As we’ve discussed here before, compensation management can be a powerful tool for businesses who employ it thoughtfully and strategically. One of the biggest mistakes one could make regarding compensation would be to allow themselves to get lulled into complacency due to the comfort of routine. Another mistake would be getting too focused on (or bogged down in, as the case may be) the process of compensation management itself rather than the potential outcomes. Here are five simple (yet important) points everyone in compensation should be considering:
- Perception of fairness: How do the employees in your organization view their compensation, or compensation as a whole within your organization? It stands to reason that not everyone will receive the same compensation, as much of what they earn is dictated by their position in the organization and the kind of work they do. It is important, however, that employees perceive compensation within your organization as being fairly administered. Employees who feel like they aren’t being compensated what they’re worth with regards to how hard they work are likely to become frustrated and look for other opportunities.
- Perception of opportunity: Similarly, do employees in your organization feel as though they have enough opportunity for growth? It’s important to keep an eye on employee performance in order to reward those who go above and beyond in your organization, as well as to promote promising talent as an investment for your organization’s future. Hardworking, valuable employees who feel they have no room to grow within an organization will likely try to find somewhere they believe holds more opportunity for them.
- Giving a fuller picture with Total Rewards: Total rewards statements are a good way to illustrate to employees the full breadth of their compensation beyond just their paychecks. Laying out benefits, perks, and other parts of their compensation package that goes beyond their pay stubs gives employees a fuller picture of how much they receive from your organization.
- Tying employee performance to company growth: This one may be easier for certain types of organizations than for others, but how can you link the success of the company to the success of individual employees? Generally this is thought to mean something like stock options, though this may not be possible for all organizations. If you can’t make it literal, you can try to be more creative and build the perception that your employees’ success is indivisible from the organization’s success.
- Empowerment through knowledge: How can all of the data necessary to strategically deploy compensation management be organized so that it’s as useful as it can be? Compensation management tools can be particularly useful here, especially for larger or more decentralized organizations. Having budget information, performance metrics, eligibility for promotion or raises, and any other necessary information all in the same place can drastically cut down on the time it takes to strategize and complete the compensation management process, removing a lot of headache in the process.