3 Tips For Developing A Compensation Strategy For Your Company

If you are looking to motive your employees and attract solid employees to your company, you need to have a compensation strategy for your company. Here are three tips to help you develop a compensation strategy that will work for your company and help you get the results that you are looking for.

#1 Tie Compensation To Reasonable Metrics

First, you need to make sure that you are tying the compensation to reasonable metrics.

For example, if you have an employee who is at or near the lowest level of responsibility at your company, their compensation should not be tied to how well the company does that year. They don't have direct control over that through their decisions or actions. Instead, their compensation should be tied to measurable achievements within the department or team that they work in and contribute to.

For top-level employees, such as executives and managers, whose actions and decisions do influence the performance of your company, their compensation should be more tied to performance metrics.

Make sure that you offer different levels of compensation that are tied to reasonable metrics based on that individual's position in your company.

#2 Make Sure That Compensation Is Also Tied To Growth

Second, you need to make sure that you also tie your compensation to an employee's potential for growth. That means that you are going to need to change compensation requirements every year for employees to ensure that they continue to show growth. You don't want to continue to reward an employee who doesn't show signs of growth.

#3 Don't Tie Compensation To Pressure

Make sure that you have a committee that reviews compensation and a checklist system set up to keep track of how and when employees meet their goals. You need to make sure that you set up a system that is as tied to metrics as possible. You don't want employees to be able to pressure or talk their way into a better compensation package. You want to set up a system that relies on data and information, which takes personal influence out of the process as much as possible.   

You may want to work with a consulting firm to set up your company's compensation structure. They can help you determine the metrics by which you will measure employees and the methods you will use to collect that data and information. They can help you set up a solid system that will keep personal favor out of your compensation system and ensure that it is tied to work effort and performance. 

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