3 Important Things to Know About Compensation Strategies in Your Company
Posted on: 24 January 2017
Running a company can be overwhelming and challenging, and among the challenges you may have, understanding how to set up an effective compensation strategy can be at the top of the list. A good compensation strategy has specific goals and is designed for a purpose. Here are several important things to understand about this.
The Goals of an Effective Compensation Strategy
An effective compensation strategy should accomplish several goals, but there are two primary ones:
- To utilize your company's funds wisely and in a cost-effective manner.
- To encourage employees to work hard due to a fair and good compensation.
When you think of employee compensation, you may have no idea what is fair to give your employees; however, you probably are always concerned about the bottom line. Paying good wages is important, but it is better if you are paying good wages to employees that deserve their wages. As you develop an effective compensation strategy, you should keep these important goals in mind.
The Purpose of Spending Time on This
While it's possible to simply offer your employees a certain wage and leave it at that, this may not be the best way to handle this. It may be better to start off by hiring a consultant. One thing a consultant can do is help you understand market trends and average wages for the types of employees you have. This is a good place to start so you can see whether your current wages are close to where they should be.
From there, the consultant will evaluate how well your employees are handling their duties based on their pay. The consultant may also do some research to find out whether your employees feel like they are being treated fairly and feel they have the incentive to work hard.
With these steps and others, you will begin to discover areas within your compensation plans that need your attention. By making some changes, you may be able to get more productivity from your employees, and they may begin to feel more motivated and valued.
Some Ideas for Compensation Strategies
There are so many different types of strategies you could incorporate into your business; however, some of the best options involve incentives your employees can take advantage of through hard work and achievement. These types of plans motivate employees to work harder, achieve more, and accomplish goals set forth.
An example of an incentive plan is a bonus that is tied to a certain goal. For a salesperson, for example, you could offer a tiered bonus plan based on sales. Your employees may strive hard to reach certain levels to earn the reward you are offering. While you may have to pay a little more if they reach the goal, your company's sales will flourish, and your company may really begin to grow.
Other ideas include giving free things to your employees, such as benefits of a company wellness plan. Company wellness plans will cost money, but the benefits they offer are numerous. A wellness plan is designed to help your employees stay and become healthier, and you can customize the plan in many ways. Some options you could include are the following:
- Health screenings—You could have a doctor or nurse come to your office and offer screenings to your employees monthly or yearly. This is a great way for them to know what health risks they have and how to deal with them.
- Gym membership—Offering free gym memberships is a great way to encourage employees to work out, and working out will help them stay healthy.
These programs offer many benefits to employees and to you, and they can be worth the cost.
If you would like to improve the compensation strategies your company uses, hire a consultant such as Fox Lawson & Associates, A Division of Gallagher Benefit Services Inc. to learn more about ways you can improve this important part of your business.
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