| It's Spring - Time for a Compensation Program Tune | | | | strategic need in the organization that will alter our |
| Up | | | | market focus, either by type of job or market |
| Now that winter has passed, the annual ritual of spring | | | | definition? Is the organization in a position to remain |
| cleaning is in full swing. Spring cleaning is more than | | | | competitive? |
| cleaning the windows and clearing the cobwebs that | | | | - What internal job equity challenges or pressures will |
| hid in the corners during the winter. "Spring is a time to | | | | be placed on the compensation program in the coming |
| take a serious look at your compensation program | | | | year?o If a job evaluation system is used, are the |
| and begin planning for the next budget cycle. | | | | factors and factor weights applicable based on current |
| Depending on your organization's fiscal year, it may | | | | strategic direction? If not, what modifications are |
| also be time to determine appropriate market | | | | required? |
| adjustments and pay increases for the coming year," | | | | - What employee equity challenges or pressures will |
| said Michael Maciekowich, National Director, Astron | | | | be placed on the compensation program in the coming |
| Solutions. | | | | year?o Have recent market adjustments and system |
| Compensation program spring cleaning is more than | | | | modifications forgotten the employees? Are we able |
| looking at the market and determining adjustments. It is | | | | to attract employees without causing internal pay |
| a time to step back and determine if the system | | | | compression? |
| remained in alignment with organizational and employee | | | | - What financial challenges will impede the ability of the |
| needs. Most organizations have long-term strategic | | | | organization to successfully fund and implement |
| plans with short-term objectives to determine | | | | needed compensation program elements?o Can the |
| progress. A compensation program designed at the | | | | organization sustain past financial commitments to the |
| beginning of a long-term strategic cycle also needs | | | | compensation program? If not, how will spending |
| flexibility to address yearly short-term organizational | | | | priorities be set? |
| objectives. As new objectives come to the forefront, | | | | - What changes need to be made as to how |
| or current ones are modified, the compensation plan | | | | employees are recognized and rewarded for their |
| must also change. | | | | contributions to the organization?o Do the current |
| This is a different way of thinking about compensation | | | | recognition and reward mechanisms work to motivate |
| programs. There are a number of tools and processes | | | | employees to contribute to the organization's strategic |
| to help with this matter. One is a survey of the | | | | direction? |
| compensation program's effectiveness for users, | | | | With these questions answered, human resource next |
| including executive management, department | | | | must develop a strategic response. Take the five |
| management, and employees. The focus of this annual | | | | questions above and overlay the four question survey |
| survey is the following: | | | | responses. This helps to develop a strategic response |
| - What aspects of the current compensation program | | | | to each of the five key compensation issues. Here are |
| were most effective in the past year?o What aspects | | | | basic examples of the thought process for auditing |
| seem to have had a positive impact on employees in | | | | current compensation processes: |
| terms of retention and morale? | | | | - External Equity Issues: Most effective. Continue |
| - What aspects of the current compensation program | | | | current process. |
| were least effective in the past year?o What issues | | | | - Internal Equity Issues: Least effective. Additional focus |
| did human resources seem to spend the most time | | | | on internal job placement required. |
| discussing with employees and managers? | | | | - Employee Equity Issues: Least effective. Serious |
| - What should be the focus of the compensation | | | | compression issues developed that need further |
| program in the coming year?o What are managers' | | | | action. |
| and employees' expectations in terms of | | | | - Ability to pay issues: Most effective. Required funding |
| compensation determination? | | | | of the program is understood and available. |
| - What will prevent this from happening?o To what | | | | - Reward and Recognition Issues: Most effective. High |
| extent do managers and employees understand | | | | level of satisfaction with current performance |
| current financial issues facing the organization? | | | | assessment and rewards systems. |
| With this understanding, human resources must | | | | With this information in hand, the final step is to create |
| answer the following five questions: | | | | a focused strategic response to present to senior |
| - What external market challenges or pressures will be | | | | management. The result is a fresh look at your |
| placed on the compensation system in the coming | | | | compensation program and a focused direction for the |
| year?o Has the market shifted? Is there a new | | | | year ahead. |