E62-321
77 Massachusetts Avenue
Cambridge, MA 02139
Management
Compensation
Learn how companies use a range of compensation tools—from wages and health insurance to profit-sharing or tuition reimbursement—to attract and keep good employees.
McGregor Metalworking needed employees with a specific set of skills that often are not readily transferable, so it introduced a "pay for skills" program that based hourly wages on skill level rather than tenure. Through the program, trainers worked one-on-one with employees to master skills through a progressive pathway of jobs. Within three to four years, a machine operator could earn 40% more than his or her starting wage.
In addition to employee motivation, tax breaks, and other benefits, Employee Stock Ownership Programs (ESOP) provide owners with an exit strategy option that also preserves their legacy. Founded in 1790, King Arthur Flour—the oldest flour company in the U.S.—was owned by a single family for five generations until the owners began thinking about retirement in the mid-1990s. With no children engaged in the business, the family transferred ownership to an ESOP over nine years.
Fleetwood Group, a maker of wireless electronics in Holland, MI, supported employees’ desires to explore other areas of the business and take on new responsibilities. The company’s tuition reimbursement policy, a part of its overall compensation package, provided up to $4,000 per worker annually for external education. That not only benefited the individual—often with promotions and higher salaries resulting from new skills—but also benefited the company by enhancing its workforce and helping keep employee turnover at a low 5%.
