The Basics of a Successful Compensation System

As a reflection of leadership’s strategy about how it values its employees, a well-established compensation system allows employers to optimize on employee engagement, productivity, financial resources, and organizational goals. 

Consider the following components and how to apply them into your business today:

• Organizational Goals. Make sure to pay employees for their individual performances as well as reward them for efforts which support the business goals of the company, department, and/or team.
• Employee Communications. Realistically communicate the company’s compensation program. Ensure that whatever the message conveys, it is done so in manner that is fair, competitive, appealing, and respectable. If the market conveys a particular value and the employer offers below the market value, then employee dissatisfaction and turnover rates will likely increase.
• Rewards and Recognitions. Ensure that project recognition is differentiated from individual recognition; in doing so, each employee’s value and relevance can be more easily identified.
• Timely Acknowledgements. Pay attention to the timing of rewards since desired performance should be rewarded as quickly as possible.
• Simple Measures. Keep performance measures as simple as possible and limit the number of measures to track.

Taking care of employees with a well-designed and well-communicated compensation program will help in the long-term investment of your employees as the company’s strongest asset.

For more information on how HRD can help you establish or update your compensation programs, please contact us at www.hrdracc.com