Posted on: 22 September 2016
A compensation strategy should be a thorough, long-term set of rules and methods that a company applies when deciding how to compensate their employees. It should be approved at the top level of a company and implemented evenly and fairly by all managers. Making a compensation strategy long-term helps bring stability to a company and also protects its reputation. For this reason, a compensation strategy should be designed to coincide with a company's five-year strategic plan. However, there are some situations when you may want to review your company's compensation strategy early.
The Company Is New to the Market
If you are just forming your company, you likely do not have a compensation strategy at all, and it is important that you create an in-depth, detailed strategy that will make you competitive in your market while protecting your assets. Any time you enter a new market, you should assess your compensation strategy and make sure that it is competitive in the market you are entering. For example, if you have been a web-development firm and wish to add SEO and content services to your company, you will need to reassess your compensation for your new branch as well as for your current services. An experienced compensation consultant can help you with this.
The Company Experiences a Large Period of Growth
If your company is set to expand, this likely means that you will be hiring many more employees and possibly hiring quickly. Before you begin the expansion process, it is important to evaluate your compensation strategy to make certain that your current levels of compensation will be applicable on a larger scale. For example, you may have to switch some of your benefits such as flex time when hiring on a larger scale, or you may need to scale back your base compensation while offering higher bonuses.
The Company Experiences a Significant Reduction
Similar to periods of growth, if your company is downsizing, you will need to evaluate your compensation strategy. Often, when a company struggles financially, there is a problem in the compensation strategy that needs to be fixed. However, the solution may not be as simple as cutting salaries or benefits. A compensation consultant can let you know when it is a better idea to offer higher compensation during a company reduction in order to make certain that the workload continues to get done and to make sure you can still attract top talent even as a smaller company.
The HR Policies for the Company Change
The compensation strategy should be closely tied to the HR strategy. Any time there is a major change in your human-resources strategy, you should evaluate whether or not your current compensation strategy can support the changes. This can be a change in your hiring methods or a change in your retention goals. However, it is also important to revisit compensation strategies if you decide to make changes to the office culture or employee lifestyle.
There Is a Change in the Market
If there is a drastic change in the market, you should evaluate your current strategies to make sure they fit the new market. For example, the release of new technology can affect your compensation strategy, as can the introduction of a powerful competitor in your sector.
When evaluating your current compensation strategy to make sure it is applicable to the major changes your company is facing, it is a good idea to hire a compensation consultant, such as one from Fox Lawson & Associates, A Division of Gallagher Benefit Services Inc. A consultant will be familiar with the current market trends and can help guide your company through your transition to make sure it is still competitive and financially solvent after making changes to the compensation strategy.Share