Those are perhaps the two most common words CEOs and other business leaders will use between now and December 31. "Next year we plan to increase revenue by 20%." "Next year's budget is due in two weeks." "Next year we need to reign in costs." "Next year we'll recruit to five key positions." "Next year we'll be making our next acquisition."
In that mix there will likely also be certain "next year"
statements made about pay. Right now you may be considering a change in your bonus formula for "next year." Perhaps you're thinking "next year" you'll finally get your total compensation structure in place and your pay grades settled. "Next year" may be the time you institute that long-term value sharing plan you've thought about for so long (phantom stock, deferred compensation, bonus pool, stock plan, etc.).
If this describes you in any way, I'd like you to do something before making any of the changes you're considering. Review this checklist.
- Make sure your company's growth goals are clear and compelling--and that all employees know what they are.
- Identify roles and expectations within your business model and define what success means for each of those roles.
- Identify your talent gaps and your recruiting strategy to fill them.
- Define what value creation means to your business and how it will be measured.
- Draft a compensation philosophy statement that clearly articulates your organization's beliefs about pay.
- Frame the kind of value proposition you think will best match the expectations of the premier talent you need to recruit or retain.
- Commit to establishing a total compensation structure to provide context for all pay decisions that are made in your business.
- Identify what balance you think will be needed between guaranteed and variable compensation for each tier of employee.
- Determine how much of the future company value ownership is willing to share with those who help create it, consistent with the organization's pay philosophy.
- Envision the kind of long-term value sharing plan that will be most attractive to key people you want to attract or retain while keeping shareholders comfortable that their interests are being protected.
Yes, that's a bit of an overwhelming list. However, if you do even one of those things, the changes you make in pay "next year" will be much more effective than they would have been otherwise.
To ensure your rewards approach has a positive impact on your business this coming year, join us for our webinar on December 9 entitled: "5 Ways to Transform Your Pay Strategy for 2015." Sign up today!