I would like to make a plea before we close out 2010. As you examine your compensation and benefit strategies for the new year, please consider three outcomes your approach should (dare I say, must?) include. I would even go so far as to call these imperatives for any company hoping to have a workforce that drives growth in 2011 and beyond.
- Strategy–ask yourself this question: “Do our compensation and benefits strategies drive execution of key strategic initiatives and make the achievement of the company’s growth goals more likely?” For this to happen, at a minimum there must be alignment between the business plan of the company and rewards. Your pay and benefits strategies should also reflect a philosophy that creates appropriate ties between pay and performance in a way that nurtures a sense of partnership with the workforce and instills an ownership mindset.
- Cost–in this regard, the question to be asked is: “Do we institute practices that ensure we create greater compensation and benefits efficiencies and lower or eliminate unnecessary expense?” Here the issue is establishing the means by which a company routinely examines the cost structure of all its plans, introduces appropriate cost sharing arrangements, expands/inplements flexibility of benefits, increases education on fiscal practices and institutes “well-being” initiatives that help lower overall health benefit costs and decrease time away from work.
- Productivity–with this final imperative, the critical question to be answered is: “Do we generate a measurable, positive return on the company’s human capital investment?” To accomplish this, companies should ensure that their approach to incentive planning is self financing, involves sound metrics and that programs are only implemented once they have been appropriately modeled and tested. The company must then institute appropropriate measurement tools to track its real return on the compensation and benefit dollars that have been paid out.
As you examine these areas and institute changes accordingly, please share your successes and frustrations in the comments section of this blog so others can benefit from your experience. You can also email me with your thoughts at email@example.com.