Pay Strategy . . . Do you Have One?

by Carey Klosterman on January 22, 2018

in Compensation,Rerun Classic


A NewsBrief article from November 2014 and still very much appropriate so I decided to revamp and recycle . . .

There has never been a more important time (and it still is!) to evaluate how you communicate your pay programs to employees. Ensuring that your employees clearly understand your overall pay strategy and philosophy is critical. Ask yourself “do my employees understand how and when their pay is determined”? If your answer is no, then it is time to take action and implement the three C’s . . . Clearly identify, Concisely write, and Consistently communicate your pay strategy.

Develop a compensation strategy and philosophy that will engage your employees and help them to understand the process. Here are some critical communication elements that you need to be aware of when designing an effective pay strategy.

  1. Make employees aware of the value they receive from their compensation plan by effectively communicating your company compensation plan/strategy. I will add that when your talk about the value . . . include total compensation which includes benefits, retirement and even paid-time-off. Preface it with how your program may differ from your competitors. It will have more meaning that way, and will likely hit home.
  2. Clearly and concisely identify how and when pay decisions will be made. Verbally, in writing, social media, intranet, etc. Find out what works.
  3. Develop a sound policy that is consistently administered and understood by employees. When employees understand that their employer is making an effort to deliver pay that is equitable and fair, they are more likely to stick around.
  4. Express appreciation for the value employees bring to the organization by regularly delivering a clear and consistent message about their pay and how their performance can drive higher rewards.
  5. Decide ahead of time how transparent you want (or need) to be. Be specific about how pay decisions are made . . . in good times and in bad.

Once you have had the opportunity to evaluate how your compensation plan is communicated, revisit the three C’s to ensure you have successfully developed a sound policy:

Is our compensation strategy clearly identified?
Is our strategy concise and easy to understand?
Have we consistently communicated what we want to measure and how our employees can be rewarded?

When employees understand what they are working for and how their role fits into the success of the organization, they will be more engaged, more productive and more optimistic during the most challenging of times.

During a time when equity concerns are at their peak, having solid practices in place will protect you against claims and provide a talking point when employees have questions.

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