7 Practical Strategies for Effectively Building Modern Compensation Plans

modern compensation plan

Why such a modern compensation plan should be a priority

An effective and modern compensation plan strategy positively impacts employee retention, engagement connections and should be created to support any growing business. It’s more important than ever to look over your current plans – impacting salaries, hourly wages, commission, bonuses and benefits – and analyze any weak areas that should be improved. These plans also attract qualified candidates to your business and motivate existing employees to perform exemplary work and exceed goals.

Creating the plan

Start with an outline, which sets objectives for your program and certain targeted goals. This process works better if job descriptions for each team member are in place. Appoint a compensation manager – usually filled by someone in human resources – who can determine how direct and indirect compensation can be selected. It is also important to create a compensation philosophy that determines whether your compensation rates will be market leaders or competitive pay with great benefits. Make sure opportunities are created for career advancement at different compensation levels.

Other factors to consider:

Keep up to date on the latest legislation

Reacting to COVID-19, the U.S. government created funded programs to help businesses negatively impacted. Programs like the CARES Act to the Families First Coronavirus Response Act provided funding sources to help businesses struggling with the loss of business and to keep employees working. To find out more go to the U.S. Department of the Treasury website at home.treasury.gov.

Focus on immediate or instant rewards

Consider using an instant rewards model to show employees appreciation for well-done work. Look at indirect compensation like gift cards or extra vacation days. Catered lunches or a coffee cart are also effective immediate and instant rewards.

Pay equity standards

It is critical you look over your direct compensation pay scale to make sure there is equity throughout the
entire workforce. In other words, people doing the same work, regardless of gender or ethnicity,
should be receiving equitable pay.

Important to revisit compensation plans during changing times

The global pandemic, changing workforce demands and interests and the booming world of working remotely should motivate you to review your compensation packages. It truly motivates those looking for an employer that recognizes their needs. Your plans should live up to management expectations and what is happening in the workplace; so modern compensation plans are just that, modern and evolving. With a plan clearly outlined, you provide an enriching and fulfilling experience for your team.

Other key strategies

Consider a total rewards approach which covers all the major ways your workforce is compensated beyond payroll and bonuses, including:

  • Health insurance
  • Life insurance
  • Retirement plans
  • Paid time off
  • Paid medical leave

Other factors that can help develop an effective compensation or total rewards package

These are programs that recognize key improvements to improved workplace diversity and inclusion, company culture events, a focus on work-life balance and management performance strategies. Professional development and personal growth programs should also be considered as part of the overall compensation.

Show employees you care about causes

The pandemic impacted non-profits that struggle to meet the needs of those they help. Showing
employees you support causes they care about can boost morale, engagement and contribute to improved retention.

The advantages of hiring ShaBro Alternative Office Solutions

Having HR and employee benefits professionals who can guide your business through various insurance options, current market trends and creative benefits strategies is a huge advantage. ShaBro provides compensation and benefits support to maximize your financial resources and ensure peer competitiveness. Contact us to devise your most effective and modern compensation packages.

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