Your compensation stack is the combination of human capital tools which create a framework for fully compensating your team members and framing your firm as a desirable destination for highly talented professionals. In Part 1 of this series, we reviewed a number of key factors (e.g., financial compensation, retirement plans, and benefits) to consider when putting together your team’s compensation stack.
Now, let’s turn our attention to some additional tools in your compensation stack—tools that can help kick your recruiting efforts into overdrive.
“The ability to attract and retain people to work in the business, and keep them happy and engaged with that work, becomes increasingly essential as an advisory business grows and scales.” — Michael Kitces
In today’s incredibly competitive labor market, flexibility in scheduling, working remotely and generous time off policies (to help avoid potential burnout) can ultimately be in the best long-term interests of both individual team members and the firm. You’ll want to carefully consider your policies relating to each of the following:
- Vacation: It’s no secret that the key to productive employees is a favorable work-life balance. Some factors for owners to consider: Will this time off be unlimited or will vacation time accrue weekly, biweekly, or monthly? Will time off be offered in tiers, allowing more tenured employees to earn more time off? Of course, your payroll and staff size will inevitably need to factor into these decisions. But whatever you decide, make sure you communicate clearly what options employees have for accruing and rolling over vacation days yearly.
- Sick Time: Will you combine sick time and vacation time into a single pool? Or do you prefer to keep them as separate allocations of available time off?
- Holidays: What holidays will your company observe? We currently have 12 federal holidays, but which non-federal holidays (if any) will you include? Will the firm have shorter hours in the summer or around the winter holiday season? Or perhaps you might consider offering a floating holiday for people to take when they wish to observe a non-traditional holiday?
- Bereavement: According to the HR Certification Institute® the standard bereavement allotment is three to seven days, but maybe this is an area where your firm could show more compassion and flexibility. Some factors to consider: Will you allow more or fewer bereavement days based on a team member’s relationship to the deceased? How will you make post-bereavement accommodations for team members who are grieving?
- Personal time off: Also known as PTO, personal time off is often used similarly to sick time and vacation time and serves as a general umbrella under which all of these instances occur.
- PTO vs Sick Time vs Vacation: How to most effectively differentiate these three pillars of employee time off has been (and continues to be) a long-standing and contentious point of debate. Whatever your personal views, consider what best serves your team. PTO may allow employees to feel supported in putting their personal health (mental or physical) first without feeling like they need to overshare. However, having a separate sick time policy may be a requirement in your state. Consult your state and local labor laws for specific details.
- COVID-19: I would be remiss if I didn’t acknowledge how dramatically COVID-19 has impacted all these time off policies. Since the pandemic’s start, companies large and small have grappled with how to address employee illness and leave policies. And as long as coronavirus still affects our world, how you deal with employees who need time off when sick will be important. Factors to consider: Will your firm maintain a separate COVID-19 policy? What does your leave of absence (LOA) or sick time policy look like for employees who suffer from ‘long Covid’?
Finally, here’s where you can get as creative as you want with additional ‘perks.’ If you are located in a city with expensive transportation costs, or live in a region that almost requires further secondary education for career advancement, you may want to consider helping offset those costs with the following benefits:
- Professional development stipend: This could help employees offset the cost of courses, classes, LinkedIn certifications, and other industry professional designations to further their professional development. But you’ll need to consider how much latitude the firm is willing to provide for professional development that’s not directly related to the individual’s role.
- Tuition reimbursement: The IRS allows companies to deduct up to $5,250 per year, per employee for tuition related expenses. So, why not make that available to your team? Do you have team members who need to finish their undergraduate or graduate degrees? How much more talent might you attract and retain if they knew you were invested in their personal and professional growth through education.
- Memberships: Trade and industry associations provide valuable career development and networking opportunities, and also do valuable work in communities. Consider offering (partial or full) company-sponsored memberships to select organizations.
- Transportation subsidies: With rising fuel prices, commuting to and from work has become an expensive endeavor. Adding a transportation subsidy or voucher can help ease the cost burden for team members and help attract new talent to your firm. If feasible, consider things like transit passes, qualified parking, and fuel subsidies. Want to think outside the box? Maybe subsidize the formation of an employee carpool. Get as creative as possible with the help of your team.
- Remote/Hybrid/Onsite Work Arrangements: I recently saw on LinkedIn that someone suggested that we all stop calling this labor movement ‘The Great Resignation’ and instead call it the ‘Great Rethink.’ Exploring more flexible work arrangements isn’t just something you should be considering; it’s something you need to prioritize when looking to attract and retain top talent. Maybe you want to allow team members to work from home and the office interchangeably, or allow parents to coordinate their start times with school or day care drop-off times.
- Meal plans: Similar to the transportation subsidies, inflation has made groceries and basic necessities considerably more expensive. If you’re in a larger shared office building, consider participating in a meal plan for your firm if available. Even if you’re in a smaller single-occupancy office, catered lunches or dinners when working late can go a long way to helping employees offset the cost of day-to-day living. Plus, it helps them eat more healthily, and saves them time from having to leave the office in search of food.
Taking the time to carefully plan your compensation stack may feel like a daunting task, but it’s a necessary exercise to fuel continued firm growth, and to attract and retain top-tier talent. Fortunately, it’s an exercise that can be done with the help of your leadership team and direct feedback from team members. Ultimately, taking the time today to reflect and perhaps make changes to your compensation stack can dramatically improve the long-term enterprise value of your business.
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