Nothing tells more about an organization than how it compensates the people who work there. The choice to invest or not to invest in talent … to lead or lag the competition in pay … speaks volumes about an organization and its values.
“For where your treasure is, there your heart will be also” – The Bible
“We’ve got to put a lot of money into changing behavior” – Bill Gates
For the people who work for our organizations, few things are more important than regular, fair and consistent feedback that results in monetary reward for routinely meeting and/or exceeding performance expectation.
“No complaint is more common than scarcity of money” – Adam Smith
“Money won’t create success — but the freedom to make money will” – Nelson Mandela
“Money isn’t the most important thing in life. But it’s reasonably close to oxygen on the ‘gotta-have-it’ scale” – Zig Ziglar
“F&%#$ with my money is like f&%#$ with my emotions” – Big Worm
Why Your Organization Needs A Compensation Plan
The organizations with employees who are engaged, satisfied and tenured are generally the organizations with a clearly defined, articulated and executed plan for how people are compensated. Why?
- Transparency. A compensation plan makes it plain for the people on what behaviors and results are required for them to earn more money. These things should not be a mystery anyway. Let people know what you’re going to pay them and why.
- Budget. A compensation plan makes it easier to anticipate and prepare for the expenses related to pay. Management at all levels then know their boundaries and costs can be kept under control.
- Integrity. A compensation plan ensures fairness in pay practices. This will limit the risk associated with unfair wage accusations. And when/if complaints arise, the defense is immediately stronger when there is a written plan in place.
Salaries and their associated costs are one of the most significant expenses in our organizations. Our practices in regards to compensation are one of the most scrutinized areas and greatest sources of liability. Our decisions on pay impact the caliber talent type which join, stay and leave our organization.
If you don’t have a plan for how to handle compensation, you’re missing a crucial step in the strategy for success and advancement of your organization … And you need to fix that. Soon.