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5 New Year’s Resolutions for Your 2013 Comp Plan

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Mykkah Herner, MA, CCP, 
Compensation Consultant at PayScale

It’s the end of the year! I’m wrapping up a bunch of client projects, getting them all set to launch their brand new compensation plans in the New Year. As I’m doing so, I’m realizing how helpful the tried and true New Years’ Resolutions are when thinking about best practices for managing compensation plans. Below are some of my favorites.

Get Fit

There are a number of things you can do to get your comp plan fit.

  • Take stock of your current compensation plan, including the strategy, philosophy, and policy. Are they still in alignment with your business goals?
  • How are you performing relative to the market? Are there any areas that need your attention? Some departments that have grown out of proportion to the rest of your organization?
  • If you have ranges, do they need adjusting? Do you need to shift them to account for shifts in the market? Or do you just need to shift some positions that may have moved faster in the market than others?
  • What other adjustments do you need to make this year to create a healthier comp plan?

Get a Better Job

As the market is slowly beginning to curve up, and more jobs become available, more and more people are considering switching jobs. How does this impact your comp plan? For the first time in a few years, you will have to really think about retaining key employees, not just attracting them. Are you giving performance-based bonuses to your star performers? Does your base comp plan take performance into account? What are you doing to retain your staff with your compensation plan?

Lose Weight

It’s time to trim the fat. Do you have underperformers to whom you’re still giving regular increases? Companies are starting to have increased budgets available to them again. How are you allocating those precious dollars? Many companies are using pay-for-performance as a way of targeting their increased budgets for the best return. In non-profit arenas, where pay-for-performance has been slow to catch on, leaders are increasingly finding pay-for-performance appealing as a way to be good stewards of their resources. Typically that means rewarding your high performers, and setting clear performance expectations for your underperformers.

Save Money

This popular New Year’s Resolution is sort of obvious, but I couldn’t resist. It’s pretty clear that saving money is crucial for your compensation plan. The comp budget is usually the single largest expense in organizations. The way you manage the comp budget, then, becomes suspect. What are you doing to save money? Or, what are you doing with the existing budget to allocate it more strategically?

Manage Stress

Finally, one of the ways to improve your comp plan for 2013 is to manage stress…

  • For your exec team: show them how you’re spending the compensation budget wisely by providing regular, high level, reports. Provide regular analytics showing how your organization is performing relative to the market and relative to your internal ranges—use different cuts of your data so they can see a well-rounded view of the big picture. Let them know that you’ve got it handled so they don’t have to stress about it.
  • For your managers: develop a simple and streamlined comp plan. If you can’t explain your base pay plan in a few sentences, there is probably too much going on. Put yourself in the shoes of each manager, trying to explain each compensation decision to their employees. Also, consider giving team leaders a flight risk report (showing high performers that are underpaid).
  • For your employees: most employees want to know that they’re being paid fairly for the work that they do. They notice their compensation when they’re not being paid fairly. Help your employees avoid stress by benchmarking your positions to market—and also by ensuring that you are aligned internally.
  • For you: do you know your way around a comp plan or does it cause you stress every year when it comes time to make those critical compensation decisions? Consider using a comp expert to support you in developing and managing your comp plan.

Whatever resolutions you make, I wish you a happy and prosperous new year!

More than 2,300 organizations use PayScale's subscription software to:

  • Allocate raises. PayScale Insight allows you to allocate raises based on employee performance and labor budget.
  • Attract talent. Price jobs based on your local market and competition.
  • Retain employees. Get pay right and show them how you did it. Your employees will be more satisfied to stay.
  • Drive performance. Get their salary right so they can focus on doing a good job.
  • Be confident. With know-how to talk about comp with anyone.

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