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Winning Compensation
Strategies for Organizational
Sustainability
Dorothy R. Berger
Partner, Lance A. Berger & Associates,...
Sustainability Definition
Ongoing success resulting from timely
and effective adaptations to changes
in the competitive en...
Adaptive Compensation Strategy
Elements
 Vigilantly monitor pay markets
 Rationalize competitive pay levels
 Link mix o...
Vigilantly Monitor Pay Markets
 Identify/monitor current and future sources of recruitment
 Identify/monitor destination...
Rationalize Competitive Pay
Levels
 Assess level of competitiveness for people in each pay
market based on recruitment ne...
Link Mix of Pay to Growth Rate
 Determine rate of growth of each business unit
 Apply higher leverage (more variable pay...
Allocate pay based on employee
contribution, recruitment, retention and
engagement
 Install salary administration system ...
Adaptive
Compensation
Strategy
 Vigilantly monitor pay
markets
 Rationalize competitive
pay levels
 Link mix of pay to ...
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Adaptive compensation.presentation comp. handbook 6 chapter 4

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Winning Compensation Strategies for Organizational Sustainability

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Adaptive compensation.presentation comp. handbook 6 chapter 4

  1. 1. Winning Compensation Strategies for Organizational Sustainability Dorothy R. Berger Partner, Lance A. Berger & Associates, Ltd. Based on Chapter 4 sixth edition of the Compensation Handbook Copyright © 2015 by McGraw-Hill Education
  2. 2. Sustainability Definition Ongoing success resulting from timely and effective adaptations to changes in the competitive environment
  3. 3. Adaptive Compensation Strategy Elements  Vigilantly monitor pay markets  Rationalize competitive pay levels  Link mix of pay to stage of growth and culture risk tolerance  Allocate pay based on employee contribution, recruitment, retention and engagement
  4. 4. Vigilantly Monitor Pay Markets  Identify/monitor current and future sources of recruitment  Identify/monitor destination organizations of employees who leave  Acquire/develop high quality surveys that match pay markets (see above)  Implement multiple salary structures based on distinctive pay markets
  5. 5. Rationalize Competitive Pay Levels  Assess level of competitiveness for people in each pay market based on recruitment needs, upward mobility and turnover potential  Assign competitive level of total compensation based on talent competition (see above) for each pay market salary structure
  6. 6. Link Mix of Pay to Growth Rate  Determine rate of growth of each business unit  Apply higher leverage (more variable pay) to faster growing units within selected pay markets at predetermined total compensation competitive level  Increase leverage in compensation mix at a pace tolerable by unit culture (more risk oriented cultures will accept leverage more easily)
  7. 7. Allocate pay based on employee contribution, recruitment, retention and engagement  Install salary administration system that regularly adjusts all base salaries based on pay market change  Introduce non-fixed annual achievement awards to replace merit pay (for all employees) for 20% of employees  Introduce special awards for exceptional contribution  Ensure that pay packages involved in the selection, advancement and retention of key employees accelerate faster, and with higher competitive levels, than most employees
  8. 8. Adaptive Compensation Strategy  Vigilantly monitor pay markets  Rationalize competitive pay levels  Link mix of pay to stage of growth and culture risk tolerance  Allocate pay based on contribution, recruitment, retention and engagement

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