30 Mar 5 Simple But Powerful Compensation Management Principles
Compensation management is inherently complex, but the ways in which we approach it don’t have to be complicated. In fact, some of the most powerful methods for managing employee pay are also the simplest. While you may be familiar with many of the following principles, revisiting them can help reframe your compensation priorities and practices.
1. Establish a Compensation Strategy
Every company needs a compensation strategy to guide employee pay decisions. It should align with your business strategy and be supported by your organization’s leadership. While it must be broad enough to be enforceable for everyone, it should also clearly define how pay for performance and competitive pay will be used, in addition to salary management using criteria such as levels, grades, or bands. Lastly, make sure the timing and methodologies for pay adjustments are clear.
2. Ace Compliance
Meeting applicable regulatory standards should also be a priority for your organization’s approach to compensation. Be proactive in ensuring your pay practices adhere to the Fair Labor Standards Act, Civil Rights Act, and any other employment regulations which may apply to your company.
3. Create Line of Sight
In order to make the determination that their compensation is fair, the workforce should be able to understand how pay decisions are made. To that end, the organization should communicate regularly and openly with employees about the rationale behind salary increases, bonuses, and other types of pay. Context for these decisions, including other elements of compensation such as benefits, should also be put into perspective.
4. Train Managers
While you can routinely distribute compensation communications to your employees, your managers must also play a role in having compensation-related conversations with their direct reports. Make sure they’re trained to show employees opportunities for pay growth and professional development, and that expectations are managed effectively. Use practice conversations and sample scripts as training resources.
5. Use the Right Tools
Finally, to help manage the complexities of the compensation planning process, invest in tools both you and your managers can use. The best compensation planning tools provide features like automated workflows, simplified award allocation based on predetermined rules, and real-time visibility into fair pay practices as decisions are being made.
HRsoft is the trusted global leader in compensation management software whose COMPview solution is proven to control and simplify the full process and allocation of merit, bonus and equity awards to drive manager and employee engagement.