This article was contributed by Jennifer Loftus, founding partner and National Director of Astron Solutions.

When you think of compensation, you likely picture a paycheck or a stack of cash. But there’s much more to it than that. A well-rounded compensation plan that takes into account cash compensation, incentive pay, benefits, and perks is critical to successfully recruiting, engaging, and retaining employees in today’s working world.

Of course, developing a well-rounded compensation plan is often easier said than done, especially for leaders of small businesses and nonprofits working with tight budgets and competing with larger organizations for talent.

But don’t worry—in this quick guide, we’ll walk you through everything you need to know to successfully design and implement your own holistic compensation strategy. As we dive in, remember that many organizations opt to work with an experienced compensation consulting firm to get their strategies just right, and doing so might be the best route for you, too. Let’s begin!

The Importance of a Well-Rounded Compensation Plan

Employee compensation is essential for the success and growth of your organization. The more well-rounded and sustainable your organization’s compensation packages are, the better you’re able to recruit great employees, motivate them to perform to the best of their abilities, and foster an overall positive workplace culture.

To ensure your compensation packages hit all these notes, take a total rewards approach. This means taking account of all the ways your team is compensated, not just the direct forms like base pay and bonuses. It also encompasses forms of indirect compensation, like paid time off (PTO), insurance, employee engagement initiatives, and more, which are often the driving force behind an employee’s true feelings about your organization.

Approaching your own compensation plan with a total rewards strategy depends on your unique goals and culture. How much goes into payroll versus the benefits you choose to offer depends on your employees’ exact needs, the nature of their work, and what your organization can afford.

To better understand what your current compensation plan may need, here are some common components of a total rewards compensation package:

• Direct compensation, like salary or hourly pay
• Any bonuses, commissions, or other incentives
• Benefits like health insurance, educational stipends, 401ks, and vacation days
• Recognition programs and awards
• Programs to uphold DEI initiatives as well as other equity issues
• Company culture events and a focus on work-life balance

Clearly, your employee compensation plan revolves around more than just how much each team member gets paid. Indirect compensation like health benefits and company-wide inclusion initiatives show your workforce that you’re prepared to support them in many areas of their lives for the long haul.

Because total rewards encompasses all forms of compensation, these types of packages are better at reinforcing the full relationship between your organization’s performance and your employees’ engagement. With both direct and indirect forms outlined and effectively communicated to your team, you provide a more dynamic and fulfilling experience for all employees.

Revisiting Your Compensation Package in Times of Change

It’s no secret that in times of economic uncertainty, political tension, or social unrest, businesses and nonprofits are affected just like individuals are. In these situations, however, your compensation plan should still be able to meet your employees’ needs.

In many cases, when faced with challenges, you may need to revisit and revise your approach. Here are some tips for doing so:

• Put a larger focus on indirect compensation. If you find that your budget is less flexible than usual due to the economic climate, you may find that leaning further into offering indirect forms of compensation can help make up for anything lacking in direct compensation. For instance, you might shift your incentive-based compensation strategy from offering cash bonuses to offering extra vacation days. This way, employees are still benefitting and your organization can stay mindful of its bottom line.

• Revisit current hiring practices. Challenges make hiring the right people an even more important investment than usual. Look over your current talent acquisition processes to ensure you’re poised to stand out in a competitive hiring environment and attract, screen, and interview the right candidates. You should also ensure your practices are in line with the highest diversity, equity, and inclusion (DEI) standards.

• Uphold pay equity standards. As pay transparency laws become more ubiquitous in the U.S. and the world strives to close wage gaps, it will be important for your organization to ensure it’s adhering to pay equity standards in its direct compensation strategy. Conduct a pay equity audit to see where your organization has gaps and then actively work to close them by employing best practices like linking pay to performance.

• Prioritize corporate social responsibility (CSR) programs. If your organization is a for-profit business, try offering a corporate matching gift or volunteer grant program that benefits nonprofits. Showing employees that you support causes they care about can help boost engagement and retention rates, and can be a great addition to your indirect forms of compensation.

Any time things are shaken up and your organization is left facing a new normal, you should take the opportunity to review your current compensation approach. Doing so will help with the long-term health of your organization and keep your employees motivated during challenging times.

Hiring a Consultant

Sometimes, organization leaders think turning to outside help is a sign of weakness or a failure to do their job. However, knowing when to ask for assistance and make changes for the better is a top quality that all leaders should embody. If you’re unsure of how to approach your compensation plan, whether it’s due to recent events or just in general, advice from a professional might just be the thing you need.

For many organizations, working with a consultant is the best way to create a well-rounded compensation plan. With their help, you can better cultivate an engaging and healthy work environment with a total rewards approach.

But what exactly can a consultant do for your organization? According to Astron Solutions, they can help you with:

• Overall compensation strategy development
• Executive compensation strategy development
• Conducting compensation surveys
• Creating/updating incentive compensation plans
• Navigating and complying with compensation-related laws

Remember, your compensation consultant is working to help you. They should act as a partner to your organization, being willing to learn about your organization, design solutions for your needs, and take feedback from your team.

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A well-rounded compensation plan is extremely important for strengthening your organization as an employer and setting it up for long-term success. In order to improve your compensation strategy, look over your current approach and take the steps to fill in any gaps. If you need further help, don’t be afraid to turn to a professional compensation consultant!

Author: Jennifer C. Loftus, MBA, SPHR, PHRca, GPHR, SHRM-SCP, CCP, CBP, GRP

Jennifer C. Loftus is a Founding Partner of and National Director for Astron Solutions, a compensation consulting firm. Jennifer has 23 years of experience garnered at organizations including the Hay Group, Parsons Brinckerhoff, Eagle Electric Manufacturing Company, and Harcourt General.