Success in any industry is contingent on the ability to attract and retain high performing talent. To ensure your organization remains both competitive and compliant, it is important to review your organization’s compensation program annually. Performing a regular analysis ensures that your organization hosts sound compensation practices and stays in line with external industry market shifts.
If your organization does not currently have a formal compensation program in place, start by reviewing your organization’s mission and values. Then, think through how your organization should be supporting employees and evaluate your current processes. If you answer “no” to any of the questions below, it is time to formalize compensation for your organization.
- Do you know if you are competitively positioned in the market?
- Are your organization’s retention rates aligned with the market?
- Is your organization able to attract the best talent?
- Does your organization have guidelines in place to assist with compensation decisions?
- Are compensation decisions consistently applied across the organization?
- Is your organization administratively efficient with compensation determinations and processes?
- Is your organization compliant with required regulations?
- Is your organization internally equitable and fair?
Compass recommends taking the following annual steps if you have a formal compensation program:
- Review your organization’s compensation philosophy to assure it is current and aligns with your business objectives and culture.
- Use reputable salary survey sources and obtain competitive market compensation data.
- Conduct a competitive market analysis (“benchmarking”) of your organization’s jobs versus similar external positions to assure alignment.
- Conduct an internal compensation equity analysis to ensure equity within similarly situated jobs.
- Identify gaps between the market and internally. Complete a financial budgeting model and put corrective plans in place to fix the discrepancies.