Over the last few years, with the uber-competitive labor market and evolving landscape of remote and hybrid work arrangements, I've had many conversations (some feeling more like counseling sessions!) with clients who had become very tired and frustrated with the rising compensation and work-related demands of candidates. These conversations included questions like: When will we see the labor market settle? How can we be profitable when paying rates such as this? What makes sense? Is there any way this would be considered reasonable? Will that be fair to my long-term employees? What we found is those with established and well-structured compensation plans were able to respond to these questions and the challenging scenarios they faced much more efficiently and effectively than those who did not.
Federal government contractors often hear about the many reasons to have an established and documented compensation plan, including the anticipated scrutiny of that plan by DCAA and OFCCP. While ensuring you can support an audit by DCAA and OFCCP is certainly a good (necessary) reason for a plan, it's also important to focus on the organization's fundamental need for a compensation plan and how it should support and ultimately be a driving force in the success and growth of the company. A compensation plan describes the base pay, incentive compensation, and employee reward programs offered by the company. That sounds very straightforward, but significant thought and planning should go into the creation and maintenance of this plan.
What Can You Accomplish With This Plan?
Is it All About the Money?
Absolutely not! Compensation is certainly important to employees - typically the most important consideration when making a job change; however, many other factors are key to retaining and motivating your workforce. Savvy employers are wise to consider the following when determining the best mix of compensation, benefits, and rewards for your diverse and unique employee population:
- Are the benefits provided meeting the diverse needs (i.e., health, welfare, financial) of my workforce and their families? How might I adapt and change these benefits as their needs evolve?
- Are employees enjoying a positive work-life balance? What can we do to enhance and encourage the mental and emotional well-being of our employees?
- Are we adequately investing in the personal and professional development of our employees?
- Are we providing appropriate and meaningful opportunities for social interaction and engagement?
- Do our employees feel celebrated and appreciated when actively contributing to the success of the company?
Where Do You Start?
The process of developing a compensation, benefits, and reward program can be quite overwhelming. While the process and outcome are exclusive to each organization, the following is important to all successful plans:
- Mission, values, and culture should be well-communicated and exemplified from the top down. What does success look like, and how do we align compensation, benefits, and rewards with those goals?
- Have a clear understanding of who your competition is in the labor market and what sets you apart.
- Determine compensation philosophy and appropriate benchmarking resources.
- Identify the traits and characteristics of successful employees in your organization and determine what is truly meaningful and encourages ownership amongst them.
- Consider the level of transparency and communication channels that will best fit your organization.
- To the extent determined appropriate, ensure your management team is provided with accurate information and an opportunity to understand the plan in order to effectively communicate and make decisions within the framework created.
Likely of greatest importance is the determination of who internally is best equipped to lead this task and to what extent external resources will be utilized. Whether you are looking to entirely outsource the development of your plan or simply brainstorm, our experienced HR Team is available to engage and support you through the process.