Employee retention is more than just keeping your team happy—it’s about building a workforce that’s dedicated, engaged, and willing to stick around for the long haul. If you’re finding it challenging to keep your best talent, it’s time to take a hard look at your compensation plans. While perks like a casual dress code or remote work options are nice, nothing speaks louder than a fair and well-structured compensation package.
The simple truth is, people want to feel valued at work, and that begins with how they are compensated. When employees believe they are fairly paid, they are more likely to be satisfied and less likely to look for opportunities elsewhere. But what exactly does a great compensation plan look like? Let’s break it down.
What Makes a Great Compensation Plan?
At its core, a compensation plan includes wages, benefits, bonuses, and any other rewards employees receive for their work. It’s not just about the money (though that’s a big part); it’s about crafting a package that addresses your employees’ needs and reflects the value they bring to your company. Here are some essentials:
- Competitive Pay – Make sure your base salaries are in line with (or better than) industry standards. This isn’t just about avoiding turnover; it’s also about attracting top talent from the start.
- Benefits That Matter – Employees today are looking for more than just a paycheck. Comprehensive health insurance, retirement plans, paid parental leave, and wellness programs can make a big difference.
- Bonuses and Incentives – Whether it’s performance-based bonuses or stock options, extra incentives show employees that their hard work is recognised and rewarded.
- Work-Life Balance – This doesn’t always show up as a line item on a pay stub, but flexibility and time off are key components of a good compensation plan. If your employees are burning out, no amount of money will make them stay.
The SCHADS Award: Why It Matters
If you’re in Australia, there’s a good chance you’ve heard of the SCHADS Award. This award covers employees in social, community, home care, and disability services sectors and ensures that workers in these industries are compensated fairly. It’s an important benchmark for setting pay rates and conditions in sectors where pay can be notoriously low.
By adhering to guidelines like those set by the SCHADS Award, you not only stay compliant with regulations but also send a message to your employees that you’re committed to fair and equitable compensation. Ignoring these standards can lead to dissatisfaction, high turnover, and possibly even legal trouble. On the flip side, getting it right can make your organisation stand out as a great place to work.
Aligning Compensation with Employee Needs
Now that you know the basics of a good compensation plan, it’s time to tailor it to your workforce. Not all employees are looking for the same things. Some may prioritise a high salary, while others might value flexibility or additional benefits. So, how do you figure out what your team needs?
Listen. Conduct regular surveys or feedback sessions to get a pulse on what’s important to your employees. This will help you craft a compensation plan that feels personal and relevant. It’s not a one-size-fits-all situation—especially if you have a diverse team.
Younger employees, for instance, may be more interested in career development opportunities and student loan repayment assistance. Meanwhile, more seasoned workers might prioritise retirement benefits and long-term security. By understanding what drives your team, you can create a compensation plan that speaks to their unique needs.
Why Fair Compensation Equals Better Retention
Let’s not sugarcoat it—money matters. Fair compensation is one of the most tangible ways to show your employees that you value them. When workers feel underpaid, it breeds resentment. Over time, that resentment can turn into disengagement, low productivity, and ultimately, resignation.
On the flip side, when employees feel like they’re getting a fair deal, they’re more likely to stay motivated and loyal. A well-compensated team is also more likely to go above and beyond, leading to better outcomes for your business.
Here’s a quick breakdown of how better compensation directly impacts retention:
- Increased Job Satisfaction – Employees who feel fairly compensated are more satisfied with their jobs and less likely to leave.
- Higher Engagement – Fair pay makes employees feel respected, which leads to higher engagement and productivity.
- Reduced Turnover Costs – Losing an employee can cost a company anywhere from 50% to 200% of that employee’s annual salary. Retaining talent means saving money.
- Stronger Company Culture – When your team feels valued, they’re more likely to contribute positively to the workplace culture, fostering a supportive and cohesive environment.
Going Beyond the Paycheck
While fair compensation is crucial, retention isn’t just about throwing money at the problem. You need to think holistically. Employees are looking for a workplace that values them as whole people, not just workers. So, in addition to fair pay, consider offering development opportunities, promoting from within, and recognising achievements publicly.
Remember, people stay where they feel they can grow. If your compensation package includes room for advancement, continuous learning, and a clear path to promotions, you’ll likely see a much lower turnover rate.
Final Thoughts: It’s All About Value
At the end of the day, your employees want to feel valued. And while there are many ways to show that appreciation, compensation remains one of the most impactful. By designing a compensation plan that is competitive, fair, and aligned with your employees’ needs, you’re not just improving retention—you’re building a workplace where people want to stay and thrive.
