Hopefully, you read part 1 of this series on compensation. If you haven’t, take a look now. This time we’re going to cover some of the most important ways you can leverage Talent Compensation to help improve your compensation management strategy.
It’s Time to Get Started, but Don’t Worry. You’ve Got This.
Implementing compensation software or updating an outdated solution can be overwhelming, but you don’t have to do it over night. Set achievable goals for the first year, and aim for incremental improvement over time. The sections that follow provide some helpful tips to help you develop a plan to implement a comprehensive compensation strategy.
A strong compensation plan will strike balance between internal equity and competitiveness in the talent marketplace. We all know that compensation can impact the productivity and engagement of your workforce, which in turn impacts your organization’s ability to deliver successful projects. It’s important to use your compensation plan to your advantage and ensure that your employees understand their benefits.
The Primary Components of a Successful Compensation Strategy
Take the time to understand the components of a successful compensation strategy and clearly communicate to stakeholders. Start by level setting with a few key terms and definitions and present your proposed plan from there.
- Pay Philosophy – Provide context around salary or bonus increases for your employees. Is there a direct connection between the appraisal scores and merit salary/bonus increase? If so, you can explain the rules or guidelines that apply. If your company is “Pay for Position” based, you can explain the position evaluation and position matrix frames how compensation is awarded.
- Pay Grades - It is our responsibility to define the salary differentials to employees, there are certain areas like, their career level, experiences, certifications and education background etc., which help define what their compensation should be. An example of this is an employee who holds CCP certifications most likely will have higher base salary than the employee who doesn’t have CCP.
- Communicating the Plan - When you start on the path to revamp or implement a compensation plan, you’ll need to take the time to ‘sell’ your compensation packages to your employees. They want to understand what they’re getting, how the plan is structured, and what they can expect moving forward.
Compensation Solution Strategy
Solution Speed Session
Key Considerations for Implementing a Successful Compensation Strategy
You’ve spent some important time considering the elements that will make a compensation strategy successful for your firm. Now tackle the implementation of your plan by leveraging technology to help you manage and apply the compensation rules and guidelines you need to make the strategy work for you.
- Budgeting - For project focused business, salaries typically make up the largest part of the overall budget. Strategically applying that budget can have a significant impact on your ability to acquire and retain top talent. In Deltek Talent Compensation, budgets can be established for all components of the compensation review cycle. These can be broken down into different levels so that the manager reviewing the employees has visibility into the funds that they have remaining.
- Strategic Compensation Management - We need salary rules and/or guidelines to help the organization understand how compensation is treated. Standards help employees see that they are being treated fairly and help to establish reasonable expectations. These rules should form the framework and be communicated to the organization where appropriate. That being said, sometimes we do want there to be some flexibility – at least enough that a top performing employee can be recognized outside the standard rules.
- Salary Audits - It’s important to stay in-tune to the market value of your positions and that’s why your market data can be uploaded into Deltek Talent Compensation. This enables you to see details about where the employee currently is in relation to market position and compensation ratio. You’ll be able to access the same employee after increases have been entered to see how their new salary compares.
- Rules and Guidelines - Compensation rules and/or guidelines bring order to chaos and help your employees understand and operate within your compensation budget. The solution can show managers guidelines based on different parameters, such as performance, tenure, and position in range to name a few. Managers can make recommendations with these guidelines in place.
- Consistent Submissions - Making use of the solutions approval engine helps you and your managers to stay within the budget when applying flexibility. They help to prevent those pesky (and costly) errors so often present on spreadsheets, and significantly improve efficiency. Keep in mind, that manual approvals are not very secure. Spreadsheets may be accidentally left visible or worse, a piece of paper could end up in the completely wrong place.
- Approval Workflows - In Deltek Talent Compensation, after recommendations have been completed, the manager can make a final review of outlying recommendations and of the budget, then submit their recommendations. This then rolls up to their manager for them to review and adjust, until all approvals roll up and have been completed.
- Total Rewards - HR should list all the components included in the total rewards package: base salary, fixed cash allowances (gas bill, phone bill), short term incentives (commissions/bonus), long term incentives (stock options, long term cash etc.) and benefits.
- Reporting and Dashboard - Visibility is extremely important when it comes to applying your salary budget and there aren’t many homegrown solutions that can take the place of a truly informative dashboard. Knowing where you are at all times, helps you to make the tough decisions in real time with accurate and up-to-date information.
Read part 1 of this blog series on compensation management to ensure you are two steps ahead. To really start to transform your approach to compensation management, grab a piece of paper as you read this series and start to outline your basic pay philosophy, your pay grades, and your communication strategy. Incremental changes today can spell major transformation tomorrow. For more information on how technology can help you take your compensation strategy to the next level, check out this Solution Speed Session on Deltek Talent Compensation.
About the Author
Judy Fort is a member of the Deltek Solutions Engineering group and bridges the gap between technology and real world users. For a decade she has been working with diverse HR organizations helping them to achieve their goals.
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