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96 Retaining Top Employees

Benchmarking
After gathering internal and external data, the next step is to
compare both, to establish in what areas (if any) you need to
make adjustments to bring your compensation plan up to the
market level. I recommend making the comparison over the six
reward categories detailed above:

1. Base pay
2. Incentives
3. Bonuses
4. Deferred compensation (including stock options)
5. Benefits
6. Perks
As a rule of thumb, if any element of your current compen-
sation package is more than 15% below the industry standard
(as shown by the survey results), you must make an adjustment,
to remain competitive. If you are between 5% and 15% below the
industry standard, you will need to make an adjustment only if
other elements of the package do not in some way compensate.
In other words, if your base pay is 10% lower than the industry
average, but your bonuses and benefits are substantially more,
you will probably not need to make an adjustment.
If you are out by 5% or less, you probably do not
need to make any adjust-
Converting Apples ment, except in the most
to Oranges competitive industries, but
When comparing your you should check back
compensation package with others, regularly (maybe every six
the cash elements are easiest to com-
months) to make sure the
pare. Non-cash incentives,benefits,
and perks are trickier. I usually multi- gap has not widened.
ply the annual cash value of the item Testing and Feedback
by 3,to convert it to a cash amount
This element of designing
for comparison purposes. So,a sub-
scription to a fitness club costing a compensation package
$450 a year would convert to $1,350 is often overlooked. It’s
(3 x $450) cash value. highly likely that some