6 Ingredients for Stellar Compensation Planning
It seems like a given, but if you want people to work for your company, then you’ve got to pay them what they’re worth. It was recently determined that the Great Recession was among the worst times to go to law school; many graduates found themselves competing for salaries that would’ve been considered low for someone without a law degree. The days of billing $500 an hour and being flown to Vegas are over. However, despite the fact that lawyers aren’t being paid what they were during the golden years, you can still pay employees for good work and make promises for the future. A solid compensation plan can keep workers around.
What Are the Ingredients for a Good Compensation Plan?
These plans should include all the future perks and present necessities that will keep good employees around: base salaries, salary increases, bonuses, standard of living increases and incentives. You want to offer reasons for them to work with you as opposed to other companies. They should benefit the employee but, in turn, they benefit the employer. Consider the following:
Does your compensation plan help you achieve your company’s goal? Does it fulfill your original vision?
There are short-term perks and long-term perks with a good incentive plan. You should have a plan for growth that will incentivize your employees to remain in your firm for a lengthy period of time, raising profits and thereby growing the company. What was your vision when you started the company? Will this move you toward it or away from it?
Do these incentives fit into your budget?
It’s easier to pay out bits here and bits there than to keep to a budget. Nobody wants to think about budgets. However, even if you do great one quarter, as a business owner, you must plan for the worst. Speaking with a financial planner can help you plan this in a fair and equitable manner.
When (and how) will these incentives be given?
Will you have a matching 401K plan? What about quarterly bonuses? Raises with good performance reviews? You could also pay employees in stock shares or cash depending on achievement or performance metrics like sales or hitting a client quota.
On what will these incentives be based?
Will you offer bonuses for meeting a certain quota or for performing above a certain benchmark?
What are the competitors doing?
You don’t want to bring on an attorney and then realize you’re paying them far below market rate. Make sure you’re paying your employees what they are worth. That way, they won’t jump ship or start a side hustle. You would only have yourself to blame for that.
Are these incentives in writing?
If you don’t have an official company handbook, at least have a typed document that outlines your policies. Nothing should be vague or left to the imagination. You should also review these policies with new hires so that nothing is questioned or left unclear.
Do you need help setting up an employee compensation plan? SuitsOn Staffing can help. Contact us today to get started!