Five Key Reasons Why You Need a Customized Employee Compensation Plan

In today’s world, attracting, motivating, and retaining key employees to help build a successful business —while remaining on budget—has become more challenging than ever. While offering competitive compensation programs is an effective strategy to attract top talent, the program must also make it easier to retain and reward the key people that help your organization succeed.

In addition, these programs must comply with the federal rules and regulations, as well as industry-specific standards. Having a customized employee compensation plan crafted and designed by specialists and tailored to industry-specific or company-specific needs can be pivotal in helping to achieve business goals, while also ensuring the program is compliant with industry regulations.

Benefits of customized compensation plans

1. Attract, retain, and motivate key talent

   A customized workforce compensation plan can identify market values for your employees, allowing you to pay them accordingly. This helps attract quality workers, control salary expenses, and minimize turnover by keeping existing employees from seeking opportunities elsewhere. When structured effectively, your compensation plan can also drive motivation across your various teams. Employees who know that they’re being fairly compensated for their work are more likely to stay engaged, committed, and productive, and gain an increased sense of job satisfaction. (Source link: https://www.shrm.org/topics-tools/news/benefits-compensation/employees-say-they-are-underpaid--worry-pay-isn-t-based-on-merit)

2. Maximize return on investment (ROI)

   Effective compensation management allows you to get the best return for the money spent. In other words, a compensation plan that stays within budget, while also driving productivity through pay-for-performance and other motivational tactics, can create a situation that’s both equitable for the company and advantageous for top-contributing employees.

3. Help with compliance requirements

   While compensation packages can increase competitiveness within your company’s industry, another key factor is that they must comply with federal regulations, such as the Fair Labor Standards Act and other industry specific standards. Adhering to these regulations can help protect your organization against litigation and ensure fairness for employees. A well-structured compensation plan assists in meeting these compliance goals.

4. Achieve strategic business objectives

   A well-designed executive compensation plan can help achieve the company's strategic objectives, both for the short- and long-term. Properly compensated and incentivized key executives are more likely to remain with the company and have a more vested interest in seeing the company meet and exceed its performance objectives.

5. Optimize benefits packages

   Compensation is only one part of a comprehensive total rewards package. Having a competitive employee benefits packages also help you to properly align business priorities in a changing employment landscape. These plans can also help you identify the right benefits carriers to deliver on your compensation strategy, meet your employees’ needs, design innovative funding strategies, and find the best pricing and service levels offered by the various carriers.

Determining the best approach to compensation is challenging due to ever-evolving employee needs and changing economic factors. In many instances, the best solution to dealing with compensation-related pain points is to hire a compensation consulting firm—specialists who understand the challenges companies face, understand the dynamics that affect each specific industry, and have in-depth knowledge of the rules and regulations pertaining to compensation.

How Newport’s Compensation Consultants Can Help

Our team of specialists work with you every step of the way to create a compensation plan—or update an existing plan—that can help you attract, motivate, and retain top talent. We provide job specific market data from multiple published salary survey sources and offer a “high touch” approach that guarantees you will have dedicated, expert-level support throughout the entire process. To assist you with competitively positioning your compensation program to win the war for talent we provide the following services:  

• Total Rewards Philosophy Statements
• Workforce and executive compensation and benefits benchmarking
• Annual and long-term incentive program design
• Transaction and retention bonus plans
• Deferred compensation and supplemental executive retirement plans
• Association or custom compensation and benefit survey initiatives
• Board compensation and CEO evaluation support

If you feel you need help attracting or retaining key players for your team, please contact us to find out how we can work with you to craft a compensation plan that’s perfectly suited to address your unique set of challenges and goals.