Alternative Methods of Compensation

by | September 28, 2012

Blog by Associate Attorney, Lauren Burgon

Compensation is compensation, right?  It’s wages, salary and bonuses.  It’s matching contributions to a 401K, or providing health insurance.   It’s money out the door that benefits employees.   Not always.

There are many different forms that compensation can take, and not all of them result in cash out the door for your company, or cash in the pockets of your employees.   Depending on each employee’s values, goals, and individual circumstances, they may prefer (and be more motivated by) an alternative form of compensation.

Flex time:  While it may not be practical to reduce an employee’s overall hours, making work hours more flexible may be easier to manage.  Do you have an employee who would prefer to start and finish early to be home when the kids get home from school?  Perhaps an employee would prefer to work 4 ten hour days instead of 5 eight hour days.

Telecommuting:  Studies have shown that employees who telecommute are often just as productive, if not more, than employees who are physically present in the workplace.  Telecommuting doesn’t have to be an all or nothing proposition; you may want to consider allowing employees to work from home 2 or 3 days a week.

Paid Time Off:  Providing more paid time off can, paradoxically, increase employee productivity.  Increased job satisfaction, reduced stress levels, and improved job focus are all possible positive effects of providing more paid time off.

Profit sharing:  It’s not always a good idea to allow employees to hold equity in your company, but that doesn’t mean they can’t share in the profits.  As long as the employees have a certain level of control over profitability, tying their rewards to profitability can be a powerful motivator.

Training:   Facilitating additional training for employees  can result in more productive and effective workers, with greater confidence and job satisfaction as well.

Responsibility:  While it sounds counter-intuitive, increasing an employee’s responsibility can be considered a blessing rather than a curse.  Not to be confused with increasing an employee’s workload, increasing an employee’s responsibility, especially by increasing the control the employee has over his or her own work, can result in increased job satisfaction and increased self-confidence, translating into a better worker

Charitable donations:   You may want to consider assisting your employees in supporting causes near to their hearts.  You might want to allow an extra day off on a regular basis to allow the employee to perform volunteer work, or offer a charitable contribution matching program.  Recognizing and validating the causes about which your employees are passionate shows that you value your employees beyond the workplace.

Equipment:  Providing your employees with the right equipment for their jobs increases not only employee efficiency and effectiveness, but reduces workplace frustrations and increases job satisfaction.   It’s difficult for employees to do their best work without the right tools!

With some creativity, and by fitting the right compensation method to each employee, it’s possible to reward and motivate your employees while increasing the effectiveness of your organization, all without breaking the bank.