What is the Correct Compensation for Your Employees?

Posted on May 1, 2002 by LCT Staff - Also by this author

Your business is only as good as the people who work for you. Hiring employees is simple. But hiring and retaining quality employees is much trickier. Deciding how to compensate workers should not be a one-day process that includes deciding only what hourly wage you?re going to offer. Your employees are the heart of your business, and to keep it running smoothly and successfully, their compensation packages should offer a mix of competitive wages, benefits and perks. Put together an irresistible benefits package, and you can attract and retain quality employees.

How Much Should I Pay? Wages will differ among chauffeurs, reservationists and dispatchers. According to the LCT Fact Book, 53 percent of chauffeurs earn between $11-14 per hour and almost half of all reservationists and operators make $6-8 per hour. Jeff Greene, president of Greene Classic Limousine in Atlanta, says that he uses these reported wages as a starting point for determining what to pay workers. ?I compare with what dispatchers/reservationists are making on a national level,? he says. ?A lot of it is also the given market, and the experience and education of the applicant.? Years of experience or higher levels of education warrant higher wages for workers.

David Brown of Premiere Transportation in Albany, N.Y., says that he determines his chauffeurs? wages based on the specific jobs they perform. ?We also run a shuttle service and these drivers are compensated a little more because the gratuities aren?t very big as opposed to a limo driver who might make a 15-20 percent gratuity at the end of the trip,? he explains.

Before determining what wage is reasonable, you should examine who is running what routes and work from there. Also, determine if employees should be paid on an hourly or salary level. Typically, senior-level executives, managers and chauffeurs are paid a salary wage, and office personnel or new employees earn an hourly wage.

Employees? performances should be reviewed periodically to reward those workers who are doing a good job and offer improvements for those whose performance might have slipped. This review should take a number of factors into consideration, including overall job performance and customer feedback (both positive and negative). Maintain a personnel file on each employee for records and reports to refer back to during the review session. Robert Alexander of RMA Chauffeured Transportation in Rockville, Md., says his employees have annual reviews, as well as semi-annual ones to track their progress.

?We make adjustments six months through to see if [the employees?] goals are still applicable, or we?ve created new ones or we?ve moved past those,? he says. ?But twice a year we meet with all our employees.?

Paid Time-off Hard workers deserve time away from the job. Standard practice is to offer employees 10 days paid vacation time and five sick/personal paid days off. ?A lot of people are getting away from calling it ?sick time,?? Brown warns. ?They?re now calling it personal time; whether they?re sick, that?s another story, but it?s being flexible.?

He suggests that this method establishes a trust between employees and their employer. ?If they have something to do on a Friday, instead of them cutting you short and calling in ?sick? at the last minute, they?re up front and say they have something to do that day.?

Paid time off can also be used as a way to balance the discrepancies in pay between chauffeurs and office personnel. ?The initial package, as far as paid time off goes, might be a little more lucrative for office personnel because they?re not getting tips,? Brown says.

Offering more paid time off after a set number of years of service increases employee retention and longevity. In weak economical times, paid time off can be used when an employee is up for a raise. Some employees need more days off than others do. Instead of increased wages, some workers may be happy with an extra week of paid leave and half the pay increases.

Medical and Life Insurance ?Ten years ago in the industry, all chauffeurs were concerned about was the cash,? Brown says. ?Now you have to put together a great compensation plan for your employees, and that includes insurance.? Medical insurance packages can be set up to cover just about any level of care. Depending on different factors ? number and health of employees, geographic area or desired premium costs ? a business can design a health care plan that will supplement an already impressive compensation package.

Standard medical packages should cover hospital/doctor?s visits, prescription drugs and dental and vision procedures, but the level of coverage can be tailored to your employees? specific needs. If, for example, your employees are more concerned about prescription drug coverage, you can implement an insurance plan to reflect this concern. ?The decision of what?s covered and not covered starts with the employer, because the employer buys the package,? says Chris Hamrick, director of media relations at BlueCross BlueShield Association.

Alexander says his main concern in establishing an insurance plan was getting as much possible coverage for his employees at a reasonable price. ?We tried to get an all-encompassing package,? he explains. Employers will usually pay for a percentage of the plan cost. ?For our salaried employees, we pay the entire cost,? Alexander adds.

Typically, employees may begin participating in a company insurance plan after the first 90 days of employment. Waiting through this introductory period guarantees that workers will not get the insurance, go to the doctor and then quit, thereby costing the company money. Brown has a 90-day waiting period for his chauffeurs before they begin insurance coverage and a 60-day window for office personnel.

?We go through a lot more drivers than office personnel,? Brown explains. It is important to gauge an employee?s level of commitment to the job before offering costly incentive packages.

Employers have the option to include ... for more on this topic, check out the May issue of LCT magazine!

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