The document discusses strategies for developing an adaptive compensation strategy to achieve organizational sustainability. It recommends vigilantly monitoring pay markets, rationalizing competitive pay levels, linking the pay mix to the stage of growth and culture risk tolerance, and allocating pay based on employee contribution, recruitment, retention and engagement. The strategy adapts compensation practices in a timely manner in response to changes in the competitive environment to ensure ongoing organizational success.

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. Sustainability Definition
Ongoing success resulting from timely
and effective adaptations to changes
in the competitive environment

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. 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. 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. 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. 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. 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