Human resource directors encounter a wide variety of choices for compensation management when developing rewards programs. Creating an incentive plan raises questions like these:
- How much do we pay for this position?
- How should we design our incentive plan?
- Should we hire help to dive into the financial efficacy of the incentive plan?
- Where is the balance between equity programs and shareholder expectations?
Each compensation management plan is unique and the intricacies and dynamism should be directly aligned to the mission and vision of the business. Oftentimes, human resource directors neglect the following three points that can lead to failure of compensation management programs.
When companies successfully address these areas, however, their rewards programs will drive direct support of the purpose and mission of the business.
1. Failure to Align the Business Strategy
Success in business depends on a clear strategic plan. If you are struggling to define your business strategy, read Innovative Leadership Tools that Drive Business Strategy to get a jumpstart on this all-important part of any successful business. Your business strategy should permeate every aspect of the business so you are clear on the core elements that drive your business, including the rewards program. Aligning the rewards with the business strategy is commonly overlooked, but taking the extra time to make the connection will yield the greatest amount of return for every compensation dollar spent.
Try these tips to align your strategic plan and rewards program:
- Use the company’s vision to create well-defined goals that can be measured by employee performance.
- Standardize performance measures using a consistent, structured method.
- Define employee roles clearly so that staff knows what is expected of them and how they fit into the puzzle of the strategic plan.
2. Neglecting the Market Position Philosophy
Many companies neglect to create a philosophy concerning their market position and this negatively impacts their compensation management. Either they have not taken the time to properly establish a philosophy, or the leadership struggles to agree on where the company fits in the market. Making this critical mistake can extinguish any hope for a successful rewards program. If you want your employees to meet business strategy goals, they must have a clear understanding of how the consumer will receive and experience their product or service.
Apple is an obvious company to consider when thinking about the marketing position. They have been winners in marketing for many years, and it can all be boiled down to their marketing philosophy. Christine Moorman addresses this in Why Apple Is a Great Marketer. She discusses how Apple’s original ideology from 1977 remains unchanged, and how it drives performance. Apple’s system is boiled down to three words: Empathy, Focus, and Impute. They hire employees based on this creed, believing that the staff, once entrenched in the company culture, will commit themselves to the happiness of the consumer.
Try these tips to create a winning market position philosophy:
- Understand your target market and consider them as the main focus of the experience and the ones with whom you need to create deep relationships.
- Present the desired qualities of the company and then think about how these impact user experience.
- Stand for more than just a product. Once you understand your audience and their impact on your brand, decide what your company can do to be more than merchandise.
3. Refusing to Counteroffer
Let’s face it, most employees do not leave their job for more money. The primary reason top talent leaves a company is because they entertained a conversation with a recruiter. Remember, recruiters are salespeople, and if they catch your employee on the right day, at the right time, it could be an easy sell. Unless the employee is dissatisfied, which should be addressed as part of any retention plan, their reason for being swayed could be as simple as they had a bad commute home and the recruiter promises an easier commute!
Knowing this, it is imperative companies begin rethinking their disdain for the counteroffer. The great news is: counteroffers don’t always have to be about money. Perhaps your employee wants to work from home more often, or would like an hour lunch break instead of a half hour, and he or she is willing to come in a half hour earlier. Maybe a top producer is looking for advancement opportunities, and you can offer more responsibility or a better-defined role (though make sure you are following these 4 Key Steps to Prevent Turnover if you notice many unhappy employees). Whatever the reason, you can often find a solution that will retain your employee and prevent the costly expense of recruiting. Mark Swartz suggests in his blog, How to Negotiate with An Employee Who Has a Better Offer, that you should begin negotiations by listening to what your employee needs. Here are three more tips for successful countering.
Try these tips for finding a successful counteroffer to keep your star employees:
- Listen to the employee as he or she tells you what is appealing about the other offer and determine if your company can offer something similar.
- Get proof of the counteroffer before countering.
- Look at ways that you can retain an employee that aren’t as expensive as a raise such as working from home, better incentives, or more responsibility.
The Pendolino Group understands the fine art of balancing motivation and bottom line. There is no “one size fits all” compensation plan for every company, so we tailor our programs to your specific needs and ensure your program can grow along with your organization. Check out our blog for more information on compensation management, performance management, and leadership excellence.
For guidance regarding Compensation, Total Rewards, Performance Management, Employee Relations, Leadership and Executive Coaching and Development, and all things “HR”, The Pendolino Group is here to support you and your team. Contact us today!