|
April 15,
2002 Issue
It's Spring - Time for a Compensation
Program Tune Up
Now that winter has
passed, the annual ritual of spring cleaning is in full
swing. Spring cleaning impacts more than just the home,
where we clean the windows and clear the cobwebs that hid in
the corners during the winter. Spring is a time to take a
serious look at our compensation program and begin planning
for the next budget cycle. Depending on your organization's
fiscal year, it may also be time to determine appropriate
market adjustments and pay increases for the coming year.
Compensation program spring cleaning is more than looking at
the market and determining adjustments. It is a time to step
back and determine if the system remained in alignment with
organizational and employee needs. Most organizations have
long-term strategic plans with short-term objectives to
determine progress. A compensation program designed at the
beginning of a long-term strategic cycle also needs
flexibility to address yearly short-term organizational
objectives. As new objectives come to the forefront, or
current ones are modified, the compensation plan must also
change.
This is a different way of thinking about compensation
programs. There are a number of tools and processes to help
with this matter. One is a survey of the compensation
program's effectiveness for users, including executive
management, department management, and employees. The focus
of this annual survey is the following:
- What aspects of the current compensation program
were most effective in the past year?
- What aspects seem to have had a positive impact
on employees in terms of retention and morale?
- What aspects of the current compensation program
were least effective in the past year?
- What issues did human resources seem to spend
the most time discussing with employees and
managers?
- What should be the focus of the compensation program
in the coming year?
- What are managers' and employees' expectations
in terms of compensation determination?
- What will prevent this from happening?
- To what extent do managers and employees
understand current financial issues facing the
organization?
With this understanding, human resources next needs to
answer the following five questions:
- What external market challenges or pressures will be
placed on the compensation system in the coming year?
- Has the market shifted? Is there a new strategic
need in the organization that will alter our market
focus, either by type of job or market definition?
Is the organization in a position to remain
competitive?
- What internal job equity challenges or pressures
will be placed on the compensation program in the coming
year?
- If a job evaluation system is used, are the
factors and factor weights applicable based on
current strategic direction? If not, what
modifications are required?
- What employee equity challenges or pressures will be
placed on the compensation program in the coming year?
- Have recent market adjustments and system
modifications forgotten the employees? Are we able
to attract employees without causing internal pay
compression?
- What financial challenges will impede the ability of
the organization to successfully fund and implement
needed compensation program elements?
- Can the organization sustain past financial
commitments to the compensation program? If not, how
will spending priorities be set?
- What changes need to be made as to how employees are
recognized and rewarded for their contributions to the
organization?
- Do the current recognition and reward mechanisms
work to motivate employees to contribute to the
organization's strategic direction?
With these questions answered, the human resource department
next develops a strategic response. Take the five questions
above and overlay the four question survey responses. This
helps to develop a strategic response to each of the five
key compensation issues. For example:
- External Equity Issues: Most effective. Continue
current process.
- Internal Equity Issues: Least effective. Additional
focus on internal job placement required.
- Employee Equity Issues: Least effective. Serious
compression issues developed that need further action.
- Ability to pay issues: Most effective. Required
funding of the program is understood and available.
- Reward and Recognition Issues: Most effective. High
level of satisfaction with current performance
assessment and rewards systems.
With this information in hand, human resources next creates
a focused strategic response to present to senior
management. Each area of focus requires more detail than the
example provided here. This example, however, provides an
outline and overview of the highly successful thought
process for auditing current compensation processes.
Wonder what your fellow readers think about critical HR topics? Is your organization unique from or similar to others?
Click here to view the results of our past polls!
If you have a topic you would like addressed in Astronology, or some feedback on a past article, don't hesitate to tell us! Simply reply to this e-mail. See your question answered, or comments addressed, in an upcoming issue of Astronology.
Looking for a top-notch presenter for your human resource organization's meeting? Both Jennifer Loftus and Michael Maciekowich present highly-rated sessions on a variety of compensation and employee retention issues. For more information, send an e-mail to
info@astronsolutions.com.
Are you reading a pass-along copy of Astronology? Click on
this button
to start your own subscription today!
Send inquiries to
info@astronsolutions.com or call 800-520-3889, x105.
We hold your e-mail address in trust. Astron Solutions promises never to share or rent your personal information. We also promise never to send you frivolous e-mails and will allow you to leave our list, at your option, at any time.
To remove yourself from this list, please follow your personalized subscriber link at the bottom of your Astronology alert e-mail.
Copyright 2007, Astron Solutions, LLC
ISSN Number 1549-0467
|
|