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