A remuneration policy is vital in every business as it helps attract talents, enhances company image, and affects business growth.
So what exactly is a remuneration policy? And what aspects should be included in it? Read on to find out.
What is a remuneration policy?
A remuneration policy, also known as a compensation policy, is a payment plan that defines how employees will be paid for their work.
This policy may specify the base salary for each position in your business, the circumstances under which pay raises will be granted, as well as any additional perks.
Annual bonuses, fully paid overseas trips, learning opportunities, and other incentives can also be included in the remuneration policy.
The purpose of establishing this policy is to keep employees happy and fulfilled, hence improving retention and productivity.
What should be included in the remuneration policy?
To attract and retain employees, many companies around the world offer attractive benefits that make employees engaged and happy. Engaged staff are more productive and stay longer than disengaged ones.
Besides the base salary, you should include these benefits in your remuneration policy:
Insurance plans and healthcare programs
Businesses must provide their employees with insurance, especially health insurance, in order to comply with the law. By providing full insurance coverage and other health benefits such as periodic health checkups, dental and vision insurance, insurance for dependents, employees will feel safe and happy working for you.
To attract and retain the best people, consider offering retirement plans in your remuneration policy. In fact, some states have issued mandates that require business owners to provide retirement plans for their workforce.
There are many retirement options out there, including IRAs, SEPs, 401(k) plans, etc. Select one that is suitable for your business situation.
In addition to salary and financial benefits, many firms provide non-financial benefits such as birthday gifts, annual trips, team building programs, etc.
A few notes
To decide on the appropriate pay rates and benefits, you may need to consider many factors:
- The average pay rate of each role
- The conditions for pay raises
- The industry standard
- Your business size, budget, and profitability
- Your business objectives, etc.
In some companies, the compensation system has gradually moved from compensating employees based on working hours, seniority, and position to work performance and actual contributions to the company.
Take some time to establish or refine your company’s remuneration policy, even when you own a small business. You’ll attract, engage and retain talented people—the foundation of your business success.