Looking Ahead – Compensation Program Assessment

11/19/12
By: Mary A. Rizzuti, CCP, CRI

As we enter the Fourth Quarter, it is important to engage in assessing the impact of your company’s current compensation programs.  Are your variable pay programs driving the desired behaviors?  What is the appropriate salary increase for your company’s employees?  How has your industry changed over the last year?  Consideration of all of the foregoing is vital to creating efficiencies in 2013.

Compensation, many times, is a company’s largest expense, yet many focus attention and effort on simply administering their plans, rather than strategically assessing them.  It is important for HR business partners to consider the impact of compensation programs on the business, as well as on the employees.  Are compensation dollars being spent on the right individuals, and on effective programs?  Are payouts from incentive plans resulting in negative unintended consequences?

Creativity in design is desirable, but linking the compensation program to the strategy of the company is imperative.  Taking the pulse of the industry, and assessing the appropriateness of the performance metrics being used for compensation spending is a good first step in assessing a company’s programs.  Doing a “look back” at salary decisions, incentive payouts, and the performance evaluation process provides a solid foundation for making necessary changes to compensation programs.

For more information or to discuss this topic further, please contact Mary Rizzuti, CCP, PHR at 201-934-0505 Ext. 107 ormar@compensationresources.com.