What are the most common compensation and benefits package design mistakes?

It is very important to regularly benchmark compensation with the market. Compensation is one of the major motivators/demotivators for any job and an inadequate compensation will lead to many organizational problems like attracting and retaining talent, employee engagement and satisfaction. Another problem is not maintaining pay parity internally. Often organizations attribute non-performance to unavailability of talent and people, but what generally lies at the core of this people problem is the compensation problem. Consulting companies can provide reliable market data for companies to benchmark and set their pay ranges correct.

The common mistakes when we create a benefit package are ignoring employees needs and preferences. That's why it's very important that we conduct a survey before starting to create packages that match and are suitable for the employees. We have to know that good salaries are not enough for the employee's satisfaction. Many employees value non-financial benefits such as work-life balance, development opportunities, and a positive work environment. Employees should have a clear understanding of how their compensation is determined and what benefits are available to them. We have to give equality to all employees so they can benefit from what we offer. It isn't about the benefits; it's about how satisfied the employees are with these benefits.

Common compensation and benefits mistakes employers make include inadequate market research, ignoring employee preferences, and a lack of transparency in communication about the packages. It's crucial to align offerings with industry standards, consider individual needs, and maintain clear, open dialogue to foster a positive work environment

Based on 100s of projects related to Rewards, Packages should be designed with employees' retention in mind. competitive packages can be leveraged with regular updates on total rewards market data. this should allow companies to differentiate salaries by career level in order to attract new Joiners and retain Senior employees. having a proactive market oriented approach about packages administration/ salary revisions/ rewards Structures will allow a company to stay at the top of their game.

1. Not doing a cost v/s ROI at the proposal stage 2. Follow the crowd is a strict no no. The benefits practices need to be customized to the organization and employee's needs and not just a reflection of what the market does. 3. Regular KPI monitoring and test for relevance should be done every few years. Like IT skills, benefit packages keep evolving and its good to get fresher perspectives every now and then.

I see two major mistakes : Failure to review and update regularly: Not reviewing and updating compensation and benefits packages regularly in response to changes in the market or organizational needs can result in outdated offerings that do not meet current requirements. Legal compliance issues: Failing to comply with relevant laws and regulations related to compensation and benefits can result in legal liabilities for the organization.

La compensación toma un sentido estratégico en el cual la organización puede comunicarle a su capital humano lo qué busca lograr y cómo contribuyen cada uno de ellos a alcanzar las macro-metas. La relación entre las metas de la organización y la motivación y desempe?o de los colaboradores, unidas mediante un plan de compensaciones efectivo es lo que llamamos alineación estratégica.

In my two decade of experience, I have observed that employers are not being very open to look at the market data. However, I have also seen some of the employers are very particular on looking at the market data before they go annual appraisal and they ensure to align accordingly, they even go furthermore to make correction in their future benchmark. Market data not only solve the problem of controlling attrition... it also helps organization to attract the top talents. I have been always vocal to encourage employer to partner with the market leaders to take their survey and algin their comp and ben accordingly.

Compensation and benefits packages will never be a "one size fits all" solution. While it's important to stay up to date on market trends, it is equally important to build a program that will support the overall business strategy. Take the time to understand this first before committing to a new compensation and benefits program.

El no dise?ar la experiencia del colaborador y escuchar a nuestro mercado Por ejemplo, según una encuesta de Willis Towers Watson, aproximadamente un 20% de los empleados no entienden completamente el valor de sus paquetes de beneficios. Esto sugiere una falta de comunicación y alineación estratégica. Además, un estudio de Deloitte encontró que solo el 27% de las empresas sienten que sus programas de compensación y beneficios están alineados con sus objetivos empresariales. Esta desconexión puede llevar a un desajuste entre las expectativas de los empleados y los objetivos de la organización, lo que a menudo resulta en una disminución del compromiso y fidelización de talento ??Escuchemos más

In today’s world thinking of a “1size fits all” approach is a big mistake. Flexibility in the package and practice design is not a luxury anymore, it is a must. Flexible benefits are now needed like never before to cater for the different demographics of the company’s workforce, this will increase the competitiveness and the attractiveness of the offered and will positively impact attraction and retention.

Many a times the global compensation philosophy of the organisation tends to supersede local market realities. To ensure a relevant compensation strategy the philosophy should act as a guiding principle that aids in creating a compensation package that is relevant and aligned to the market. Hence partnering with local HR leaders and listening to the voice of the customer beyond global market data becomes key to good compensation design.

Compensation and Benefits Strategy (CBS) must be aligned with the principle of Performance Management. While every organisation is setting the continous improvement as well as bringing the performance into the higher level, CBS must be answering the challenge of high performers seeing the objectives is something not to be achieved but also exceeded. Be flexible to create the additional flavor of CBS for the high performers and set that as new level of meeting expectation year by year.

