First of all, what is “compensation” and what does it mean to an employee? Money is obvious but it’s not the whole story. Let’s take a look at Sue who owns a small accounting firm. She struggles with employee retention. For example, she would hire a well-qualified employee, and just about the time the employee was up to speed, he would leave for a “better” job — one with a better compensation package. After this happened a few times, Sue decided to do some research.

Sue studied what the competitors were doing locally and in the neighboring big city. Other accounting firms were able to pay as much as 25 percent more than what she could afford, but she also learned that there are more components to a “paycheck” than just the salary. Stability of the industry, flexible work schedules, on-site child care, promotion options within the company, retirement benefits, health insurance, paid holidays, and profit sharing can be as important to the employee as the actual salary.

Armed with this new information, Sue made three lists: “Can do no;” “To be considered;” and “Impossible right now.” Then, she went through all the possible options and put each into one of the three categories. She knew she could increase the salary up to five percent and still make a profit, so she decided to do this for employees on their six-month anniversary. Unfortunately, healthcare coverage was still too expensive for her small company and profit sharing was also out of the question, at least for now.

What Sue did realize is that she could offer flexible schedules to her employees since this would not have a negative impact on the company’s bottom line. Flexible scheduling would give employees some control over their workweek and could be implemented right away. Giving employees an extra week of vacation each year also seemed like a good idea if employees covered for each other. Sue decided to give this extra time to employees who had been employed for 12 months, creating an incentive to stay with her firm.

Although the changes Sue made did not meet the needs of all of her employees, it satisfied enough of them that she found employee retention was less of an issue than it was previously. She learned that the quality of the work environment was something she could immediately control and bring instant satisfaction to the employee. Within a few months, most of her new hires decided that they liked their working environment. They were paid fairly, and respected as individuals who had personal lives outside of work — and that was better than a long commute and a higher salary.

The lesson to be learned from Sue is that understanding the needs of workers and being creative in how your company defines compensation may help you attract and retain a skilled workforce, and build a stronger organization.

For assistance in building your successful business, contact the Kitsap Business Assistance Center for no-fee and private counseling. We grow Kitsap County, one business at a time.

(Editor’s Note: Wendy Miles, Director of Customized Training and Military Education at Olympic College, oversees the operation of the Kitsap Business Assistance Center (KBAC). For partnership opportunities, contact her at 360-475-7786. For KBAC counseling services contact Rand Riedrich at 360-307-4220, rriedrich@oc.ctc.edu.).