Now that winter has passed, the annual ritual of spring cleaning is in full swing. Spring cleaning is more than cleaning the windows and clearing the cobwebs that hid in the corners during the winter. “Spring is a time to take a serious look at your compensation program and begin planning for the next budget cycle. Depending on your organization's fiscal year, it may also be time to determine appropriate market adjustments and pay increases for the coming year, ” said Michael Maciekowich, National Director, Astron Solutions.
Compensation program spring cleaning is more than looking at the market and determining adjustments. It is a time to step back and determine if the system remained in alignment with organizational and employee needs. Most organizations have long-term strategic plans with short-term objectives to determine progress. A compensation program designed at the beginning of a long-term strategic cycle also needs flexibility to address yearly short-term organizational objectives. As new objectives come to the forefront, or current ones are modified, the compensation plan must also change.
This is a different way of thinking about compensation programs. There are a number of tools and processes to help with this matter. One is a survey of the compensation program's effectiveness for users, including executive management, department management, and employees. The focus of this annual survey is the following:
o What aspects seem to have had a positive impact on employees in terms of retention and morale?
o What issues did human resources seem to spend the most time discussing with employees and managers?
o To what extent do managers and employees understand current financial issues facing the organization?
With this understanding, human resources must answer the following five questions:
o Has the market shifted? Is there a new strategic need in the organization that will alter our market focus, either by type of job or market definition? Is the organization in a position to remain competitive?
o If a job evaluation system is used, are the factors and factor weights applicable based on current strategic direction? If not, what modifications are required?
o Have recent market adjustments and system modifications forgotten the employees? Are we able to attract employees without causing internal pay compression?
o Can the organization sustain past financial commitments to the compensation program? If not, how will spending priorities be set?
o Do the current recognition and reward mechanisms work to motivate employees to contribute to the organization's strategic direction? With these questions answered, human resource next must develop a strategic response. Take the five questions above and overlay the four question survey responses. This helps to develop a strategic response to each of the five key compensation issues.
Here are basic examples of the thought process for auditing current compensation processes:
Michael Maciekowich is a National Director for Astron Solutions. His areas of expertise include the development, design, and implementation of executive, physician, and employee total cash compensation and performance management systems in all industries. His primary focus is the integration of compensation and human resource strategies with organization-specific missions, visions, values, and strategic operating plans. Michael has twenty-five years of consulting and industry compensation experience. He can be reached at 800-520-3889 or email@example.com.
Astron Solutions is a consulting firm dedicated to the delivery of HR consulting services and supportive technology. For more information about giving your compensation program a spring cleaning, please call Astron Solutions at 800-520-3889.