As organizations continue to tighten their budgets, HR managers need to practice greater diligence with compensation management, which has one of the most profound impacts on a company’s bottom line. SumTotal Systems compiled five tips that HR professionals can use to improve and streamline employee compensation management, while continuing to engage, retain and develop the company’s most valuable asset: its workforce.
Here are the recommendations:
1) Align compensation with performance. To effectively budget, it is important to evaluate pay-for-performance by thoroughly assessing the organization’s performance, calibrating results to eliminate any managerial bias, and ultimately compensating individuals for accomplishing their goal targets.
2) Eliminate any opportunities for error. Simply relying on spreadsheets to manage employee data is no longer the most accurate process for compiling information due to human inaccuracies. Implementing a compensation management system automates the process and mitigates the risk of manipulation and errors.
3) Consider mixing in alternative incentives. When rewarding employees for their hard work, consider offering alternatives to pay raises such as stock options or one-time financial bonuses. These reflect the company’s faith in key employees while defining clear conduits for career growth.
4) Stay in touch with the market. By keeping a beat on the market pulse, you can better gauge fair merit increases and bonuses, as well as highlight any salary gaps that may need adjustment. Having this insight is especially crucial for those roles facing high turnover risk.
5) Involve your managers. Collaboration between HR professionals and managers is crucial in determining the most appropriate compensation allocations. With the right tools, managers can make effective performance decisions and work with HR to ensure consistency and control costs.