Putting together a compensation plan that leaves everyone delighted can be a lot like baking up a perfect piece of pie. You’ll need to put together the right ingredients in the right order, and have a bit of patience to make sure everything’s coming together in the oven.
If you’re not yet the Julia Child of compensation planning, follow along for the recipe to a delicious comp plan.
First up, compensation philosophy & strategy are the crust of your comp plan pie. While it may be enticing to skip straight to the delicious filling, you’ve got to bake the crust first. Just like a good homemade pie crust, you’ll want to put some TLC in to outlining your compensation philosophy & strategy
Next, your compensation structure is most definitely the filling of your comp plan pie. Just like there are a plethora of options when it comes to actual pie filling, there are also options about what type of compensation plan you might choose to have. A well planned compensation structure may look like salary bands, pay grades, and/or ranges and should align with your compensation philosophy & strategy.
However you choose to organize your comp structure, market data is going to be a KEY ingredient. And just like artisanal chocolate or organic berries, you better make sure that compensation market data is high quality.
It’s also important to note that market data is only one ingredient in your comp plan. It might be appetizing to look at market data as the final answer, however, that market data should inform the decisions you make about pay in conjunction with the other ingredients in your compensation plan like the compensation strategy & philosophy.
Compensation policies & procedures are the all-important whipped cream & cherry on top of that freshly baked slice of comp plan pie.
After putting together the foundation of a compensation philosophy & strategy and baking up the delicious compensation structure filling, it’s time to serve up that hot out of the oven comp plan pie with some lovely compensation guidelines on top.
These compensation guidelines will include how your organization plans to handle outliers like red circled & green circled employees, how to evaluate and reward promotions & pay increases, and what to offer new employees within the pay range for that job.
Taking your time to form a well thought out compensation philosophy & strategy, designing a market data based compensation structure, and implementing pay policies that align with that philosophy, strategy & structure will enable you to serve up a tasty slice of comp plan pie that executives & hiring managers, and employees are sure to enjoy.
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