Contrary to the usual perception, employee compensation has a much wider scope than just money. However, a major chunk of it is more about monetary compensation.
Sometimes, entrepreneurs overlook the importance of employee benefits, as well as other types of compensation. Here are some questions all entrepreneurs need to ask about their businesses in regards to employee compensation:
- Is the employer adhering to all the applicable compensation laws pertaining to minimum wages, paid leave, paid sick leave, as well as other benefits?
Compensation laws of the state may keep changing from time to time even at a local level. As such, the employer may need to consult a lawyer when they’re uncertain about their obligations towards their workers.
- Is the employer hiring contract workers or full-time salaried employees? Are they classifying their recruits properly?
It’s critical to classify employees in an appropriate manner to avoid legal complications. Also, while determining the compensation of workers, consider the type of employee you would like to attract to your organization. Higher quality employees require higher compensation.
- Does the employer wish to offer equity options to their employees?
According to data shared by a study, around 80% of job postings made by the American startup businesses involve equity in some form. In case an employer decides to offer their employees an opportunity to participate in the business ownership, their workers should be told how they can sell their equity shares and the consequences if they decide to part from the organization.
- Is the employer being transparent, fair, and unbiased about pay, wages, and promotions?
A fair employer should avoid any pay gap due to gender and be fair and transparent about their employees’ salaries. Experts also highly recommend that there should be complete transparency for developing and sharing policies on raises and promotions.