Key Considerations for Designing Pay Plans to Drive Results

Key Considerations for Designing Pay Plans to Drive Results

When it comes to designing a total rewards program, it is important to ensure that it reflects the unique culture, goals, and management philosophy of your company. Therefore, careful planning and thoughtful design are paramount to drive specific behaviours and business outcomes. Getting each piece into the right place to create a total rewards package that supports company goals is no easy feat. Yet, if business leaders follow a sequenced process, they can put together an appropriate total rewards package for powerful results.

First, however, there are a few key considerations to bear in mind. When determining how to pay employees, there are both tangible and intangible factors to consider. Here are some of the main factors to consider:

• Fixed vs. Variable: Businesses can choose to pay employees a flat salary, hourly wage tied to time, or piece rate that fluctuates based on work outputs. They can also provide bonuses or commissions to employees.
• Monetary vs. Non-Monetary: Many employers aim for a blend of both monetary and non-monetary rewards to offer a balance of intrinsic and extrinsic motivators. Plus, by incorporating non-monetary rewards, employers touch upon underlying employee wants that have a greater lasting impact than pure monetary awards.
• Employee vs. Contractor: There is a rise in the non-traditional workforce, so employers who hire contractors should determine how these contributors will be compensated as opposed to traditional employees while being mindful of the differences between each group or class of workers, which are entitled to different rewards based on their classification.
• Effort vs. Result: Some employers reward based on efforts, while others pay based on results. Employers need to figure out what is more important in their operating environment. It is also important to determine whether rewards will be distributed based on team or individual contributions.
• Executive vs. Management vs. Individual Contributor: Lastly, the ways in which executives, managers, and individual contributors are to be compensated must be defined by your pay strategy.


HRsoft is the industry leader for compensation planning and total rewards software. Our cloud based SaaS solutions combine best of breed features with an intuitive, easy-to-use interface that simplifies and automates the entire compensation process helping companies save time and their best employees.

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