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Compensation Strategy

What is the compensation strategy?How does the compensation strategy drive performance and innovation?

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The compensation strategy sets a clear guidance for the key remuneration principles in the company. The strategy defines key strategic behaviors and

values, which are remunerated. It defines the values and behavior, which are valued and rewarded. The compensation strategy makes the difference between

the focused strategic compensation and a bunch of different non connected compensation components.

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creative HRM

Content(1) About cHR

(2) What is the Compensation Strategy?

(3) Key Components

(4) Common Implementation Approach

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creative HRM

About

creative HRM is a website covering many HR related topics... HR Management, HR Management Practices, HR Strategy, HR Models, HR Business Partnering Model, HR Processes, HR Development, Organizational Design ...

The website is new and fresh, a lot of new content will be added during 2013. Please, follow creative HRM as you do not miss any news... cHRM Twitter

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What is the Compensation

Strategy?pondělí, 30. září 13

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Compensation QuestionsCompensation Strategy Challenges

๏ HR enjoys raised expectations of the top executives. They want HR to increase the performance, to retain key employees, bring new skilled talents to the company and they want to keep costs under a strict control

๏ Finding, motivating, developing and keeping employees is a key component of business success

๏ The compensation components cannot be managed discretely, they have to be a part of the overall strategy - the company has to define the competitive compensation strategy

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creative HRM

Compensation StrategyKey Components

PAYBase Pay

Overtime PayShort term incentivesLump Sum PaymentsCash Profit Sharing

Long Term IncentivesPerformance Plans

Equity Plans

BENEFITSRetirement

HealthPaid Time Off

Income ProtectionDeath Benefits

Work/Life BalanceOther benefit policies

CAREERSSkills enhancements

Leadership DevelopmentCareer AdvancementPromotion Process

Employment StabilityNature of Work

Rotations and Job Enrichment

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Key Components of the Compensation Strategy

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PayKey Compensation Strategy Components

๏ The key component for the right positioning of the company on the market

๏ Generally, the higher pay can attract skilled employees and reduce turnover if aligned with right values

๏ The right pay depends on key values and behavior the company want to reward

๏ Most successful companies do not use the competitive pay as the advantage; they set the proper mixture of the pay, benefits and career opportunities.

๏ Changes to pay are quick to implement, but they can become extremely costly to the company

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creative HRM

BenefitsKey Compensation Strategy Components

๏ The attractive benefits package can be a real competitive advantage - if benefits offered are aligned with the corporate culture and values of the company and employees

๏ The company has to define its strategy for benefits. It is simple to lay one benefit over another one. The company has to manage costs of providing benefits. It has to define its core benefits, which will be used as a basis for building the competitive advantage

๏ Flexible benefits are usually seen as the best alternative, but the company loses the option to put “its corporate extra” into the package

๏ Benefits do not increase the satisfaction of employees, but they are seen important when the employee considers another job offer

๏ Benefits can be used as a great reward and recognition tool

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creative HRM

CareersKey Compensation Strategy Components

๏ Careers represent the future value to employees of staying with the company

๏ The opportunity to learn and grow is highly valued by many employees

๏ The proper career management is also a strong cost management tool for the company

๏ Careers are always connected with the strong performance management process and with the succession planning processes

๏ Many companies do offer specialized career opportunities and they let employees leave after a limited period of time (and they are valued for)

๏ The position and weight of the career management in the reward mix depends on the industry and the mixture of employees

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How to develop an effective Compensation

Strategy?

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creative HRM

Compensation Strategy:The development process

1. Review the business environment. Understand the key factors outside the company.

2. Assess the business design. What are your key business drivers, goals?

3. Examine critical HR implications. Articulate the role of employees in executing the business strategy.

4. Measure the internal reality. What do you reward? How? Why?

5. Identify gaps and priorities. What needs to be fixed or changed? When?

6. Develop the action plan. Measure it.

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Want to know more?

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Please, feel free to visit creative HRM

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creative HRM

About

creative HRM is a website covering many HR related topics... HR Management, HR Management Practices, HR Strategy, HR Models, HR Business Partnering Model, HR Processes, HR Development, Organizational Design ...

The website is new and fresh, a lot of new content will be added during 2013. Please, follow creative HRM as you do not miss any news... cHRM Twitter

Please, feel free to visit creative HRM

pondělí, 30. září 13