Post on 20-Jan-2017
Winning Compensation Strategies for Organizational Sustainability
Dorothy R. BergerPartner, Lance A. Berger & Associates, Ltd. Based on Chapter 4 sixth edition of the Compensation Handbook Copyright © 2015 by McGraw-Hill Education
Sustainability Definition
Ongoing success resulting from timely and effective adaptations to changes in the competitive environment
Adaptive Compensation Strategy Elements
Vigilantly monitor pay markets
Rationalize competitive pay levels
Link mix of pay to stage of growth and culture risk tolerance
Allocate pay based on employee contribution, recruitment, retention and engagement
Vigilantly Monitor Pay Markets
Identify/monitor current and future sources of recruitment
Identify/monitor destination organizations of employees who leave
Acquire/develop high quality surveys that match pay markets (see above)
Implement multiple salary structures based on distinctive pay markets
Rationalize Competitive Pay Levels
Assess level of competitiveness for people in each pay market based on recruitment needs, upward mobility and turnover potential
Assign competitive level of total compensation based on talent competition (see above) for each pay market salary structure
Link Mix of Pay to Growth Rate
Determine rate of growth of each business unit
Apply higher leverage (more variable pay) to faster growing units within selected pay markets at predetermined total compensation competitive level
Increase leverage in compensation mix at a pace tolerable by unit culture (more risk oriented cultures will accept leverage more easily)
Allocate pay based on employee contribution, recruitment, retention
and engagement Install salary administration system that
regularly adjusts all base salaries based on pay market change
Introduce non-fixed annual achievement awards to replace merit pay (for all employees) for 20% of employees
Introduce special awards for exceptional contribution
Ensure that pay packages involved in the selection, advancement and retention of key employees accelerate faster, and with higher competitive levels, than most employees
Adaptive Compensation
Strategy
Vigilantly monitor pay markets
Rationalize competitive pay levels
Link mix of pay to stage of growth and culture risk tolerance
Allocate pay based on contribution, recruitment, retention and engagement