When organizations examine their total compensation offerings, they increasingly factor in something beyond cash compensation and benefits. That extra, less tangible, but inarguably significant element is work environment.
I encourage many of my clients to throw work environment into the mix of their total compensation package, particularly as we are working to define their compensation philosophy (more on compensation philosophy development here). Although it may be tough to pin a specific economic value on it, it does have capital and it does matter (often a great deal) in the organization's efforts to attract and retain employees. I encourage my clients, particularly those who have a work environment worth bragging about, to articulate exactly what it is that makes their organization a great place to work and to incorporate that in all their communication about total rewards.
The aspects of work environment worth singling out and calling attention to may differ from organization to organization. Sometimes it is the physicial work environment that is the differentiator. Take, for example, the situation of one of my clients, a manufacturing company whose production is primarily done in a large plant adjacent to company headquarters. Across the street is another manufacturing company and their production plant; my client's biggest competitor for people. This other plant typically pays somewhat higher hourly rates than my client, presenting a constant temptation to my client's employees. But the plant across the street is hot in the summer, sometimes over 100 degrees inside, dirty and very loud. My client's plant is air conditioned, they have taken the steps necessary to keep it very clean and the noise level is low -- plus they have popular music piped in all day long. A number of employees have bolted for the higher paycheck and then returned to my client, asking for their jobs back. The comparatively pleasant work environment, and the investment that my client has made to keep it that way, are worth something and should be factored in -- and communicated -- as part of their overall reward package.
Alternatively, it may be more the "psychic" aspects of the work environment that play a notable role. Another client of mine, who operates in a particular niche of the financial services industry, offers a strikingly different workplace than nearly anyone else in their business. While that niche is known for highly competitive -- some might even say "cutthroat" -- work practices and environments, this organization has taken the steps necessary to create a very collegial and team-oriented culture. They don't try to match the sometimes exhorbitant cash packages offered by others in their business; they don't have to. People who enjoy doing this type of work in a uniquely positive and collaborative environment seek them out as an employer of choice and are generally loathe to leave simply for a higher compensation package.
Bottom line: Work environment does matter and if your organization has a unique and positive one to offer, it should be addressed and communicated as an element of your total rewards package and philosophy.
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