How can a pay structure engage 67% of your employees?
How developing the right Compensation Strategy can breed engagement and lower turnover
“Pay differences between employees should
reward and retain top performers and motivate all others”
- People Profits Principle #28
Seldom do I find a documented compensation strategy and plan. In cases where there is one, but undocumented, it is rare where the employees had a good understanding of it. The vast majority of the time, whether documented or not, the managers versus the employees understanding were quite different. Clearly, this situation cannot be motivating or engaging.
Most compensation strategies are based on:
1. Time SERVED.
2. Wage SURVEYS.
3. SUBJECTIVE opinion of somebody somewhere regarding:
- The employees’ PERFORMANCE
- The VALUE of the job – how much they can pay
- How much the increase will be for TIME SERVED
The result will be:
- A close grouping of rates for most employees
- Most differences based on how long they have been there
- Inexplicable rates for some employees
- Little objective basis for individual rates
Your Compensation Strategy and Plan should be based on:
1. OBJECTIVE value and productivity
2. INDIVIDUAL achievement
3. The highest pay for consistent STELLAR achievement
4. Rewarding INCREASES in performance and VALUE
5. PENALIZE non-performers
6. CALCULATED value of job
Your Compensation Strategy and Plans’ goals should:
1. REWARD AND RETAIN stellar performers
2. A CLEAR DISTINCTION in pay for subpar/par versus stellar performers
3. MOTIVATE non-stellar performers to higher value and performance
4. Assist in the DEVELOPMENT OF OBJECTIVE performance criteria
5. Assist subpar performers out the door
What does this mean for you?
1. The REVENUES per employee are INCREASED
2. Stellar employees FEEL VALUED and less likely to leave
3. None stellar employees are motivated to increase PRODUCTIVITY
- Or they will MOVE ON
5. Employee ENGAGEMENT and RETENTION is increased
6. Employee COST PER $1.00 of REVENUE is REDUCED!
Thereby, engaging, motivating and setting a standard of performance.
People Profits mission is to elevate your HR department to where you need them to be. The strategic driver of your greatest asset!! We do this by building a comprehensive Human Capital Strategy and Plan including all 7 elements of HR with no conflicts and focused on business and financial principles.
Profits and Growth through Human Capital Strategy and Systems
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