It's Spring - Time for a Compensation Program Tune Up

It's Spring - Time for a Compensation Program Tunestrategic need in the organization that will alter our
Upmarket focus, either by type of job or market
Now that winter has passed, the annual ritual of springdefinition? Is the organization in a position to remain
cleaning is in full swing. Spring cleaning is more thancompetitive?
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 tobe placed on the compensation program in the coming
take a serious look at your compensation programyear?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 maystrategic direction? If not, what modifications are
also be time to determine appropriate marketrequired?
adjustments and pay increases for the coming year,"- What employee equity challenges or pressures will
said Michael Maciekowich, National Director, Astronbe placed on the compensation program in the coming
Solutions.year?o Have recent market adjustments and system
Compensation program spring cleaning is more thanmodifications forgotten the employees? Are we able
looking at the market and determining adjustments. It isto attract employees without causing internal pay
a time to step back and determine if the systemcompression?
remained in alignment with organizational and employee- What financial challenges will impede the ability of the
needs. Most organizations have long-term strategicorganization to successfully fund and implement
plans with short-term objectives to determineneeded compensation program elements?o Can the
progress. A compensation program designed at theorganization sustain past financial commitments to the
beginning of a long-term strategic cycle also needscompensation program? If not, how will spending
flexibility to address yearly short-term organizationalpriorities 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 planemployees 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 compensationrecognition and reward mechanisms work to motivate
programs. There are a number of tools and processesemployees to contribute to the organization's strategic
to help with this matter. One is a survey of thedirection?
compensation program's effectiveness for users,With these questions answered, human resource next
including executive management, departmentmust develop a strategic response. Take the five
management, and employees. The focus of this annualquestions 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 programto each of the five key compensation issues. Here are
were most effective in the past year?o What aspectsbasic examples of the thought process for auditing
seem to have had a positive impact on employees incurrent compensation processes:
terms of retention and morale?- External Equity Issues: Most effective. Continue
- What aspects of the current compensation programcurrent 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 timeon internal job placement required.
discussing with employees and managers?- Employee Equity Issues: Least effective. Serious
- What should be the focus of the compensationcompression 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 understandlevel of satisfaction with current performance
current financial issues facing the organization?assessment and rewards systems.
With this understanding, human resources mustWith 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 bemanagement. The result is a fresh look at your
placed on the compensation system in the comingcompensation program and a focused direction for the
year?o Has the market shifted? Is there a newyear ahead.