Have you crafted a post-recession compensation plan? How well your compensation is designed will have impact on the organization’s success. If it is viewed as equitable and competitive, it will support organizational objectives.
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Get Your Report Now!"If your organization instituted a hiring and/or salary freeze or offered only very limited compensation increases, you may have fallen behind the competitive labor market. In order to plan for the future, you must know where you currently stand." Jennifer Daniels told us in a recent BLR webinar.
5 Steps to create a post-recession compensation plan that's aligned with the market
Here are the 5 steps to take now:
- Review your organization’s current base pay structure. Does your current base pay structure support both market competitiveness and internal equity? Sometimes organizations require more than one base pay structure to suit their employee populations.
- Market price your organization’s positions (or a representative sample) to determine current competitive market rates. Market pricing is the process of analyzing external salary survey data to establish the worth of jobs as represented by market data, based upon the "scope" of the organization (geography, industry, budget/revenue size, employee size, etc.) and the job itself.
- Update the base pay structure, if needed. When you analyze the market price data you’ve gathered, you may find that the current structure is out of line with the market. You will want to develop minimums and maximums around your target salary for each role. The appropriate range spread will depend on which type of base pay structure you are developing and the positions in the structure.
- Review where employees fall in the base pay structure, and evaluate where employees should be. After you update the base pay structure, you may need to make adjustments to compensation. It is common for some employees to fall below the minimums of a newly updated base pay structure, especially if your structure and current rates of pay have lagged the market. It is highly recommended that when you implement the new structure, you make the immediate adjustments to any employee below the minimum of his or her position’s salary range.
- Explore variable pay. Variable pay is compensation that is received in addition to the base pay. Organizations may choose to implement some form of variable pay to meet their goals. For example, variable pay in the form of incentives may help to align pay with results.
For more information on creating a post-recession compensation plan that meets your organization’s goals, order the webinar recording of "Post-Recession Compensation: Build a Plan That Attracts and Retains Top Talent." To register for a future webinar, visit http://catalog.blr.com/audio.
Jennifer Daniels is a Senior Consultant with Keating Advisors. She has experience in all aspects of total rewards strategy design and human resources projects implementation consulting. She has a proven track record in project management, conducting detailed compensation analysis, and developing pay-for-performance strategy.