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

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



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