Best practices for plan design? Most compensation practitioners can tick off the obvious ones on their fingers. I'm talking about: Requiring that the design helps your company achieve its strategic business and talent management goals. Interviewing executives to learn how to have an impact on the issues your leaders face. Conducting employee focus groups so you find out not only what employees think, but why. Connecting business strategy with an employee's work, so the reasons for their rewards are plain as day.
Go back through Compensation Cafe archives and you find many articles on each of these plan design parameters. There are probably even more articles that expose what happens when you take shortcuts, skipping one of these best practices.
This time I want to highlight the best practices that get talked about less frequently -- even though they are fundamental to plan success. Skip the following steps at your peril! Whether you are redesigning your base pay program or creating an incentive plan, it pays to learn from experienced colleagues, so I've included links to Compensation Cafe articles about each of these three best practices.
Spend time understanding the nature and root causes of the performance challenges that your new plan must address. Don't assume that you have all the insight you need. Analysis of divisional productivity data (followed by some manager interviews) can tell you a lot about performance obstacles, for instance. I bet there are important questions that you haven't asked yet. You'll find inspiration here:
Pay for Influence? Rewards for Retweets? by Ann Bares
The Measurement Puzzle by Ann Bares
Determine the success criteria you will use for new the plan. This is always a tricky one but you can make it easier by creating a two-column table. Title the first column, "The compensation plan will be considered successful if it achieves." Now list all of the outcomes that you are shooting for (I mean, all!) Side-by-side in the second column, brainstorm how you can measure success for each item. Some of your ideas will be measures, some of them will be outcomes you can describe; all of them should have a target date. Need to think more about measuring success? Take a look at these:
What If You Could Start from Scratch? by Margaret O'Hanlon
A Foundation Like a Ship, Not a Building by Dan Walter
Respond to "negative influencers," otherwise known as the employees who rarely have anything positive thing to say. While they are not your main audience, they are an audience not to be overlooked. Each time you make a design decision, step back and ask yourself what the negative influencers would have to say about it. Would their viewpoint hold any water? If so, now is the time to address it. You'll never bring all your employees over to your side but you can make good progress by looking at the plan from the negative influencers' point of view and taking their views into account.
Still skeptical? Take a look:
Irked Enough to Care by Derek Irvine
Do You Have the Answers by Chuck Csizmar
Disruptive Innovation in Compensation Communication Practices by Margaret O'Hanlon
Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. A former Board member for the Bay Area Compensation Association (BACA), Margaret coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.
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