5 Compensation Strategies to Boost Your Competitive Edge next year
In a recent webcast, “Winning in 2013: Alternative Compensation Strategies to Boost Your Competitive Edge,” Author and Managing Partner of Lance A. Berger & Associates, Lance Berger presented some alternative approaches to talent management that will help companies remain competitive in unpredictable and volatile business conditions. During this webcast, Lance discussed what competitive business strategies should be using next year and beyond in addition to which talent management strategies best align with each business strategy.
How do we communicate the transition to variable or incentive pay from a current ‘given automatic 2.5%’ pay increase that employees expect on a yearly basis? I hope that we keep the keepers and lose the losers.
The best way is to develop a new salary administration manual that explains how the new approach leads to more competitive pay, has more equality and is based on a codified talent management strategy and is achievement oriented. If the company and people perform better and people get into the critical jobs they get paid more. The head of the organization should give verbal presentations and each employee should get an employee version of the program with Q&A on important issues.
What do you recommend for pay strategies for nonprofit companies (no long term compensation?)
Non-profits can establish both achievement awards and other incentives by adjusting the total amounts of funds available so there is some type of achievement award for each of the strategic groups. I have also done long term incentives with non-profits in the same way.
Should we identify the positions that are eligible to receive variable pay, or should this option be available for all positions?
All positions should be eligible for variable some type pay (some type of company profit share), outside of this form of pay incentives for all other individuals should be identified and each participant should get an administration plan that specifies how the program works and the types of affordable performance or achievement rewards they will receive. Non-profits can establish both achievement awards and other incentives by adjusting the total amounts of funds available.
Is it possible for a single company to have multiple growth strategies? If so, then will there be different comp strategies throughout the company?
A single company could have more than one pay strategy depending on how many winning business strategies they will be implementing. Within each strategy, pay is allotted to employees based on their contribution level spelled out their talent strategy
What percentage of the fixed pay should the achievement award be? What would you recommend? Should it be flat sum decoupled from Base salary or should it bear a reference to the Base/Fixed Pay?
Minimum of 10% for an achievement award, in lump sum paid once a year. It’s 10% is the percentage of the employee’s midpoint not base salary and it could be more depending on the distribution of employees. The lower graded recipients get these awards the higher they could be. Sales and commissioned base people should not be included because there awards are funded in a different way.