Canadian HR Reporter, the national journal of human resources management interviewed Roy Graydon, president and CFO, Fibernetics, NEWT & Worldline on his strategy on balancing employee compensation, benefits and engaging his workforce.
How important are compensation and benefits when it comes to employee satisfaction?
Having an employee ask for too high a raise can be a difficult scenario, but when Roy Graydon, president and CFO of Fibernetics, was faced with this dilemma, he took a creative approach. It turned out the employee had an old car and couldn’t afford to buy a new one, so she was looking for extra income. As an alternative, the telecom company asked to her to research financing options over five years, and then paid for her car allowance.
“She had a specific problem… we addressed that problem rather than allow it to be a discussion about base salary,” says Graydon. If Fibernetics had raised her salary, it’s possible the employee still would have left the company anyway. This kind of approach helps with retention, he says.
When it comes to employee engagement, compensation is an important part of the recipe — but it’s only a single ingredient, says Graydon. “You can’t fix all problems through compensation and you can’t create engaged employees simply through compensation. But it’s a very important part of the overall package, for sure.” And there’s a huge correlation between happy or satisfied employees and happy customers, he says, which affects a company’s performance.
“A company’s most significant competitive advantage is an engaged workforce.”
“Our employees are all, at one level or another, impacting or interacting with our customers and if they are happy and engaged, that shines through in the interaction and our customers get a different experience as a result, which creates more happy customers.” But that doesn’t mean employee engagement is a huge factor when it comes to determining compensation levels, says Graydon.
“We determine compensation levels based on what our understanding of the description of the job is and what kind of total compensation that position can support in terms of the cost to the organization. We’re looking at paying a very fair base level of compensation and we’re looking at adding to that perks and benefits that round out the overall package,” he says.
“But I don’t think we approach it from the perspective of ‘We need to offer more money so employees will be happier.’ What we want is to create a culture or environment where people are happy and, as part of that, they feel they are fairly compensated.” Benefits, on the other hand, are more important than compensation when it comes to employee engagement, says Graydon. Fibernetics wants employees to be impressed by its offerings, with interesting aspects that may not be offered elsewhere. For example, the company funds the costs of massages, with no limit.
“There are a lot of little things you can do from a benefits point of view that stand out and are highly valuable to employees, and help us with attracting the right kind of people and keeping those people,” he says. “In many respects, spending a little bit of money enhancing a benefits plan goes farther than spending a little bit of money to give everybody a raise — ideally you want to do both, you hate to be in an either/or situation — but I think a benefits plan can be a huge competitive advantage to attracting employees.”
People feel that a good, strong benefit plan is part of a fair total compensation structure, says Graydon, who is based in Cambridge, Ont. “Giving people money and saying, ‘Go self-insure’ or ‘Pay for your drugs directly because we’re paying you more money’ doesn’t work for people. Part of the whole perception of fairness is the understanding that we understand the importance of those kinds of benefits, and also we’re there to protect employees when the costs of those benefits exceed people’s expectations.”
While the 150-employee company offers primarily health and dental benefits, it hopes to offer some kind of employee savings plan in the future, such as a group registered retirement savings plan.
“None of us put away as much as we’d like and the idea that the organization is helping (employees) with that and providing an incentive to do that is an important part of that total compensation package,” says Graydon.
Human resources and finance review Fibernetics’ benefits plan each year and discuss what changes need to be made along with reasonable allocations of the budget. That can mean no longer offering benefits that don’t make sense, such as on-site massages because participation is low, he says. And, of course, HR is involved in establishing compensation levels for new positions and reviewing compensation levels for each individual.
But when it comes to staying on top of trends and forecasting, the HR industry probably could do better, says Graydon. “There are parts of HR that can be absolutely strategic to an organization’s ability to attract and retain the right people and I think there’s an opportunity for HR in general to propose things that could be a little bit creative.”
Oftentimes, people are only concerned about budget dollars, so they won’t consider alternatives, he says. “A company’s most significant competitive advantage is an engaged workforce and anything that can help with that ought to be considered,” says Graydon. “There’s an opportunity for HR in general to push for a more detailed look at that side of the business — how does our compensation and benefits plan drive satisfaction and engagement?
“I don’t want to talk about salary, I don’t want to talk about benefits, I want to talk about the total compensation of a position, ‘What are all of the things that are going to go into that plan?’… And that goes for everything from health and benefits to life and disability insurance to car allowances and cellphone allowances — I want to know it all because I think that’s an important part of the package as well.”