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Creating an employee compensation plan

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Keep in mind, only two-thirds of your employee cost is actual raw salary or hourly wage.  (©iStockphoto.com/Alexandra Katina) Keep in mind, only two-thirds of your employee cost is actual raw salary or hourly wage. (©iStockphoto.com/Alexandra Katina)
 

There are many ways to make employees happy: a congenial work environment, opportunities to learn on the job, flexible schedules, and the list goes on. But at the end of the day -- or more precisely, the end of the week -- employees' happiness comes from getting paid. Creating an employee compensation plan is vital for any enterprise with intentions to hire a staff.

Creating a thoughtful employee compensation scheme is important no matter how few employees you initially hire. A good employee compensation plan takes into account the long-range goals of your business. And by creating a compensation template, you can relax: You won't have to reinvent the wheel every time you expand your staff.

Keep in mind, only two-thirds of your employee cost is actual raw salary or hourly wage. According to the latest numbers of the Bureau of Labor Statistics, which is part of the U.S. Department of Labor, almost 30 percent of the cost of paying either an hourly or salaried employee goes to benefits, such as health care coverage, worker compensation insurance, and social security payments.

Agencies such as the Better Business Bureau, as well as other government and Web-based resources, can help you understand what benefits are mandated by law. An accountant or a banking adviser is a good resource for discovering the standard ways in which to select benefit providers, such as insurance companies, and how to cut a payroll check with the smallest amount of paperwork. But perhaps the most important task is to investigate your industry to determine the wage scales expected from prospective employees. Finally, be aware that certain businesses regularly rely on unionized workers, which means you will need to compensate workers along union rules.

By doing a little homework, you won't only be making your employees happy. With a solid employee compensation plan in the bag, you'll have reason to smile too. 

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