Reviewing Your Compensation Package

A common occurrence among busy small employers is to develop a compensation package and then, in effect, to put it in the back of the closet and forget about it. In order to keep your compensation package competitive and up-to-date, you'll need to periodically review it.

How often should you review your package? Here are a few suggestions:

• Review your package at regular intervals, perhaps every year. The review doesn't have to be elaborate — it can consist merely of having your lawyer review it for legal compliance or getting some salary data to find out what other business are paying.
• Review the benefits you're offering when benefit contracts come up for negotiation. When it's time to renew a benefit contract, check with other providers to see if they can quote you a better rate for the same coverage. See if the coverage you're offering is in line with what others offer. Too little coverage may mean you need to consider additional benefits and too much may mean that employees don't need all the coverage you're paying for.
• Review your package if you notice a pattern beginning to emerge in which employees are leaving for better pay elsewhere. A constant flow of employees out the door may indicate that you're underpaying your employees. Get salary data to confirm your suspicions.