On the whole, the employee compensation plan you design for your employees must entice them to continue working for you while completing their tasks successfully. The most ideal plan offers a win-win situation for both the employer and employee, and below are some tips which will help you structure such an arrangement.
Build a Strong Workforce with Attractive Compensation Plans
As an employer, your goal should be to recruit and retain the industry’s top talent for many years to come. In a day and age where many employers race to the bottom to get the cheapest workers, your goal should be to go in the opposite direction, recruiting the best even if this means paying them more with greater benefits. Some features to consider include a retirement program, high commissions for those that work in sales, or a reimbursement system for college tuition.
Your Compensation Plan Must Be Within Your Means
Offering a lucrative compensation plan is great, but if you’re unable to afford it, you will shoot yourself in the foot over the long run. Even if the business is a making a lot of money right now, rainy days will inevitably come and profits will slow down. Any compensation plan you create needs to take this into consideration. The best compensation plans are those which are flexible. This flexibility can be created through the offering of bonuses which are dependent on production. This will entice the staff to be more productive to obtain the rewards.
Assess the Available Options for Employee Benefits
There are a plethora of employee benefits that can be added to a compensation plan. In addition to incentives which are merit based, you can also include dental or health plans. Benefits which are family oriented are excellent for employees who have children, and can include things such as reimbursement for daycare or even daycare facilities that are located on the company’s premises.
Avoid Being Overly Generous
A generous compensation plan is great, but one which is too generous can be counterproductive. Even the most successful businesses will go through cycles where profits and sales fall, for a variety of different reasons. During these rough times, having a compensation plan which is too generous will backfire, because you will be expected to pay for things that the company’s profits may not be able to afford. Failing to pay for these expenses may result in disenchantment from the employees. Always bear in mind that adding benefits is a lot easier than taking them away.
Be Concise When Adding the Compensation Plan to the Company Policy Manual
If the compensation plan you draft is not clear and concise, this can lead to serious problems down the road. To avoid this it is recommended to hire an attorney to help you draft a concise document where all the terms are clear. It is best to avoid a lot of complex legal language and instead draft the document in a manner that is easy to comprehend. New hires should be shown the benefit plan, and should contact the management if they have any questions regarding it. Even a great compensation plan will fail if the employees who read it don’t understand what is being enforced.