Re-evaluating Compensation Plans in Today’s Economy
Have you discovered your existing compensation plans may not be meeting your business objectives? You’re not alone. In today’s economy, many employers are re-evaluating their compensation plans. Listed below are examples of recent trends as it relates to realigning compensation plans to increase profitability, employee morale and productivity.
Recent Compensation Trends
The compensation trends I have been noticing recently show the following:
- Employers are revisiting sales compensation plans. For example, business owners are working with their leadership team and sales department to determine how the company is selling more products and services and how the company is increasing sales to current customers. Sales compensation plans are often times in need of realignment to reflect the new direction of the company.
- Employers are revisiting annual merit increases. Many employers have realized in today’s economy the importance of a ‘high performer’ employee. More and more employers are moving away from providing merit increases to lower performers and are instead more adequately rewarding high performers for their results and impact on the company’s bottom line.
- Employers are revisiting bonus plans. Traditionally, employers would provide employees with a holiday or end-of-year bonus. However, in today’s economy, many employers are writing specific and measurable employee and corporate goals that are tied to the company objectives. The payout of the bonus is based on how successful the employee and/or the company were in meeting the goals.
Compensation plans often times have legal implications. For example, some bonus plans require the bonus must be taken into account in determining overtime pay for the period of time during which the bonus was earned. Therefore, it’s important to work with an HR professional or an employment attorney when developing compensation and bonus plans.
An effective compensation plan has the ability to help a company achieve their business objectives by redirecting employee efforts and appropriately rewarding and motivating employees.
Created by: Patty Mazerolle
Last Modified On: 5/1/2009 5:26:29 PM
Re-evaluating Compensation Plans in Today’s Economy
Have you discovered your existing compensation plans may not be meeting your business objectives? You’re not alone. In today’s economy, many employers are re-evaluating their compensation plans. Listed below are examples of recent trends as it relates to realigning compensation plans to increase profitability, employee morale and productivity.
Recent Compensation Trends
The compensation trends I have been noticing recently show the following:
- Employers are revisiting sales compensation plans. For example, business owners are working with their leadership team and sales department to determine how the company is selling more products and services and how the company is increasing sales to current customers. Sales compensation plans are often times in need of realignment to reflect the new direction of the company.
- Employers are revisiting annual merit increases. Many employers have realized in today’s economy the importance of a ‘high performer’ employee. More and more employers are moving away from providing merit increases to lower performers and are instead more adequately rewarding high performers for their results and impact on the company’s bottom line.
- Employers are revisiting bonus plans. Traditionally, employers would provide employees with a holiday or end-of-year bonus. However, in today’s economy, many employers are writing specific and measurable employee and corporate goals that are tied to the company objectives. The payout of the bonus is based on how successful the employee and/or the company were in meeting the goals.
Compensation plans often times have legal implications. For example, some bonus plans require the bonus must be taken into account in determining overtime pay for the period of time during which the bonus was earned. Therefore, it’s important to work with an HR professional or an employment attorney when developing compensation and bonus plans.
An effective compensation plan has the ability to help a company achieve their business objectives by redirecting employee efforts and appropriately rewarding and motivating employees.
Have you discovered your existing compensation plans may not be meeting your business objectives?
Re-evaluating Compensation Plans in Today’s EconomyThe content is not cached.
/insights/patty_mazerolle/re_evaluating_compensation_plans_in_todays_economy.aspx
11720
The information contained in this document is for general, informational purposes only and is not intended to be legal advice. This information is not a substitute for the guidance of a professional and should not be relied upon in reference to any specific situation without first seeking the advice of a qualified HR professional and/or legal counsel regarding applicable federal, state or local laws. HRTools, Administaff and their respective employees make no warranties, express or implied, and make no judgments regarding the accuracy of this content and/or its applicability to a specific situation. A reference or link to another website is not an endorsement of that site or service.