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5 Steps to Fair & Competitive Compensation

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Variable Pay System

Although there exists a near endless number of variations, most variable pay plans can be grouped into three categories: Incentives, Bonuses, and Recognition. These pay plans can be designed for any individual, or combination of individuals, and form the basis for an employee’s discretionary compensation. In other words, payouts ONLY occur when certain performance or results criteria are met.

TurboExecs believes that a solid variable pay system can align and focus your organization on the accomplishment of key goals and objectives. It will also reward those employees who contribute to these results.

How we help clients design systems that meet their unique needs:

The first step is to determine the core business strategy of the organization. Are you looking to achieve Operational Excellence? Perhaps Product/Service Leadership is your key concern. Or maybe you are striving for Customer Intimacy. Writing clear objectives that support your business strategy is the key link between the strategy and the actions taken and behaviors exhibited by employees to achieve results.

From there, we’ll help you develop a variable pay system that impacts four areas proven essential in achieving optimal organizational performance:

 

  • Focus – we’ll clarify the important tasks/accomplishments employees must perform, and identify for them what is important by establishing clear measures of success.
  • Alignment – we’ll emphasize the balance between organizational success and individual performance by cascading all goals down from the top of the organization to the individual employees.
  • Motivation – we’ll encourage continuous improvement by facilitating change through use of the “pay/reward lever”.
  • Reinforcement – no program can succeed without a plan to reinforce key points. To do so, we’ll devise a positive reinforcement system that acknowledges desired behaviors and results.

Finally, TurboExecs will help you measure the plan’s effectiveness. To do so, we’ll continue to measure the business objectives, monitor the organization’s culture, and assess the impact the plan is having on the organization as well as the employees.

Don’t spend the time and financial investment in a plan destined for failure! TurboExecs can help you avoid the five most common reasons why variable pay plans fail! If you want an outside view, or simply do not have the internal staffing to manage a project of this size, give us a call. We can help you design the entire system, or are more than willing to assist where needed. We truly enjoy seeing our clients experience the success that a well-conceived variable pay system can provide!

Base pay system design

The most common objective of any compensation plan is to be internally equitable and externally competitive. TurboExecs believes it is essential to not only design a base pay system that meets these objectives, but also supports the business strategy and creates a link between work and rewards. Base pay is simply defined as compensation that we provide to employees in exchange for performing specific job responsibilities.

TurboExecs can help you design a base pay structure that will attract, motivate, and retain quality employees through these action steps:

  • Job Analysis – this first step provides key information about the nature and level of work performed.
  • Job Documentation – next, we need to gather information about job content and the knowledge, skills, and abilities required to successfully complete job duties.
  • Job Evaluation – during this phase we’ll collect the data needed to create a job worth hierarchy. Either a market-based approach or job content approach can be used.
  • Job Worth Hierarchy – this last step indicates the perceived value of jobs in relationship to each other within an organization.

Once we complete the above steps, the salary ranges can be established and any other factors such as shift or geography differentials or hazard pay can be accounted for. Other considerations we can help with include designing the procedures for administering promotion/demotion pay changes, COLA increases, market adjustments, and communicating pay actions effectively.

Base pay compensation systems continuously interact with their external and organizational environments and are affected by changes in these environments. As a result, they must be monitored regularly. If you need help implementing or redesigning your system, please contact us. Be proactive in auditing your system’s effectiveness! TurboExecs can help you prevent the serious consequences that arise from compensation systems that are not aligned with organizational objectives.

Interested in learning more? Contact us today.