How to build a competitive compensation package

What trends should HR leaders be looking out for?

BY Dexter Tilo 06 Nov 2024

Building a compelling compensation package needs a strategic approach that aligns with the organisation's objectives and employees' expectations, according to a whitepaper.

Organisations need to consider a comprehensive range of benefits and rewards beyond the base salary, Frontier Software said in a recent whitepaper.

It comes as wages remain the most critical factor for employee recruitment and retention. Research from Robert Half recently underscored that high living costs continue to strain Australians, leading many to look for second jobs to make ends meet.

Another report said salary premiums can also convince many workers to return to the office, as a growing number of organisations begin to mandate onsite comebacks as of late.

But in order to build a competitive compensation package that can satisfy employees, Frontier Software suggested the following steps:

Market analysis. Regular salary surveys are essential to benchmark pay rates against industry standards and competitors.
Total rewards. A robust benefits package, including health insurance, superannuation, flexible work arrangements, and employee assistance programs, enhances employee wellbeing.
Pay equity. Implementing fair pay practices ensures equal pay for equal work, regardless of gender, age, or other protected attributes.
Performance-based pay. Linking compensation to performance drives employee engagement and productivity.
Employee value proposition. A clear and compelling employer value proposition attracts and retains top talent.

Organisations also need to be mindful of various trends in developing their compensation strategies, such as pay transparency, the gig economy, AI, and sustainability.

In addition, government policies and industrial relations can also influence wage determination, according to the whitepaper.

"HR professionals must stay informed of legislative changes and industrial relations trends to ensure compliance and effectively manage wages and salaries," it stated.

Read more about how to navigate these future trends in this whitepaper from Frontier Software.