Compensation Plan


Has your organisation starts to establish a foothold in the market, the compensation plan and leadership development are two areas you want to pay attention to. But your compensation plan or incentives for performance can be the very thing that derails your organisation’s future growth. I bet you are wondering how?  

Let us start with why your compensation plan is important. If your compensation is set up properly, it should do one or more of the following. Retain stellar performers, attract potential or like performers. It should also encourage innovation and reward productive ideas.  

Your compensation plan is a strong determinant of focus and efforts therefore they must be carefully and strategically constructed. You do not want the plan that pits teams against each other or the one that rewards mediocrity. Because it usually backfires in the end. Star performers will leave, and pretenders stay and get exposed. But by that time, it may be too late. Do not compound HR’s already tough task by initiating a needless recruitment exercise. 

Your organisation’s compensation plan must align with your company objectives so that the organisation and teams share the same goals and collaborate more effectively together. 

For instance, if the goal of your company for the fiscal year is to increase retention rate by 25%, compensation plan that caters to only work hours will send the wrong message. That attendance is more important than paying attention to solving customer queries or paying attention to existing customers.  

Even a sale driven compensation plan can go airily wrong. If your organisation overtly focuses on the number of products shipped, you may risk the danger of telling your employees that speed is more desirable than accuracy which irks customers or clients and keeps repeat business away.  
As aforementioned, align your compensation plan with your company objectives. Ensure that it is designed to reward achieving the goal and there is clarity in communicating those goals to critical players.  

Finally, one of the most underrated skills in the world is striking a balance. You do not want your team vying too much on the side of caution or so far, they become loose cannons. Be clear about the result the compensation plan will cater to and find creative ways to develop different compensation packages employees can aim for as opposed to a one size fits all approach.  

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