Taking a Strategic Approach to Compensation Planning

Companies that take a strategic approach to compensation design are far more likely to get the behavioral and business outcomes they desire. Your company’s compensation is a powerful motivator that directly impacts engagement, productivity, collaboration, competition, and business outcomes.

As companies define their business strategy goals, they should begin to think about the talent implications involved in meeting those goals.?Specifically, companies must determine the level and type of talent needed to achieve its business goals and then determine how to pay appropriately for that talent.

Taking a strategic approach takes dedication to a structured process.?However, it is much more effective in the long run than addressing compensation issues in isolation. The structured process begins with establishing a pay philosophy in alignment with your business goals and talent needs, then putting together a thoughtful compensation strategy, design and structure.?

Why does it matter? Start-up companies may need to pay lower salaries in the early stages while planning for future growth and think about how they will reward their “founding” employees through future bonuses or increases to avoid pay inequities in the growth stage. Mature companies should keep in mind the future potential of downturn and avoid becoming hyper-competitive and increasing expenses with fixed pay.?There are also reasons you may want to differentiate pay strategies for key roles and to address market needs.

OnPoint Business Solutions can help you align your compensation strategy to your business strategy.?Contact us to learn how we can help.?Mary Ann Sturm, HR Practice leader for OnPoint, has amassed over 35 years in Total Rewards strategy design.