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CHRIS CRAWFORD AND BRENT LONGNECKER
Building a successful
compensation plan
Five strategies to help your business
attract and retain quality employees
Most employees are far removed from the design and analysis of their
compensation plans. Behind the scenes, the employer is investing time and
resources in designing the plans that attract, retain and motivate top talent-
W
hile every company plans
compensation packages
differently, there are some core
strategies that can be applied to attain
success in recruitment and retention.
You can plan big with these five
strategies to building a successful
employee compensation plan:
1. Communication is key.
Good intentions behind the design
of a compensation plan do not
necessarily deliver the intended
results. Communication is the driver.
Management is responsible for
communicating the "why's" and "how's"
of the plans it has designed. In addition,
keeping people abreast of performance
— both corporate and individual — is
paramount when a company has a pay-
for-performance culture.
2. Good corporate strategy equals
successful compensation plans.
All too often, compensation plans are in
place because "it has been done in the
past." For a compensation plan to be
truly successful, it must be tied directly to
corporate strategy.
LEARN M O R E about Longnecker and
Associates on its blog blog.longnecker.com.
One of the biggest failures of pay plans
is they do not take into account all the
key drivers that will make the company
successful. Without this "linkage," pay
plans can actually promote unwanted
behavior that offsets the overall strategy
of the company.
3. A sound employee performance
evaluation process is essential.
The employee evaluation process may
be tedious, but it is the catalyst that
drives most, if not all, pay decisions. The
employee evaluations and the process
utilized should have direct ties with the
compensation plans used. It gives the
company the ability to show definitively
that results impact rewards.
4. Pay is not perceived the same by all.
Abraham Maslow's theory of the
"hierarchy of needs" directly pertains
to this strategy. Base salary and benefits
are typically essential to all employees in
the corporate workplace. These are key
"building blocks" of pay.
Beyond these basic building blocks,
the "hierarchy of compensation needs"
changes as much as the demographics
of the organization. Giving appropriate
consideration to these unique needs and
tailoring portions of total compensation
allows an organization to reinforce its
culture while maximizing the utility of
the total compensation dollars.
5. Recognition, recognition, recognition.
Acknowledgement is a fundamental human
need. Compensation is a great way to
express appreciation and acknowledgement
of a job well done; however, compensation
plans are typically based upon milestones
in the calendar year.
Remember, everyone wants a "pat on
the back" or some form of recognition
when they, as an individual or as a team,
have achieved something worthwhile.
Recognizing and reinforcing top
performers through compensation will
promote the corporate culture, promote
desired work ethic and achieve results.
Well-designed compensation plans
have the ability to propel an organization
forward. These strategies, among
otbers, should be considered by those
responsible for compensation design —
the CEO, CFO or vice president of HR
— in order to achieve success. Leading
organizations are built on talented,
committed professionals — competitive,
well-planned compensation packages are
vital to recruiting and retaining these top
performers. •
Brent Longnecker is chairman and CEO and Chris
Crawford is president ot Longnecker & Associates,
and are experienced in the field ot compensation
and corporate governance consulting. They have
authored 15 books on compensation, including "The
Power ot Restricted Stock." For more intormation,
visit wwwJongnecker.com,
December 2013 | Smart Business Houston 5
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