Compensation Trends for Difficult Times
It’s probably safe to say that not many of us would choose to relive the last few months of economic insanity if asked. In truth, the volatile nature of this year has forced organizations to think outside the box to survive. As happens frequently in difficult environments, the innovations and trends that have surfaced over the recent months will help us all build more effective organizations going forward.
One of the areas with significant innovation and change is employee compensation. When companies are fighting tooth and nail to stay profitable, it’s no shock that they look to manage one of the biggest items on their balance sheets: employee payroll. Some of the changes companies have come up with to manage through these turbulent times can also make great long term strategies when it comes to using pay to get the most out of your workforce.
Let’s look at some of the best trends in the marketplace today.
Pay for Performance
Though pay for performance is not a new strategy for compensation it is certainly making a strong push in today’s companies. Many organizations are attaching a variable pay component to jobs that have traditionally been straight salary. By attaching behavioral targets that become required for an employee to be achieve 100% compensation, companies are able to ensure that each employee understands what actions are expected of them and how they contribute to the bottom line.
Win-Win Bonus Strategy
Many companies that have traditionally had bonus programs built into their compensation plans have begun to re-evaluate how those programs operate. Programs that pay employees for top line production are being exchanged for programs that compensate on profitable business or better bottom line expense management. By aligning employees’ bonuses only with actions that contribute to the company performing positively, organizations are able to ensure their workforce is on the same page as their share-owners.
Building Value Outside of Pay
Because budget dollars are obviously short in the current marketplace. Innovative organizations are finding non-financial rewards that can allow them to recognize their top performing employees without additional expense. Among the more popular options are work-from home programs that are dependent on performance metrics that allow employees increased flexibility and transit savings in exchange for performance.
The lesson to be learned from these compensation trends is that, when approached creatively, it is possible to compensate your top employees more without adding any expense to the system. If you haven’t already it would be well worth the time to analyze how alternative compensation programs might help you wring more value out of your workforce.
