This is the time of the year that most organizations have completed or are in the midst of doing their business’ strategic planning process. One of the aspects of this process that is often overlooked is the following question:
How do our pay philosophy, strategy and plan support our strategic plan in the short-term (this coming year and the long-term (the next three years)? [Okay, for the next three to five years for those of you whose plans address this longer span of time.
Now back to the question of “How does your pay philosophy and plan support your business plan?” Let’s start by offering a set of questions that your organization should periodically ask itself:
1) What is the amount of your company’s total compensation investment?
2) Do we have a clear pay philosophy and strategy?
3) What results should our pay strategy be producing for your company? (i.e., What is the ROI on that investment?)
4) Are our pay practices and decisions consistent with our philosophy and strategy?
5) Do we have an easy to understand statement about it for our employees and potential employees?
6) What is our compensation target relative to the market?
7) Should we have a single target for all jobs or different targets for selected jobs?
8) Where is our actual compensation in comparison to our target?
9) Which is better—higher salaries or higher incentive pay?
10) Which positions should be eligible for incentive compensation?
11) Does one type of incentive compensation work best for all those eligible?
12) What’s the right mix between base pay and incentive pay?
13) Should we use a short-term or long-term incentive pay plan?
14) How many metrics should our incentive plan(s) have?
15) Should those metrics remain the same or vary from year to year.
No, I did not forget the question asked in title of the article. Here are the two signs that you do NOT need compensation consulting help:
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1) Your 4 & ½ year-old granddaughter or someone else’s is not in charge of compensation. Before anyone accuses me of being gender or age biased, please note:
- I have not been asked for proof of age when ordering wine for 50 years.
- My very accomplished and now retired wife has always been the CFO of the LoDico family.
- I have two very accomplished adult daughters.
- I love my 4 & ½ year-old granddaughter very much and she’s exceptionally smart, but she’s not in charge of Trinity’s compensation. Ditto for my 2 & ½ year-old grandson.
2) The real sign is that you can successfully answer the fifteen questions we asked.
By the way, many of you are gearing up to go through year-end performance appraisal and pay review process.
- You’ll find some sound information on Trinity’s within the “HR Management Matters” tab by clicking on “Articles” and then typing “year-end” in the search box.
FOR INFORMATION AS TO HOW TRINITY CAN HELP YOU WITH YOUR COMPENSATION CHALLENGES AND/OR OPPORTUNITIES:
- Email us at Info@TrintyHR.net
- Go to our website — ww.TrinityHR.net
- Call us at 856.905.1762 or Toll Free at 877.228.6810
You have HR questions…Trinity has answers!