In a BLR webinar entitled "Compensation Strategies: How to Build a Market-Competitive Salary Structure that Retains and Attracts the Very Best," Diana D. Neelman, CCP of Compensation Resources, Inc. enumerated that the benefits of doing a thorough competitive analysis of your compensation structure:
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- Valid market data
- Updated or confirmed salary structure
- Credible grade assignments
- Logical parameters for pay from minimum to maximum
The results can also be used to maintain competitiveness through a performance management process. Performance management can improve employee performance by enriching the capabilities of the team and individual contributors. It can also provide continuous employee development and assist in achieving strategic business goals.
An effective pay for performance system works when an organization is able to accurately and objectively assess employee performance. It must be reviewed on an ongoing basis, including the manner in which managers rate and coach their employees.
Human Resources should conduct periodic audits of performance ratings to ensure that managers are objectively assessing performance. Periodic retraining is useful in ensuring that managers are using the system properly. Managers themselves should be evaluated in their performance evaluation on how they conduct their review -- on time?
Job criteria is not the only aspect of an employee's job that should be evaluated. Where appropriate, goals and objectives should be established that focus attention on projects that help the department/organization achieve its strategic goals, while empowering employees to achieve higher levels of performance.
Where results meet or exceed expectations, pay actions should reflect the level of achievement. This need not only be accomplished through the merit system, but through some form of variable compensation when appropriate. A pay for performance process, when implemented effectively, can be used to eliminate the entitlement mentality.
Diana D. Neelman is a Principal and Senior Consultant with Compensation Resources, Inc.. (www. compensationresources.com) She manages the research and data analysis relative to the design and implementation of comprehensive compensation programs. Ms. Neelman is responsible for the development of written policy and communication materials, including plan documents, policies and procedures manuals and administrative forms that support the plan designs. She is also responsible for developing and conducting training programs covering various compensation topics. Furthermore, she oversees CRI's Survey Department, which published various compensation and benefits studies each year.
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