Um erro muito comum é n?o considerar as reais expectativas e necessidades dos colaboradores ao projetar pacotes de remunera??o e benefícios. Podendo desalinhar entre o que a empresa oferece e o que os colaboradores valorizam. Uma alternativa interessante é um pacolte de benefícios mais flexivel onde os colaboradores podem optar por diferentes op??es de benefícios.

From a benefits perspective, there could be the option to have a flex benefit approach, however to achieve this successfully (especially with very large headcounts) a tech system investment is required. However, if there is a lack of investment in tech, to ease issues and risks with flex Ben, then a group approach is required. In this case communication of the value of the benefits to employees becomes an even more important activity.

Assuming you know what employees want and not seeking input leads to wasted effort and money. It’s important to do your research and take internal soundings not just look at what everyone else is doing.

Resulta clave medir la efectividad de cualquier nuevo incentivo o beneficio que se incorpore al paquete de compensaciones desde el punto de vista del empleado, para verificar el impacto real y en su caso identificar posibles mejoras. El no realizar este tipo de evaluaciones, siempre generará un alto riesgo de implementar medidas poco efectivas e incluso que puedan hasta generar efectos adversos a los esperados. En temas de compensaciones y beneficios, es clave escuchar, indagar y comprender.

I think that maintaining open communication channels is important for the successful implementation of the compensation and benefits plan. It will help in delivering the right message to employees and collect their feedback on what really matters to them. At the end it is a continuous process and the plan designers actually needs the feedback to improve the lan and respond to different dynamics

Open communication is not just about gathering feedback, but also about actively responding to it and making necessary adjustments. Indeed, one of the common pitfalls in this process is the failure to act upon the feedback received. This can lead to a disconnect between what's promised and what's delivered, undermining trust and engagement. Our approach should be proactive, continuously seeking opportunities to refine and enhance our offerings based on real input from our teams. It's about striking the right balance: taking feedback seriously, acting on it promptly, and ensuring that our initiatives are not just well-intended, but also well-received and effective in meeting the needs of our employees.

One thing I have found helpful is collecting feedback, conducting surveys and polls, to make informed compensation and people management decisions. To ensure employees are satisfied with Comp & Ben packages, they should be involved in the process, this will help in designing incentives that will be valued and appreciated by them.

Les meilleures pratiques pour se conformer aux aspects juridiques et légaux lors de la conception des programmes de rémunération et d'avantages sociaux comprennent le respect des lois locales, l'assurance de l'équité et de la non-discrimination, la transparence dans la communication des informations aux employés, des audits réguliers de conformité, la consultation avec des experts juridiques, la documentation des politiques et processus, ainsi que la formation du personnel pour éviter les risques juridiques et maintenir des pratiques équitables et transparentes.

Laws and regulations related to compensation and benefits vary by region and industry. Ignoring legal requirements can lead to costly lawsuits and damage to the organization's reputation.

N?o só os aspectos legais e éticos devem ser observados, pois igualmente importantes s?o os aspectos técnicos envolvidos nos desenhos de Planos de Cargos e Salários e de Remunera??o Estratégica, como por exemplo o conceituado Método Hay de pontos e pesos para o estabelecimento de salários. Basicamente este método avalia os cargos com base em três fatores principais, como Know-how, Solu??o de Problemas e Acountability. Sem a observa??o de uma metodologia para o estabelecimento técnico do salário adequado para determinado cargo, o resultado pode ser uma forte sensa??o de injusti?a remuneratória da empresa.

Never offer your employees a very nicelly wrapped empty box. This means compensation systems that claim to offer benefits, but make targets so hard to reach they become unattainable. Also systems where compensation amounts are so insignificantly small, that it makes no sense to try for it. Compensation systems only work when they add value.

There are some few “structural” challenges: 1- balancing cost of labour with competitive reward policies and practices especially in markets where labour costs 30-35% more than the gross compensation you give to employees 2- balancing flexibility of plans with law requirements especially in countries where laws are changing very slowly and increase rigidity instead of offering options to employees and employers 3- balancing wide offering (to increase options for employees) with clarity of the communication and understanding of employees of their package

Designing a one-size-fits-all compensation and benefits schemes without considering the diverse employee segments that require different needs and preferences. It is important to design total rewards schemes based organization strategy, employee segments, and market benchmarks for such employee segments and your rewards strategy to each segment .

I would add here the lack of innovation that is not keeping up with emerging trends and innovative practices in compensation and benefits design. Many companies are risk-averse and rely on compensation models of the past that support the status quo. It is important to stay on top of the new trends and adapt your compensation and benefits practices with the ones that will keep your workforce engaged.

Consider this: employees are the heart of any organization. They bring unique perspectives, experiences, and aspirations. By not considering what matters most to them in terms of compensation and benefits, a company essentially overlooks a golden opportunity to invest in something invaluable—employee engagement and satisfaction.