Among other things like employing the right people and selling relevant products and services, the right compensation plan for your organization is critical to its success. The right compensation plan will motivate everyone in your organization towards growth and success. There are two basic components to a solid compensation plan: those that involve money and those that do not.
If you are in the initial stages of restructuring your employees’ compensation plan, then your number one worry should be the financial aspect. This includes how much money you will have to pay in terms of compensation and the cost to your organization. Consider all the costs to your company including bank compensation consulting costs if you decide you need help with drafting out your plan. Working with a consultant will help you evaluate your current plan and see what should be added to fit your specific needs and budget.
Wages come first in your compensation plan. The first step you should take is to determine criteria for determining salaries and also the revision of salaries for your employees. Ultimately, the wages you pay an employee should reflect the time they put in, their productivity, and their level of seniority. If you pay unfair wages, then no amount of incentive can compensate for that.
Incentives and Bonuses
The second step in your self-evaluation should be your incentive and any other bonus plans you might have. Ensure that you have clear rules governing them, so there is no confusion about who deserves a bonus and who does not. Cover all the bases to protect your institution financially, but to also avoid employee disappointment when they find out that the bonus they have been expecting all year does not actually apply to them. Your bonus or incentive program should be tied to the performance of an individual, a team or the company as a whole.
How Much Will This Cost You?
Your next step in evaluating your company’s compensation plan should be assessing the cost of the plan. Employees work best when they know there is a bonus or incentive on the other side of their hard work. However, this can cost your company both financially and otherwise. Financially speaking, an incentive plan will cost you money depending on how you structure it. It will also cost you staff and lead to high turnover if you decide to put in an incentive and remove it after a few years.
This includes things like health insurance, employee services, employee growth and training, and retirement benefits that should be offered to maintain the staff that you have, and attract new talent to your company. These can even mean more to an employee than the actual wages you pay them. Health insurance, for example, is critical for many job seekers and this usually contributes to their decision to take on a new job offer.
Whatever you do, all aspects of employee compensation should be critically analyzed and consulted on if you are to attract the right talent and keep your current staff happy. It should be fair to both your staff and your budget.