20 Dec To Build a Comp Strategy that Drives Retention and Engagement, Ask these Questions
When designing a compensation strategy, most companies have similar goals: the plan should be competitive enough to attract, engage, and retain top talent. For that to work effectively, you must first identify who your top talent truly is. Once you’ve done that, you can then begin tailoring your compensation strategy to reward your high performers.
Here’s how to start:
Consider These Questions
Using compensation for engagement and retention requires more than just following guidelines; it’s about putting the dollars where they can make the most impact – something we like to call Return on Employment (ROE).
Some important questions you want to consider:
“What is our compensation strategy?”
“Is compensation given out compensation appropriately?”
“How should we allocate the compensation budget?”
What Is Your Compensation Strategy?
To successfully leverage compensation as a tool for engagement, you must craft out a solid strategy. A compensation strategy is critical in determining how your company positions itself on the open job market, and crucial in how effective the company can be in retaining its top talent.
Traditionally, compensation strategies are aligned with organizational goals. Implementing a compensation strategy aligned with organizational goals creates better synergy and allows for a more effective allocation of compensation budgets to help retain the best talent.
Generally, a compensation strategy needs to include a framework on how employees are compensated, including things like career opportunities, pay raises, or adopting a centralized model or decentralized model for compensation planning.
Is Compensation Given Out Appropriately?
HR and compensation managers intuitively know this should be done, but in practice it can challenging to execute. Often it can be the lack of processes, resources or tools that prevent efficient allocation.
But right now, it is more important than ever to empower managers (who understand individual employee performance more than HR) to be able to make compensation allocation decisions. This enables comp budgets to be used more effectively in your overall engagement and retention strategy.
And as much as we don’t want to lose good talent because of compensation, we also don’t want to overpay. A good compensation planning strategy will allow you to avoid overpaying by having done the research, established benchmarks, and collectively decided upon your pay structures and pay-for-performance modeling.
Asking the questions and employing the strategies listed above will help you lay the foundation for a comp plan that will boost retention and engagement in your organization. You can further simplify comp planning and make it even more effective by implementing a software solution such as HRsoft’s COMPview. It provides busy HR departments with planning tools, automation, and real-time reports to make the comp planning process as seamless and strategic as possible. To learn more, you can view a quick demo of the COMPview software here.