Variable Pay System Design
Although there exists a near endless number of variations, most variable pay plans can be grouped into three categories: Incentives, Bonuses, and Recognition. These pay plans can be designed for any individual, or combination of individuals, and form the basis for an employee's discretionary compensation. In other words, payouts ONLY occur when certain performance or results criteria are met.
I believe a solid variable pay system can align and focus your organization on the accomplishment of key goals and objectives. It will also reward those employees who contribute to these results.
How I help clients design systems that meet their unique needs:
The first step is to determine the core business strategy of the organization. Are you looking to achieve Operational Excellence? Perhaps Product/Service Leadership is your key concern. Or maybe you are striving for Customer Intimacy. Writing clear objectives that support your business strategy is the key link between the strategy and the actions taken and behaviors exhibited by employees to achieve results.
From there, I'll help you develop a variable pay system that impacts four areas proven essential in achieving optimal organizational performance:
- Focus – we'll clarify the important tasks/accomplishments employees must perform, and identify for them what is important by establishing clear measures of success.
- Alignment – we'll emphasize the balance between organizational success and individual performance by cascading all goals down from the top of the organization to the individual employees.
- Motivation – we'll encourage continuous improvement by facilitating change through use of the "pay/reward lever".
- Reinforcement – no program can succeed without a plan to reinforce key points. To do so, we'll devise a positive reinforcement system that acknowledges desired behaviors and results.
Finally, I'll help you measure the plan's effectiveness. To do so, we'll continue to measure the business objectives, monitor the organization's culture, and assess the impact the plan is having on the organization as well as the employees.
Don't spend the time and financial investment in a plan destined for failure! I can help you avoid the five most common reasons why variable pay plans fail! If you want an outside view, or simply do not have the internal staffing to manage a project of this size, give me a call. I can help you design the entire system, or am more than willing to assist where needed. I truly enjoy seeing my clients experience the success that a well-conceived variable pay system can provide!
March 19, 2013 - "Accounting for the HR
Professional" Susquehanna HR Association, Lewisburg, PA
March 20, 2013 - "HR Strategic Planning: Charting the Course
of HR in Your Organization" Blair County SHRM, State College, PA
April 15, 2013 - "Variable Pay: Incentives
& Consequences" SHRM Talent Management Conference, Las Vegas,
May 15, 2013 - "HR Strategic Planning:
Charting the Course of HR in Your Organization" Central PA HR
Professionals, Harrisburg, PA