Setting Pay Structures That Fit Your Company Goals

When establishing compensation packages, HR professionals must look beyond market data to the specific goals and priorities of their organization. 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? Prioritize 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 emphasize 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 organization 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 analyze 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.

 

 

This website stores cookies on your computer. These cookies are used to collect information about how you interact with our website and allow us to remember you. We use this information in order to improve and customize your browsing experience and for analytics and metrics about our visitors both on this website and other media. To find out more about the cookies we use, see our Privacy Policy.

If you decline, your information won’t be tracked when you visit this website. A single cookie will be used in your browser to remember your preference not to be tracked.

Accept
Decline