Why You Need a Comprehensive Compensation Policy
by Marty Kirshner, CPA, MSA, Gray, Gray & Gray, LLP
Your most potent tool to retaining quality employees
In the competitive landscape of the modern business world, the success of a propane or heating oil company, like any other, hinges on a dedicated, efficient and motivated workforce. One of the most potent tools for fostering such an environment is an attractive, comprehensive compensation program. In an industry where efficiency, safety and reliability are paramount, a well-designed compensation policy not only rewards employees but also helps to align their actions with a company’s broader strategic objectives.
Four Reasons to Implement a Compensation Policy
1. Attract and Retain Good Workers: An attractive compensation package acts as a magnet for quality employees. Offering competitive salaries, bonuses and benefits helps attract the best talent to your company and keeps existing employees from seeking opportunities elsewhere.
2. Improve Employee Morale and Motivation: When employees feel they are valued and their efforts are recognized, they are more likely to be engaged, productive and loyal to the company. A well-designed compensation program can help accomplish this.
3. Encourage Performance and Productivity: By aligning part of the employee’s compensation with their performance, companies can motivate employees to deliver their best. A performance-based compensation program will encourage efficiency, promptness and safety, which are essential for an energy company.
4. Enhance Company Reputation: Offering competitive compensation can enhance the reputation of the company, making it a “preferred employer.” This reputation will, in turn, make it easier to attract new customers, forge beneficial partnerships and maintain a positive public image.
What Should Be Included in the Compensation Program?
A comprehensive compensation program for an energy company should include the following key components:
• Base Salary: This is the fixed amount paid to employees, usually monthly or bi-weekly. It’s essential to ensure that your base salaries are competitive with similar roles in your industry and geographical location. You can find average wages for various positions in our annual Energy Survey.
• Incentive Pay: This is a variable component of the compensation program that’s tied to performance. For a heating oil or propane delivery company, the incentive pay could be based on various factors like the number of deliveries made, customer feedback, adherence to safety protocols, etc. For equipment salespeople the incentive may be a percentage of the purchase price or a percentage of the gross margin made on each sale.
• Benefits Package: This includes both statutory and non-statutory benefits. Statutory benefits are those mandated by law, such as social security contributions, worker’s compensation and unemployment insurance. Non-statutory benefits, often referred to as fringe benefits, include health insurance, retirement plans and paid time off, among others.
• Recognition and Rewards: These are non-monetary ways of acknowledging the effort and achievement of employees. They could be in the form of employee of the month awards, service awards, public acknowledgment, or other company metrics. For an energy company, recognition and rewards could be given for perfect safety records, high customer satisfaction scores, etc.
• Training and Development Opportunities: Compensation is not just about money; it’s about valuing employees and investing in their growth. By providing opportunities for training and development, a business can help its employees upgrade their skills, achieve their career goals and contribute more effectively to the company’s success.
As you move forward, it’s important to continually review and update the compensation program, keeping it aligned with industry standards, the company’s strategic objectives and employee expectations. By doing so, a business can ensure that it remains an employer of choice, with a committed workforce driving its success in the competitive market.
With its operational demands and stringent safety requirements, the delivered fuel industry necessitates a committed and motivated workforce. A well-structured and competitive compensation program can play an instrumental role in achieving this, by attracting and retaining top talent, boosting employee morale and motivation, enhancing productivity, and ultimately, driving the company’s growth and success. Thus, for propane and heating oil companies, developing a comprehensive compensation program is not just desirable; it’s a strategic imperative.