DAV Professional Placment Group
DAV Professional Placment Group


Johannesburg +27 11 217 0000

Cape Town +27 21 468 7000

JOHANNESBURG +27 11 217 0000
CAPE TOWN +27 21 468 7000

Talent Retention: Employee Compensation Strategies


Talent Retention - Employee Compensation Strategies January 2015 - Maria Meiring



Nowadays companies understand that attracting and retaining high performance individuals (and keeping them engaged) requires a mix of factors including environmental, relationship, support, growth and, of course, compensation. When considering your compensation strategy it pays to realise that money alone will not retain most employees, hence organisations need to consider a mix of hard (monetary) and soft (non-monetary) employee compensation approaches:


  • Salary. This is the most popular method of employee compensation due to its stable nature. Despite so many innovative employee perks and work life initiatives, it continues to be essential that employees feel they are paid fairly for the work they perform.
  • Benefits. Often the key differentiator between employment offers. Benefits focus on stability, health and wellness as well as lifestyle.
  • Incentives. Incentives are drivers of employee performance and are aligned with business goals:
    1. Short-term incentives: these may include an annual performance bonus, profit-sharing and commission plans.
    2. Long-term incentives: these may include share options.
  • Non-cash Compensation. Like benefits, non-cash compensation focuses on the employee’s lifestyle and values. These may include flexible work arrangements, time off or office space improvements.

You could also consider:

  • Corporate Recognition Awards. Employees thrive in a work environment where they receive frequent feedback and praise from superiors.
  • Industry Educational Support. Giving employees the tools and resources to achieve industry certifications and degrees can help to elevate the quality of work produced, whilst providing a meaningful career incentive.

To be successful, a company’s compensation strategy should:

  • Include direct and indirect forms of employee reward;
  • Support, encourage and drive desired business outcomes;
  • Strike a balance between business affordability and employee value; and
  • Be fair and equitable, without any form of systemic prejudice.

Keep the following in mind when developing and documenting your corporate compensation strategy:

Budget Allocation. How much of total compensation budget will be spent on salary and what percentage will be spent on benefits and other incentives?

Salary Ranges. Benchmark like jobs within the same industry and create a pay structure, establishing salary ranges that match all job descriptions. This is critical to ensuring employee pay is competitive with other organisations.

Salary Audits. Markets change therefore it is important to perform routine salary audits to ensure salary ranges reflect current compensation trends in a particular industry.

Benefits Package. Being competitive with health, retirement, tuition reimbursement and other benefits can be the determining factor for a candidate deciding whether to accept a position with an organisation or an employee deciding to stay with an organisation.

Legal Compliance. A well defined compensation strategy will incorporate legal requirements to eliminate natural biases made in hiring decisions and to ensure the organisation is in compliance.

Structured Administration. As with any other business process, structure is important. Develop an annual review process, salary audit, raise process timeline and make sure someone is responsible for ensuring all areas are completed.

A comprehensive compensation strategy can be the foundation for creating an environment that attracts, retains, recognises and rewards employee performance and helps to establish a strong culture of employee engagement.

If you have any questions or if we can help in any way, please get in touch.




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