When establishing compensation packages, HR professionals must look beyond market data to the specific goals and priorities of their organisation. Carefully designed pay structures that directly tie to business objectives are a strategic asset.
Start by identifying your top company goals. Do you aim to drive rapid growth? Prioritise innovation? Boost customer satisfaction scores? Each goal requires a tailored compensation approach.
Growth-focused companies may leverage commissions and bonuses to spur acquisition of new customers. Startups seeking the best technical talent may emphasise equity and upside. Customer experience leaders could reward achievement of satisfaction targets.
Get specific and quantitative. Compensation directly linked to metrics like revenue growth percentage, products launched or NPS trends will activate the desired behaviors from employees.
Gauge the level of risk the organisation can bear. Conservative structures with modest variable pay and risk controls promote stability. More aggressive structures with huge payouts for stretch goals fuel big bets. Find your appropriate risk-reward balance.
Foster collaboration not internal competition. Avoid incentive structures where business units or individuals undercut each other. Shared goals, cross-functional rewards and profit-sharing plans unite employees.
Continually reassess if pay structures are driving actions that ladder up to strategic goals. Leading companies analyse the effectiveness of compensation plans just like other business investments.
With thoughtful design, your pay structures become levers for activating your most important company objectives and competitive differentiators. Align compensation to strategy and watch performance reach new heights.
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