how much of each salary/wage you want to make variable based on impact (margin or cost)

BENEFITS

1. Determine what your competitors are offering
2. Based on your Vision, Mission, Values - what Benefits should you offer
3. Options
   1. Health & Dental Care
   2. Insurance
   3. Retirement
4. Cost out the package
5. Decide how (or if) you want have a vesting processes
6. Determine what the total package cost - pay + benefits and adjust.

JOB SECURITY

1. Long term vision for the company
2. The future organizational chart
3. Policy of promoting internally vs external hires
4. The plan for investing in the future of the business from retained earnings

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