HRs Guide to Setting a Compensation Strategy
Published on 12 Dec 2022
Recruiting and keeping workers is becoming more difficult. And although employee involvement, career growth, and flexibility are all significant, salary may be the most significant. 52% of respondents to a poll cited possible merit raises as their primary motivation for sticking with their current employers, ahead of criteria such as company culture and work connections. And according to a recent LinkedIn survey, companies with excellent remuneration ratings also had 56% lower employee turnover rates.
While money is not everything, compensation directly influences employee engagement and performance and is intimately tied to career advancement. In most firms, however, the pay-related decision-making process may seem arbitrary, opaque, and biased. When questioned, 24% of workers and 27% of HR executives feel their pay systems are clear and simple to comprehend. If compensation planning is not integral to your Human Resources practice, it should be.
In this booklet, we will discuss the important issues that must be answered before this may occur. From establishing your compensation "concept" to developing wage bands that interact with job levels, we will discuss what you need for a more comprehensive, transparent, and equal approach to employee compensation.
Determining Your Compensation Strategy
What's your company's unique view on compensation? How does your strategy vary from other organizations vying for the same talent? To develop a plan, you must first choose your guiding philosophy.
A compensation philosophy is a document that outlines your viewpoint and pays objectives for employees. In other words, think of it as your goal statement and employee compensation manual.
If this seems uncomplicated, keep in mind that there is more to developing a compensation philosophy than crafting an appealing slogan. Using the above assertions as a guide, you must answer more complex questions such as:
- What is remuneration for employees?
- How should we organize our pay grades?
- Should performance be taken into account?
- To what extent should the procedure be open?
- How can we increase wage parity?
- How does compensation fit into our current programs?
Having detailed answers to these questions is essential for eliminating prejudice and pay disparities in the future and ensuring compensation is handled efficiently. We will answer each of these questions to assist you in developing a pay philosophy that is optimal for your firm and its employees.
In addition to dollars, pounds, and euros, compensation is a crucial aspect of human resource management. Employees want to be recognized for their good work and know that their coworkers are as well. But with the proper framework and instruments, gaining trust in the process is simple.
With compensation principles, teams can clarify responses to crucial employee inquiries. At best, the link between performance and wages may seem obscure or the product of a calculation conducted behind closed doors. In the worst cases, imprecise compensation policies may foster mistrust, bias suspicions, disengagement, and, eventually, employee churn.
To create an award-winning "best place to work" where workers flourish, Lattice thinks a comprehensive investment in engagement, growth, and performance management is necessary. Equally important to the employee experience is compensation, which is why we are integrating it into our range of people management products coming ahead. To see our solution in action, arrange a demonstration immediately.
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