20 Oct How to Develop a Strong Foundation for Your Compensation Plan
Employers can add many attractive programs to appeal to candidates looking to improve their employment opportunities, but adding all the “loyalty builders” in the world won’t work if an employer does not first have a fair and competitive compensation structure. Whether you’re seeking to attract in-demand talent or develop and retain your existing workforce (or more likely, a bit of both), your compensation structure should reflect your talent management goals.
A compensation plan is only as strong as its foundation. And, a strong foundation starts with a solid compensation philosophy. Simply put, a compensation philosophy is your organization’s position on how you will pay your employees compared to your competition. It explains how your compensation practices support your overall goals and allows you to take a proactive – instead of reactive – approach to hiring and retaining talent. Below, we’ll look at how you can craft a solid compensation foundation on which an effective plan can be built.
Create a Compensation Philosophy
If you don’t already have a compensation philosophy, you’re not alone. In an HRsoft poll, 37% of respondents said their organization does not currently have one. Yet, developing one will be tremendously helpful in ensuring fair pay practices and streamlining new hire practices.
Update Job Descriptions
Creating precise, updated job descriptions is another important component of a solid compensation program. In doing so, you can increase employee and manager communication. Clear job descriptions give employees a better idea of exactly what’s expected of them. As a result, employees will also see where they fit in the organization and the contributing role they play towards the company’s success, which is a powerful way to drive engagement.
While these are only the preliminary steps in creating a compensation plan, their importance cannot be overstated. By developing a clear philosophy for your compensation plan, you’ll have a distinct roadmap for building a plan to suit your business strategy and organizational needs.
HRsoft is a leading provider of strategic talent management software that improves manager effectiveness and business results. Our full suite of cloud-based HR software solutions includes applicant tracking software, compensation planning software, total rewards software, stay interview software, performance management software, and content management software. To learn more about our Compensation Management Software, COMPview, click the button below!