If you're the person in charge of recruiting and hiring in your manufacturing business, you know that it can be a challenge to find and keep good employees. A big part of making your company attractive to potential hires is offering a competitive compensation package. But what exactly does that mean?
Your total compensation package should include more than just a salary. It should also take into account things like bonuses, benefits, and other perks. These investments show your employees that you value their skills and contributions, and that you're committed to keeping them happy and engaged in their work.
We want to help you put together the best possible package for your manufacturing employees, so we've put together a few tips to get you started.
What Is a Competitive Salary for a Manufacturing Job?
A quick Google search will reveal a wide range of salaries for different manufacturing jobs, which can be confusing and overwhelming to both job-seekers and companies.
An entry-level manufacturing worker might earn something around $31,000 per year, while a Controller or Manufacturing Engineer could exceed $100,000. So how do you know what a competitive salary is for the manufacturing job you're trying to fill?
You'll need to look at the factors specific to your company and the position. Consider the following:
- The cost of living in the area where your manufacturing business is located
- The skills and experience required for the job
- The market demand for the position
- The salary range for similar positions in other industries
Once you have a good understanding of your market and what other businesses are paying for similar positions, you can start to determine what is a competitive salary for your unique position.
Keep in mind the manufacturing industry, especially durable goods manufacturing, has more unfilled job openings than there are unemployed workers with experience in the field. If every unemployed person with the appropriate experience were employed, the industry would still only fill 65% of vacant positions.
That means candidates have the upper hand, and there's a good chance you'll need to offer a higher base salary than you initially planned in order to attract the best candidates. Labor costs are the most expensive part of running a manufacturing business, so it's important to get this number right.
But salary isn't the only thing you should consider when putting together a competitive compensation package. It's just a fraction of what your employees are really looking for. Let's dig into the total compensation package a little further.
What Should a Compensation Package Include?
Like we’ve mentioned, employee compensation goes beyond just salary. A total compensation package includes all of the monetary and non-monetary benefits that an employee receives in exchange for their work.
Hourly wages have remained relatively stagnant over the past few years, but the cost of benefits has continued to rise. HR departments and business owners can create total compensation packages that attract and retain employees by offering a mix of wages, benefits, and other perks. Here are the most important components to include:
A competitive salary should meet or exceed the market average for the position you're trying to fill.
Dental and vision insurance, health savings accounts, and a retirement savings plan are all examples of common benefits that can be included in a compensation package.
To attract workers, you might also need to get creative with:
- Profit sharing
- Tuition reimbursement
- Gas reimbursement
- Company car
- Gym membership
- Life insurance
- Child care assistance
While a company car or gym membership might not seem traditional or even relevant for a manufacturing business, they can be important factors in attracting and retaining employees.
And these are just a few examples — the possibilities are endless. Here are the top 5 employee benefits that cost you nothing to offer.
Some of your hard-to-fill positions, especially those in management or that require a high level of experience, might need to be filled by workers who live in different parts of the country. In these cases, relocation compensation that covers the cost of moving and getting settled can entice workers to take the job.
Think of the relocation fees as an investment. The cost of relocating an employee is often much less than the cost of having an unfilled position, which can lead to:
- Lost productivity
- Decreased employee morale
- Lower quality products
- Poor customer experience
- Decline in profits
Paid Time Off
Sick time, parental leave, and vacation days are all examples of paid time off (PTO) that should be included in a good compensation package. Offering paid time off shows your employees that you value a healthy work-life balance.
Beyond PTO, flexible unpaid time off can also be a valuable perk. This might include things like unlimited vacation days or schedule flexibility.
Bonuses and Incentives
Holiday bonuses and performance bonuses are just a couple of examples of incentives that can be used to attract and retain employees.
Performance pay, or variable pay, is compensation that is paid in addition to an employee's base salary, and it can be given for things like meeting specific goals or improving performance.
Offering bonuses and incentives can give you negotiating power with potential hires. It can also motivate existing employees to stay with your company and continue performing at a high level.
Compensation Package for Executives vs. Regular Employees
While all of the components we've discussed so far can be used to create a competitive compensation package for regular employees, there are some additional considerations for executive-level positions.
Executives often have more responsibility than regular employees, and they usually play a larger role in the overall success or failure of the company. As a result, their compensation packages need to reflect this increased level of responsibility.
Executive compensation packages often include:
- A larger salary
- Long-term incentive plans that are tied to the company's performance
- Stock options
- Deferred compensation
- Generous severance packages
Management-level positions might also require some of these same benefits, but the compensation won't be as high as what's given to executives. Manufacturing businesses often have a hierarchical structure, so it's important to be aware of the different levels of compensation that are appropriate for each position.
No matter what level an employee is at, though, remember that the most important thing is to find a balance; creating a compensation package that meets their needs and helps you achieve your business goals.
Best Practices for Building a Total Compensation Package
Now that we've gone over some of the most important factors to consider when creating a total compensation package, let's take a look at some best practices for putting it all together:
Communicate your compensation package details clearly
Candidates and employees should be aware of all the benefits and perks that are available to them in their compensation package right from the start. This can also be enticing information to include in your job descriptions and hiring ads.
Follow compliance guidelines
Make sure you're up-to-date on the latest state and federal compliance regulations for minimum wage, overtime pay, paid time off, and other compensation-related issues.
If your manufacturing company has unionized employees, you will need to negotiate a compensation package with the union that meets their needs while also being budget-friendly for your company.
Review and update your compensation package regularly
Your business goals and the needs of your employees can change over time, so it's important to review your compensation package regularly and make changes as needed.
You can use employee surveys via text message to get feedback on what people like about their current compensation package and what they would change if they could. This will help you identify areas that need improvement so you can make the necessary updates.
Talented employees are the key to a successful manufacturing business, so it's important to do everything you can to attract and retain them. Creating a competitive compensation package is one of the best ways to achieve this goal.
Remember that you're investing in your company's future when you offer a competitive compensation package, so don't be afraid to spend what's necessary to attract and keep the best employees. With the right team in place, you can reach new levels of success that you never thought possible.
Tired of struggling to find enough workers for your manufacturing facility? Grab our free checklist of all the best ways to get more qualified applicants without breaking the bank.