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 An
effective compensation strategy should help to
ensure that the following occurs:
-
Employees
receive a fair wage for work performed.
-
Payroll costs
are in line with the overall financial health of the company.
-
Basic
compensation
philosophy is clearly understood and supported by management
team.
-
The pay scale
for the various positions reflects the importance of the job and
the skills.
-
The pay
scales are competitive with other employers in your
geographical area.
-
The
compensation policies are in line with state and federal laws.
-
Your
compensation policies are keeping pace with the changing nature
of business.
Start With
Your Goals and Work Upward!
Defining a Total Compensation Philosophy:
The philosophy
statement should define how a compensation plan is to be utilized
in order to achieve the business goals. These may
include:
-
A Statement
how the compensation program is intended to support both HR objectives and business objectives.
-
How the compensation program
meets the needs of the
business.
-
A statement
on whether base salaries are competitive or higher, or lower
than peer companies.
-
Guidelines
for communicating compensation objectives.
-
An annual review
that reflects change in business needs and
to external market conditions.
-
A statement
based on rewards that takes salary, performance
bonuses, merits, etc. into consideration.
-
A provision
that establishes a parameter for costs like
(compression, recruitment of new hires, bonuses, etc.).
-
A statement
regarding handling counter offers for current employees.
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