Adaptive compensation.presentation comp. handbook 6 chapter 4
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The document discusses strategies for developing an adaptive compensation strategy to achieve organizational sustainability. It recommends vigilantly monitoring pay markets, rationalizing competitive pay levels, linking the pay mix to the stage of growth and culture risk tolerance, and allocating pay based on employee contribution, recruitment, retention and engagement. The strategy adapts compensation practices in a timely manner in response to changes in the competitive environment to ensure ongoing organizational success.
Adaptive compensation.presentation comp. handbook 6 chapter 4
- 1. Winning Compensation Strategies for Organizational Sustainability Dorothy R. Berger Partner, Lance A. Berger & Associates, Ltd. Based on Chapter 4 sixth edition of the Compensation Handbook Copyright © 2015 by McGraw-Hill Education
- 2. Sustainability Definition Ongoing success resulting from timely and effective adaptations to changes in the competitive environment
- 3. Adaptive Compensation Strategy Elements Vigilantly monitor pay markets Rationalize competitive pay levels Link mix of pay to stage of growth and culture risk tolerance Allocate pay based on employee contribution, recruitment, retention and engagement
- 4. Vigilantly Monitor Pay Markets Identify/monitor current and future sources of recruitment Identify/monitor destination organizations of employees who leave Acquire/develop high quality surveys that match pay markets (see above) Implement multiple salary structures based on distinctive pay markets
- 5. Rationalize Competitive Pay Levels Assess level of competitiveness for people in each pay market based on recruitment needs, upward mobility and turnover potential Assign competitive level of total compensation based on talent competition (see above) for each pay market salary structure
- 6. Link Mix of Pay to Growth Rate Determine rate of growth of each business unit Apply higher leverage (more variable pay) to faster growing units within selected pay markets at predetermined total compensation competitive level Increase leverage in compensation mix at a pace tolerable by unit culture (more risk oriented cultures will accept leverage more easily)
- 7. Allocate pay based on employee contribution, recruitment, retention and engagement Install salary administration system that regularly adjusts all base salaries based on pay market change Introduce non-fixed annual achievement awards to replace merit pay (for all employees) for 20% of employees Introduce special awards for exceptional contribution Ensure that pay packages involved in the selection, advancement and retention of key employees accelerate faster, and with higher competitive levels, than most employees
- 8. Adaptive Compensation Strategy Vigilantly monitor pay markets Rationalize competitive pay levels Link mix of pay to stage of growth and culture risk tolerance Allocate pay based on contribution, recruitment, retention and engagement