Two of the most salient steps you can take in management – create a compensation plan that competitively pays your employees and rewards them for excellence.
Enlightened compensation plans inspire performance and incentivize productivity.
So a well-planned strategy to compensation planning will enable you to be astute in making decisions about your budget and pay schedules.
In this way, you’ll get a strong return on your investment in time and money.
Here are strategies for good planning:
Design a winning compensation philosophy
Your compensation philosophy should delineate how you want to differentiate your organization with competitors. The process starts with determining the salient tenets for your compensation program.
You need a perspective to analyze your marketplace data and where you stand in competitiveness.
Acquire relevant data
An effective wage and benefit study will help you pinpoint your standing with competitors. Identify reliable sources of data that swathe all your job descriptions.
Ascertain which positions are key to your organization and those that warrant extra consideration for higher compensation.
Look for trends
You should identify trends in marketplace budgets for salary increases. Monitor the trends to see how you stack up. Strategize what you must do to offset any pay gaps.
Continuously fine-tune your process
Don’t stand pat. Your compensation planning should be an ongoing process. Make sure your data includes what competitors are doing in salary-structure adjustments.
Then, regularly update your salary ranges to stay competitive.
Don’t fall into the trap of adjusting salaries without updating salary ranges. You’ll risk having employees being paid too much for their salary range.
Ultimately, this will mean you won’t have an accurate snapshot of your compensation program compared to your competition.
Keep an open mind about performance pay
Spend your money on what you value. You should budget enough money to pay your employees well if they deliver.
But keep an open mind in your compensation planning. You might want to consider incentivizing performance across your entire workforce.
For example, if a high-performing business is your goal, be conservative in your pay schedules but consider profit-sharing on a monthly basis. That’s right. Give your employees immediate gratification – with profit and loss bonuses – if they effectively work with their team members to deliver profits.
Give extra weight to high performers
You’ll want to pay high-performing employees more than average-performing employees. To determine pay for them, you should have a matrix with performance ratings and pay ranges.
Develop lucid communication principles
Determine the ground rules about sharing compensation information. You must train your managers to communicate effectively with their employees.
Your managers must comprehend how your process works, including criteria for deciding on pay increases, and what can and cannot be shared with their employees.
You must determine whether your staff can retrieve information about their salary ranges, the higher pay schedules, and your organization’s pay makeup. Be consistent in how you communicate such information.
Get a strong return on your pay raises
Keep morale high for your strong performers when you have to criticize some aspect of their work.
A common practice in giving mild criticism is to use the “pancake sandwich” approach. Like a pancake restaurant menu item, the pancake sandwich comes with an over-easy egg and sausage sandwiched between pancakes.
Therefore, to mildly criticize employees: Compliment the employees, then give the criticism followed by two unrelated compliments. The employee is more likely to accept the criticism and respond well with continued high performance because you’re using a positive approach.
The converse is true to get the most mileage when giving a raise a raise to employees:
Praise an aspect of the persons’ performance accompanied by a raise and two unrelated compliments. In this way, you’ll get maximum mileage out of paying the person a higher salary or bonus.
From the Coach’s Corner, here are more management strategies:
Risk Management When Competitors Raid Your Employees — If competitors raid your employees, here are risk-management tips.
Optimize Talent Management with 5 Coaching-Culture Tips — When managers become coaches, you get a higher-performing workforce. You will have replaced mediocrity with strong performance. Here’s how to develop a coaching culture.
Management — 4 Mindsets for Leadership in Performance Reviews — Are you nervous at the thought of giving employee-performance reviews? You’re not alone. Your employees aren’t exactly thrilled, either. Typically, employees aren’t convinced they can get valid feedback. If they’ve experienced poor managers, they likely dread the performance-review process or are skeptical of the outcome.
Sales Management: Motivate Your Staff in 10 Seconds — All too-often when sales managers are busy, they’re task-oriented. Not to be critical, but they’re focused only on what’s at the end of their noses. For effective management and revenue, the trick is to guard against it.
13 Management Tips to Solve Employee Absenteeism — Absenteeism causes migraines for a lot of bosses. Obviously, your company will make healthier profits, if you don’t have an absenteeism problem.
“Sure, sometimes guys pass you up in salary, and maybe it’s a lesser player, but it’s all based on what a team has as far as value in that person.”