03 Jan How to Build Your Competitive Compensation Plan in 5 Steps
While recruiting, engagement and retention get all the headlines, you can see how compensation plays a vital role in each of them. With a competitive compensation plan in place, you will better allocate available budgets to right people and places within your organization.
Building a compensation plan can be complicated, but when you take a strategic, step-by-step approach, it becomes much more manageable and effective. There are five main ways you can build a more competitive compensation plan, including:
- Define Your Compensation Strategy – Create a clear compensation philosophy statement that identifies your budgeting model, market positioning, and organizational alignment. Make sure that your strategy is aligned with your company values and industry.
- Identify Your Critical Talent – Utilize your hiring and line managers, performance management techniques, succession planning, and stay interviews to identify your key and at-risk talent.
- Build a Pay-for-Performance Model – Quantify employee performance and outline a clear model for linking rewards to key productivity drivers.
- Pay Competitively AND Pay Appropriately. – Know your data and know your market before you make important compensation decisions.
- Create a Compensation Communication Plan – Utilize total rewards statements and/or WAVE calculators to show employees the full value of employment. Make sure that the “big picture” of their compensation plan is communicated clearly so everyone understands the many components.
Most importantly, compensation planning should no longer be considered just an administrative task. It is a critical and strategic tool that can maximize not only the productivity of your talent, but your investment in them.
You can reduce the complexity of compensation planning with the help of software such as HRsoft’s COMPview. Not only does it maximize the efficiency of your compensation plan, it also alleviates time-consuming tasks for HR and management so that your most dedicated high performers can continue devoting their attention to keeping the organization running smoothly and driving results. To learn more about how COMPview works, visit our product page.