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Innovative Compensation Strategies

May 26, 2017


An employer can get a competitive edge in retaining the most talented professionals in the industry by offering innovative compensation packages to its current and potential employees.


Offering salaries is the most popular method used to retain talented employees in today’s job market because it provides stability and assurance for both the employer and employee. However, there are many other packages employers can utilize to attract, motivate, and retain employees, including flex days, get your work done policy, fitness allowance, vacation allowance, vacation bonuses, profit sharing, stock options, and many more.



Incentives are used to increase employee performance, which helps the corporation achieve business goals and is common strategy used to compensate employees. Short term incentives can include profit sharing, commission plans, and routine performance bonuses while long term incentives can include stock purchasing and other stock options.


Paid time off (PTO) and flex days are intended to help employees achieve a balance between their job duties and personal life. The employer will specify the amount of PTO each employee is eligible for in a calendar year, and the policies/procedures governing their compensation strategy. Flex days enable the employee to structure their working hours in accordance with their personal schedules in such a way as to maximize the use of both their professional and personal time. The employer will specify a “core period” of time in which the employee is expected to be present at the worksite and a “bandwidth period” in which employees are expected to have completed their required hours of work. Any time outside of the “core period” is considered flex time, in which the employee has flexibility in prioritizing and arranging other obligations or work.


Get your work done policies, also referred to as work-at-home policies, are designed to both motivate and increase employee productivity. The thought process behind this policy is that, as long as you get your work completed, it doesn’t really matter if you are at the office sitting in your cubicle, at a Tim Hortons drinking coffee, or working from home on your laptop. This policy is most effective for employees who do not rely heavily on teams or groups of people to complete their work and for employers who clearly communicate their expectations and routinely measure employee performance.


Fitness allowance, or Health and Wellness allowance, enables an employer to provide gym memberships to employees, either tax free or offer reimbursement of membership costs up to a maximum amount, or provide employee access to the corporation’s own fitness facility. This policy gives the employee autonomy to take care of their own health and wellbeing in a manner most suitable to their personal preferences. It also allows employees to access health and fitness activities/facilities that may have otherwise been inaccessible due to budgets and/or family earnings.


Although there is provincial and federal legislation governing vacation pay and vacation time, top employers usually opt to go above and beyond these minimum standards and provide excellent vacation allowances to their employees. Employers can offer greater than ESA minimum standards for employees that have reached certain employment milestones (i.e. 1 year of service is rewarded with 11-15 days of paid vacation) to maintain their competitive edge in the job market.


Vacation bonuses are designed to ensure that employees receive the rest and relaxation needed during a calendar year; which reduces or eliminates employee burnout. To ensure that employees receive that downtime, the employer actually pays the employee a set amount of money, intended to go towards the vacation. Studies have proven that the more you work the less you productive you become, and so more young and innovative companies are getting ahead of this trend by offering vacation allowances to their employees.


To ensure that a company’s compensation strategy is successful, it is important that the employer:

  • Offers direct and indirect employee rewards

  • Aligns employee compensation with strategic business goals

  • Equally balances company affordability with employee value

  • Refrains from systemic prejudice and discrimination

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