CompLogix Blog

People, Product, and Process: Where does Compensation Management Fit In?

The three Ps of a successful business are People, Product, and Process.  Meaning, in basic terms, that you need to have a product which will sell and bring in revenue.  You need to have a process which will allow you to produce that product efficiently so that you can conserve as much time and money as possible during its production.  And finally, you need to have the right people who will enact that process.

So where within these three Ps does compensation management fit?  It surely wouldn’t fit under Product, unless your organization’s product is compensation management software.  And it wouldn’t be people, for obvious reasons.  That leaves process – compensation management is part of the process of running your business, obviously – but it can affect the other two areas fairly dramatically.

Think about people, for a second.  It’s important that your employees are engaged and productive, and that they enjoy their work.  One of the main ways to see to this is through compensation, and proper compensation management.  Employees want to feel that they’re being compensated fairly for the hard work they put in to your business, and also want to be recognized for their achievements.  Proper compensation management not only ensures that they’re paid fairly and on time, but that they’re recognized for any hard work they put in above and beyond the status quo and are rewarded accordingly.

Compensation management can also affect product.  The first (and most obvious) way is through people – by keeping your people happy and productive you can keep them more easily focused on the process, which will produce the product.  Compensation management is also important here because it helps keep your operating budgets in check.  By having clearly defined pools for compensation and merit increases, you can help ensure that you don’t start allotting money for compensation that might be needed somewhere else within your organization.

To summarize, compensation management affects all of the three Ps, though in different ways and to different extents.  First and foremost is process, which compensation management is a part of.  Second is people, because compensation management directly impacts them, and thus affects their work, motivation, and engagement.  And the last is product, because making sure that you have the people and the process working in lockstep is paramount to producing your product in a timely and cost-effective manner.  Understanding how compensation management interplays with these three Ps is important because understanding how the three Ps interact with each other is vital to running a profitable and successful business.

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