Happy, engaged employees are key to any successful company and compensation is a critical component to keeping employees satisfied. However, compensation management can be tricky. There needs to be a balance between what the company’s budget allows and what employees see as competitive, fair payment.

No one said compensation management was a breeze, but understanding and enhancing your compensation plan will improve your business in more than one way. Check out these 4 keys to unlocking the best ROI with the right management process for your business.

Discover Employee Market Value

Determining an employee’s market value includes many factors like location, type of business, skill demand and industry. It also takes into account the professional’s performance, skill set and experience.

Did you know 35% of employees said they’d look for a new job if they do not receive a pay raise in the next year? If your company is not able or willing to maintain salary parity, it can’t expect to thrive or retain skilled employees. Check out websites like Payscale, Glassdoor or Monster to see how other employees at similar companies are being compensated. Don’t forget to factor in benefits such as health insurance, vacation days and retirement plans.

Use Continuous Feedback

When you have a competitive compensation plan in place, you’ll be able to attract top talent in your industry. One way to retain and reward your employees is to give continuous feedback. Using continuous feedback means that problems are solved before they can cause serious harm to projects or the employee’s productivity. It also means your top performers are getting constant reinforcement for their good work.

When an employee feels misguided or completely unguided, it’s hard for them to attain success in their role. Continuous feedback creates touchpoints for performance while inviting employees to feedback dialogs. When they know they can trust their leadership to be honest and supportive, it’s easier to be motivated for better performance. It’s been estimated that turnover costs companies anywhere from 6 to 9 months of that employee’s salary. That means a manager making $40,000 a year could total around $20,000 or $30,000 in recruiting and training costs.

Stay up to date with each of your employees and their performance. Continuous feedback helps both managers and employees maintain a steady understanding of what is expected. It also brings new ideas to the table and allows them to be put into action sooner for faster results. Rewarding good work through compensation, bonuses or perks will help boost employee morale. An added bonus to continuous feedback with employees and transparency is that it will push your employees to want to assess their own performance and work harder for your company.

Have a Killer Performance Management Process

Have you considered how proper performance management affects profits? On average, the annual performance review process costs about $120,000 in the value of time spent. Of course, that number varies among organizations, but it’s hard to ignore how much of the budget you could be losing if the process is disorganized.

To enhance your performance management process, establish goals to explain exactly what the organization needs in order to reach peak potential. For example, iRevü allows managers and employees to choose specific goals when they give and receive feedback within the platform. That way employees and leaders are having performance conversations in real-time, increasing employee engagement and improving employee performance all while building short and long-term development strategies.

Paving Future Career Paths With Your Company

Did you know 78% of employees would stay at their current employer if they knew their career path within the organization? Retaining more employees means fewer recruiting costs, a more committed workforce and all around better employer branding. Consider it in terms of future planning. Your company probably has an idea how it would continue to succeed if an employee leaves, but do leaders consider what will happen if an employee stays? Succession planning is important to your company and the motivation of your workers. They want to know that they will have the opportunity to improve their own career and skills and whether they can include their current employer in that equation.

Don’t allow an annual review to be the only time career trajectory is on the table. Use frequent performance check-ins to provide goals for your employees and steer careers on the right path within your company. Give continuous feedback and practice company transparency to retain your best employees and even avoid hits to your company budget.

Time is money and realizing your employees are part of your investments will help you see true ROI on performance management tools. Better employee performance will help you to manage compensation and improve business performance. Also, don’t forget to sign up for a free trial and calculate the ROI of introducing iRevü to your organization.