It may seem like you’re going through the motions during the times in the calendar year when things get really busy. That’s why the late summer and early fall months are a great opportunity to allow yourself time to take a step back and evaluate whether you have the processes in place to make your compensation program truly stand out. For most businesses, it’s just about time to get ready for year-end decision making. Take this time to do your research on merit funding and assess funding from prior cycles to create pay guidelines. We invite you to leverage the tips in this checklist to turbo charge employee rewards strategy.
1. Look at your pay and performance distribution curve.
Did you differentiate pay as much as you expected? Maybe changes are required. In a competitive labor market, pay differentiation is crucial to retaining your high-performing and high-potential employees. Our data tells us that companies using more performance ratings (five ratings vs. three) don’t typically do a better job differentiating pay even though they have better intel to do so. Don’t miss an opportunity to show your top talent how valuable they are to the organization.
2. Make sure you’re leveraging the right data.
Do you have the appropriate data resources on hand to make informed decisions? Evaluate your survey library, clean up your processes and assess whether you have the appropriate tools in place so you can understand where there are gaps or where changes are required.
3. Update competitive analysis.
How do your total rewards programs stack up to the market, particularly when it comes to certain hot jobs? Make sure your base pay is aligned to the market where you compete for talent, and evaluate long-term incentives and other pay and benefit components as well. Identify what your critical jobs are, evaluate your hiring strategy and understand where you’re experiencing turnover to determine whether you are paying competitively in the right places.
4. Educate and train managers.
An often overlooked piece of compensation planning is to get your managers to effectively communicate pay decisions to employees. Find ways to build their muscle around understanding and communicating pay decisions by providing training for managers on how to have good pay and performance discussions with employees. It will give them the confidence needed to have these discussions when merit cycle approaches.
Aon’s experienced compensation team is here to help if your team needs any extra support. Contact us to learn more: https://humancapital.aon.com/about-us/contact-us.