CompLogix Insights

Compensation Planning: The Key to Victory

Mar 1, 2018

In his legendary treatise on warfare, Sun Tzu states that “the general who wins a battle makes many calculations… ere the battle is fought. The general who loses a battle makes but few calculations beforehand. Thus do many calculations lead to victory, and few calculations lead to defeat.”

While business and war may use vastly different means to reach their ends, the book, The Art of War, has become a favorite of businesses the world over as the lessons contained within are easily (and usefully) applicable to any kind of management. The above passage is a good example of this, as the importance of planning cannot be understated. This is especially true when it comes to compensation planning.

Compensation planning is a vital strategy in managing an organization’s workforce. The correct compensation mix applied strategically can have massive impact on many aspects of your workforce, including morale, retention, and productivity – the three of which often go hand in hand. By mastering compensation planning, your business is one huge step closer to achieving its goals, and to victory.

The inverse, however, is also true. Say you pay little attention to compensation planning, and your employees feel like they’re not being fairly rewarded for their work, or that there’s no room for them to grow within the organization. `If they’re worth their salt, someone else will notice sooner or later and offer them something that’s more to their liking. Thus, you lose valuable resources to competitors.

Moreover, if an employee doesn’t feel as though they’re valued, and aren’t receiving the opportunities they’ve earned, their morale will drop and their productivity will inevitably suffer. Make them feel valued, however, and they’ll become more invested in their work. Make them feel as though they have a stake in the company’s success and future and they’ll fight to make it succeed.

Compensation planning should be more than just a mere afterthought – it should be treated as the powerful strategic tool that it is. In the right hands, the right compensation plan can reap great rewards for an organization, just as its mismanagement can lead to stagnation. Utilize the resources available to you effectively, and your organization will reap great dividends. Compensation planning is an important key to your organization’s success, and to victory.

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