Three common issues our clients face are:
- Individuals often don’t understand how their compensation is determined or how to advance their career and pay.
- There is a perception that compensation is unfair.
- The current compensation system is old and outdated. Organizations will often try to fix these problems by crafting one-off deals with employees – which only exacerbates the perception of inequality – or by applying policies that don’t differentiate the high performers, increasing the risk of losing their best talent.
A good compensation system has:
- A Pay Strategy – A clear pay strategy demonstrates an organizations’ commitment to its employees and can help attract, retain, and motivate employees.
- Objectivity – Consulting with an outside professional can help to eliminate bias in an organization’s salary structure, compensation packages, and total rewards.
- Credibility – When deciding to make changes to or to develop a new compensation program, factual data is often exactly what’s needed to earn buy-in from the C-suite.
- Cost Effectiveness – A sound, market-based compensation system compensates employees fairly without overpaying.
If your compensation system has all of the above, your employees will feel that the organization has invested in resources for pay fairness/equity. This, in turn, will build trustworthiness and loyalty, resulting in the organization attracting and retaining the best talent.