We are approaching year end and it’s time to prepare some New Year’s resolutions regarding your compensation program.
Over the course of the last year, most of my wonderful clients have taken my advice to heart, making hard decisions and implementing changes to their compensation plans. However, there have been a few cases in point where the process, let us say, could have been smoother!
So from these experiences, I recommend that you take an honest look at your compensation plan and use your persuasive skills with upper management to make some changes in 2013.
- Use clear messaging. Often, management does not want to declare its compensation philosophy because they think that people will be unhappy with it. If that’s the thinking, it’s generally the case that employees are already unhappy, and are making up all kinds of stories about compensation, most of which are not true. Be clear, be honest, be forthcoming. Even if employees don’t like what they hear, everyone knows where they stand.
. - Do what you say you are going to do. If you embark on a compensation project and tell employees you will be making decisions in March – do it! If you implement a bonus program – make sure it pays out like you said it would! There’s nothing worse than breaking your word and losing credibility with your workforce. You may see it as a “whoops” moment, but losing employee engagement results in a downward spiral that is hard to reverse.
. - Keep managing your compensation plan. You’ve implemented a compensation plan and you can rest for a couple years. Wrong! Labor market inflation continues, even though it seems like no one got a pay increase for the last few years. In actuality, many people did get raises because employers knew that even with fewer employees, it’s important to pay market rates for jobs. So pay structures should be adjusted annually for labor market inflation (check WorldatWork and others for their data). Changes in job duties (material ones) should result in the repricing of jobs. You may not be able to allocate large sums of money for pay adjustments, but you should at least be aware of where your pay stands relative to the market. Knowledge is power!
– Lisa Norris, Senior Consultant
CompTalk 