Implementing A Comp System Essay

1408 words - 6 pages

Section O
Implementation of Compensation Strategy
It can be said that compensation is the “glue” that binds the employee and the employer together and in the organized sector, this is further codified in the form of a contract or a mutually binding legal document that spells out exactly how much should be paid to the employee and the components of the compensation package. Since, this article is intended to be an introduction to compensation management, the art and science of arriving at the right compensation makes all the difference between a satisfied employee and a disgruntled employee. Now that we have come up with a compensation strategy that we believe will be successful in years ...view middle of the document...

Done correctly, a company would be able to show their employees where their job fits within the pay structure, where their salary fits within the pay range and what they need to do to reach the next higher pay level.
Duplox needs to beware, however, that regardless of the system, if their employees don’t perceive that the system is fair, it isn’t. Pay for seniority is relatively easy to communicate to employees. Pay for performance is not. Due to its difficulty, many companies do not even attempt to communicate their performance based compensation system. They instead keep their salary increase decisions between management only. This is unfortunate as most employees compare their salaries and salary increases (even when they are told not to). In the absence of an explanation, employees will jump to their own conclusions as to why they are paid what they are paid which often leads to searching for a new job, and Duplox should be trying to keep their employees.
As a result, we have implemented a performance/salary communication process where we first conduct an all employee meeting to explain the overall pay system. I then have managers hold two separate meetings with their employees. The first meeting goes over the performance appraisal; the second meeting explains the salary increase decision. These meetings are not designed to make employees happy. They are designed to communicate the equity and logic behind the pay decisions. That’s where we come in, our job in this case is to explain the changes to come by expressing the positives that will come out of these changes. No matter how good our new compensation strategy looks on paper, if explained incorrectly or managed improperly, it is certain to fail. Implementing or updating base pay systems without a clear plan can lead to some common pitfalls, ranging from employee misunderstanding of the system to negative financial impact. To help avoid such pitfalls, be sure to develop a detailed transition and communications plan for implementing the recommended program changes. In addition to misunderstanding an organization’s culture and the human relations within that culture, a recurring reason for failure in the change management process is an unwillingness to adequately diagnose the environment. Strategic plans with weak diagnostic assessments too frequently result in missed opportunities. Since placing efforts in the right direction is as important as identifying resources and maintaining effort once the decision for change has been made, completing a serious environmental scan also helps ensure that change efforts are meaningful.

Developing a training plan is important for implementation of a new compensation system. First, key support people in the Human Resources department must be trained to completely understand the system and it’s components. They can then, serve as trainers and advisors for the rest of the organization. Second, there must be sufficient training for...

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