"There's an app for that." In the digital world, the meaning of that phrase is universally understood. An app is a tool that resides on your digital tool of choice that will make your life easier, more fun or improve your productivity. There are many such apps we can no longer live without.
In compensation design, a GamePlan is your "app." Although it doesn't reside on your smartphone, it will simplify your pay planning. Here's what a Compensation GamePlan includes:
- An Assessment. Before developing incentive plans, pay grades or any other aspect of your pay strategy you need to know where you stand right now--from both a company leadership and an employee perspective. Assessments come in many forms--surveys, interviews, checklists--but regardless of the mechanism it must provide insight into two issues: structure and mindset. The former has to do with what plans are in place right now, who's participating, what the metrics are and how they are performing. The latter addresses issues such as the level of engagement, commitment and passion of your employees.
- A Forecast. Incentive planning in particular can't begin until you know where the business is headed. A financial model must be built that shows what the future company will look like at different performance levels, such as base (what you have to do), target (what you plan to do) and superior (what you hope to do). With a forecast in place, you can envision future shareholder value and determine value creation thresholds that have to be met before incentives will be paid.
- A Philosophy. A pay philosophy articulates what your company believes about compensation. For example, it defines how value will be shared and under what circumstances. The philosophy becomes the compensation constitution for the business that guides all decisions regarding rewards.
- An Examination of Options: With the former steps completed, you are in a position to make an informed evaluation of your options. Informed means you are examining options in the context of the data, forecast and philosophy you just developed. Here you make a determination about which pay components should be part of your comprehensive compensation strategy and what weight each should be given--salary, bonus, long-term incentive, benefits, retirement plan, executive benefits and so forth.
- A Design Plan. The consideration of various plan options in the proper context should allow you to arrive at the specific plans you will want to design, revise or eliminate. You may need help with properly engineering certain strategies, but the GamePlan process helps you know which programs are going to best reflect your pay philosophy. This list will need to be prioritized for implementation so you don't bite off more than you can reasonably implement. I suggest developing a framework of planning "phases" with time frames defined for each.
Hopefully you can see that taking a GamePlan approach to your compensation planning will ultimately simplify the development of all the strategies you want to design and implement. When this kind of framework has been built, you can easily envision what all the parts are that have to come together to build a rewards approach that will align compensation with the business model of the company and engender a unified financial vision for growing the business.
To learn more about how things such as a Compensation GamePlan can transform your approach to pay plan development, view our past webinar entitled: "5 Ways to Transform Your Rewards Strategies for 2015."