In today’s economy, organizations are fiercely competing to attract the best people to be a part of their organization. An organization’s desire to increase its intellectual capital correlates directly to the organization’s compensation package. The better the overall plan, the more attractive the organization will be to qualified candidates. Furthermore, a well-developed compensation strategy helps keep employees satisfied and can drive higher organizational performance.

One of the key components when putting together a compensation system is to first determine the organization’s compensation philosophy. A compensation philosophy is a set of guiding principles that are based on the values that drive compensation decision-making at the organization. A well-crafted compensation philosophy helps tell the story of who you are as an organization and what you value as an organization. The compensation philosophy will:

• Define the organization’s commitment to valuing employees;
• Define competitive labor market and pay position;
• Be used as key tool to attract, retain and motivate staff;
• Combine use of base salary, variable/incentive pay (where appropriate) and non-cash rewards.

In addition, the compensation strategy will answer several questions such as:

• What are the goals of the total rewards package?
• What is the right balance between financial and nonfinancial rewards?
• How will you balance internal equity versus external competitiveness?
• What is the most effective way to link pay and performance?

Each of the above points listed are vital to ensuring your organization has an effective and efficient compensation system. A well-crafted compensation plan will lead to mutual benefits for all the stakeholders of the organization. To learn more about improving the compensation plan for your organization, please attend the Basics of Market Pricing webinar hosted by Kim Keating of Keating Advisors, on March 23, 2012.

Keating Advisors is an organizational development consulting firm that works with organizations in building and managing HR systems that enable organizational success. Her areas of expertise include organizational effectiveness, compensation system design and implementation, incentive plan development, and performance management. Kim’s clients include national nonprofits such as Share Our Strength, American Legacy Foundation, BoardSource, as well as numerous other organizations ranging from international development to affordable housing. Before establishing Keating Advisors, Ms. Keating was a Senior Consultant at Mercer Human Resource Consulting. Previously, Ms. Keating led the rewards function for The Advisory Board Company, a strategic research think-tank and the Motley Fool, a financial education company. Before joining the Motley Fool, Ms. Keating was a human resources consultant with Sibson & Company, a leading human capital consulting firm. Prior to her human resources career, Ms. Keating was a financial analyst at Morgan Stanley Investment Bank and Chief Financial Officer at Teach For America. Ms. Keating holds an M.B.A. from the Harvard Graduate School of Business Administration and a B.B.A. in finance from Southern Methodist University.