Tuesday, January 08, 2013

Compensation Practice Basics – Our New Six-Part Series

According to an October 2012 study reported by WorldatWork, it’s back to basics for compensation programs.  Human Resources professionals must be knowledgeable about the fundamentals of several compensation tools in order to successfully attract and retain talent in 2013.  The study, Compensation Programs and Practices 2012, notes that, across a wide spectrum of organizations, there is a more rigorous approach when it comes to compensation practices than in past years. 

Astronology looks forward to sharing compensation basics with you and exploring changes in compensation practices and programs for the future. We will examine the study’s findings and discuss compensation basics with you throughout the upcoming six-part Astronology series.  By the end of the first quarter of 2013, you will be primed and ready to enhance your existing compensation programs to ensure successful employee attraction and retention!

·         Compensation 101: Compensation Philosophy – Coming January 22nd
Compensation Programs and Practices 2012 found that 67 percent of organizations are adopting a formal, written compensation philosophy to ensure compensation programs support the organization’s culture. Has your organization adopted a compensation philosophy?  What elements are included in your compensation philosophy?  When was the last time you updated the compensation philosophy?  Does your compensation philosophy vary by employee group, department, or other category?  We’ll explore these questions and more in Compensation 101: Compensation Philosophy, as a compensation philosophy is the foundation upon which all other compensation decisions are made.

·         Compensation 102: Job Evaluation Methods – Coming February 5th
Market pricing remains a dominant method for job evaluation.  However, it is not a true job evaluation method, since its focus is external rather than internal.  Since neither the external nor the internal can be ignored when developing compensation systems, many organizations use a variety of methods to determine job values. In Compensation 102: Job Evaluation Methods, we will examine the various job evaluation methods and how they can be used to effectively create job groupings reflective of internal and external value.

·         Compensation 103: Salary Structures – Coming February 19th
According to Compensation Programs and Practices 2012, 85 percent of organizations have a formal salary structure. What are the pros and the cons of having a formal salary structure in place? What type of salary structures can be used to attract and retain talent?  How often should an organization update its salary structures?  How does HR know when it is time to create a brand new salary structure?  Compensation 103: Salary Structures will examine a wide variety of necessary considerations when building a salary structure.

·         Compensation 104: Pay for Performance – Coming March 5th
Compensation Programs and Practices 2012 cites that 71 percent of organizations have a formal employee performance appraisal system. A popular choice in this regard is to measure individual performance against management or personal objectives. How flexible can an employee performance appraisal system be? Where do you start when establishing a performance appraisal system?  What types of evaluation criteria should be included in the performance appraisal system?  How can HR ensure that the performance appraisal system is fair?  Does compensation link with performance appraisal score?  Should it?  The thorny issues are on tap for Compensation 104: Pay for Performance.

·         Compensation 105: Pay Communications – Coming March 19th
Compensation Programs and Practices 2012 found that 80 percent of organizations relay pay information to their employees via brief written or oral communication. In some cases, individual attention is given to employees regarding the topic of pay.  What is the best way to go about communicating the sensitive, but necessary topic of pay?  What communication methods are most effective?  Is there one right way to share pay information?  Are there any legal considerations that impact pay communications? You won’t want to miss Compensation 105: Pay Communications, since the best compensation programs lose their proverbial punch if not communicated effectively to employees.

·         Compensation 106: Variable Pay – Coming April 2nd
Wrapping up our six-part series, Compensation 106: Variable Pay will discuss the options surrounding and challenges with incentive programs. According to Compensation Programs and Practices 2012, in 2012 84 percent of organizations used some form of bonuses or incentive compensation to reward employees.  There are many options in the realm of variable pay: bonuses, award recognition payments, and individual performance plans are but three. What the pros and cons of different variable pay design options? Which variable pay options are viable for your organization, given its goals, objectives, financial status, and culture?  Does one variable pay design option fit all?  Or should the variable pay design change over time?  Our six-part series on compensation basics comes to a close with Compensation 106: Variable Pay’s examination of a more advanced compensation topic.

It’s going to be an educational Spring 2013 here at Astronology!  We look forward to exploring these topics and questions with you in the next six issues. We also look forward also to hearing your reactions, responses, and questions. Please contact us today with any specific questions you’d like us to tackle during this six-part series on compensation basics, and we’ll be sure to include a response to your question in the relevant article!

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