Compensation Systems Are Tools

Employers, you are leaders and leadership requires action!

I have encountered a lot of different approaches to compensation systems over the years and I frequently ask where the approach to compensation came from. Here are typical answers to that question:

1. I tried something new (great!!!!!! Action!!)
2. They were doing it this way when I got here (not a good answer...LEAD!)
3. We have always done compensation this way (NO! This is passive leadership!)

Once I get past that initial discussion with employers I ask them about how they view their compensation systems and most view them as simple tools used for calculating an employee's salary/wage. Worse yet, some of them actually view them as a necessary evil.

Well, I have great news for you! You can actively lead by creating compensation systems, that when constructed and used correctly, can help you achieve the following:

1. Attract candidates who fit your organization.
2. Retain great employees.
3. Encourage and reward satisfactory AND exemplary performance.
4. Ensure compensation equity.

Attracting Candidates Who Fit Your Organization:

Properly constructed compensation systems, like systems built in DinamiComp?, can help you attract candidates who FIT YOUR ORGANIZATION!!!!

This is how it works:

Compensation systems should be based on the value employees bring to their organization.?These things are what we call Pay Differential Variables (PDVs) and they are the attributes, skills, degrees, certifications, etc., that employers KNOW make good employees.?If it can be measured, it should be put in the compensation system.

Once the system is built (based on PDVs that are important to the ORGANIZATION), it is used in job announcements.?It could read something like this: “If you possess these skills, abilities, certifications, etc., then please apply because YOU FIT US!”?When successfully implemented, you will have candidates opt-in to your candidate pipeline because they fit you.?Similarly, you will have people opt out of your pipeline because they do not fit you.

Attracting candidates who fit you will help with retention!

Retaining Great People:

Properly constructed compensation systems, like systems built in DinamiComp?, can help you retain great people!

This is how it works:

Those same compensation systems you used to attract candidates who fit your organization and are based on the value (the PDVs mentioned above) employees bring to your organization, will help you recognize the power of greatness within each employee. If employees deliver on the things that make them great, then they are rewarded for it!

Employers, how often do you lose GOOD people who are simply seeking additional compensation for the great things they are doing, but your system is not set up to recognize their impact??If you answered more than “never,” then our system is for you!?

Also, please keep in mind that those employees who are not delivering the things you want are currently overpaid. And guess what?! They are staying!!!!

Encouraging and Rewarding Satisfactory AND Exemplary Performance:

Did you know that greater than 50% of the workforce is guilty of quiet quitting? Did you know you can actually discourage this prevalent practice?

Yes, you can create compensation systems (easily done in DinamiComp?) that help you discourage Quiet Quitting by encouraging and rewarding satisfactory and exemplary performance.??

Now, before I get to the particulars, quiet quitting has been around for years and has simply become more prevalent in recent years.? I bet employers reading this have people working with them who are rather senior and are “coasting.”? That is quiet quitting.? In my Army days, we used to call this “retired on active duty.”? Every profession has employees who are coasting.

Here is how you can fix this issue:

Compensation systems should be based on the value employees bring to their organization.? These are the PDVs I mentioned above.

????Perhaps the most important PDVs that can be included are ones linked to evaluation tools. PDVs could look like this:

Evaluation Part 1: Satisfactory = $X

Evaluation Part 1: Exemplary = $Y

Evaluation Part 2: Satisfactory = $X

Evaluation Part 2: Exemplary =$Y

Etc.

????Once you embed your evaluation tools into your compensation systems, you can EASILY encourage and reward satisfactory AND exemplary performance.

Thus, you have given great reasons to employees to refrain from quiet quitting and employee productivity will improve.

Ensuring Compensation Equity:

Yes, you can create compensation systems (easily done in DinamiComp?) that help you ensure you have equitable compensation practices.??

Here is how compensation systems can help you ensure compensation equity:

Compensation systems should be based on the value employees bring to their organization (again, the PDVs I mentioned above).

Once you have your systems in place, they are used to determine the salary of your employees.?

????Ambiguity is gone.?

????Subjectivity is gone.?

????The arbitrary nature of some compensation decisions is gone.

??The system determines the compensation and takes the guesswork out of the equation.

When you have equitable compensation systems, you will create stronger relationships and build trust with your employees.?Both of these will help you with retention.?

??Compensation equity is the right goal to have!

As you can see, compensation systems are useful tools that help you solve a multitude of issues within your organization. It is time to actively lead and upgrade today!

????Do you want to win in today’s employment market??Then email me at [email protected] today!

#dinamico #compensation #PDV #lead #leadership #quietquitting