What is your Philosophy?
It is important that organizations establish a total rewards philosophy as this guides the decision-making as to what the organization will offer to its employees. If the company adopts a “Risk/Reward” philosophy, then more emphasis will be placed on performance-based incentive plans/payouts and base pay will tend to be below market level midpoint by roughly 10 – 15%. If an organization adopts the “Employer of Choice” total rewards philosophy, it is making a commitment to offer a total package that attracts qualified candidates to the compensation/ benefits leader organization. If a company adopts a “Maintain Market Level” philosophy, a majority of the employees will be paid and continue to be paid around the market level midpoint, and benefit and incentives will be at the norm levels.
1. What are you trying to accomplish?
An organization should review its strategic plan and determine which total rewards philosophy will best assist the organization with its accomplishment of the strategic plan.
Are you seeking to attract and retain the highest quality employees? With an approved total rewards philosophy in place that moves you towards your strategic plan and a commitment to maintain and change the total rewards program as necessary, the organization should be able to attract and retain the highest quality of professional and hourly employees.
2. How do benefits and bonus fit in?
Benefits and bonus are the other two important legs of a total rewards program. The total rewards philosophy the organization adopts will determine the composition of benefits and bonus plans and the levels established for the organization. Executives and key next-generational managers will require a competitive short-term and long-term total rewards package that ensures their retention and commitment to the organization.
3. Corporate Compensation or Total Rewards Committee?
This group of 8 to 15 individuals is typically made up of functional top leaders across the organization. They normally meet on a quarterly basis to discuss any new positions that have been established, modified jobs that have changed to the extent they are not the same position, review total reward trends and turnover figures, and help guide the total rewards program based on the organization’s strategic plan and total rewards philosophy. In addition to this Committee, an organization should have a Board Compensation Committee that approves the Total Rewards Philosophy Statement and the various qualified and non-qualified benefits/incentive plans that are tied to the performance of the organization.
DBSquared is available to assist you in the development of your Total Rewards Philosophy and the various base, bonus, short-term and long-term incentive plans and benefit programs. The total package should motivate employees to perform at levels that provide your organization with a competitive advantage over other organizations as you seek to fulfill the strategic plan. Contact us today for your successful tomorrow!