Compensation Strategies That Lead to Profitability
Business leaders who want their enterprises to survive must first develop a clear vision of their future goals. Because of the complexities of goal setting decisions companies may spend countless hours trying to decide what they need to achieve success. Regardless whether companies are driven by market share, service adoption rates or consumer feedback, all enterprises require sales compensation plans that motivate their employees to strive for unified objectives.
Compensation management isn't quite as simple as providing big holiday bonuses, ensuring that pay checks clear or instituting commission policies. Companies must disburse employment rewards that are actually relevant to worker needs and desires. Here are some of the reasons companies employ compensation software tools like Cornerstone to fortify this essential pillar of workforce management.
What Makes an Effective Compensation Strategy?
As a Forbes contributor writes, "Founders should strive to strike the right balance between cash, opportunity and equity." In other words, the commission structures or benefits that entice one employee may not motivate their colleagues the same way. Companies should take note of what elements of encouragement strike a chord with specific employees, so the right reward system can be utilised for them moving forward.
It takes more than just a strong compensation plan to get the most from an employee and to help them feel engaged with their company. Employees need to feel passionate, energized and have a long term sense of commitment with their employers. According to the Australian Human Resources Institute, 23% Australians feel this heavily sought after perception of engagement with their company, and this engagement rate in Australia is one of the highest in the world. That means that companies need to listen to their employees needs and understand what aspects of their compensation is going to motivate them and help them feel those pillars of connection with your company.
How Do Leaders Make Compensation Work?
Most CEOs and leaders echo the idea that effective compensation strategies must strikes a balance between organisational demands and specific employee needs. For those who attempt to achieve this ideal harmony, however, management can become exceedingly complex.
With Cornerstone Compensation, decision makers visualise how compensation relates to individual employee performance. This approach makes it easier to determine the most effective means of motivation on a per-case basis. As times and workforces evolve, compensation dashboards that display employees’ contributions in an accurate and easy to understand fashion are invaluable.
Streamlining Compensation Planning
Of course, analytical insight isn't the only key to compensatory efficacy. There are numerous compensation strategies to choose from, but the majority of sales focused companies seem to favour pay for performance methodologies. The company Fishbowl, for instance, uses an evolving pay for performance approach. Their payment incentives change as their company goals change. This evolving approach helped their company stay profitable and helped grow their company by 70 percent each year between 2007 and 2012 while only adding 10 percent more workforce annually. Companies like Fishbowl are only able to develop successful compensation strategies when they understand the direction of their company and how to incentivise their employees properly.
Incentive programs may keep workers focused on long-term achievements, but in order to improve employee performance with compensation plans employees need to understand what aspects of their contributions are leading to the best results. Cornerstone’s performance appraisal software introduces a level of transparency that enables workers to see how their hard work, skill acquisition, team engagement and other factors pay off over time. Giving workers this peek behind the curtain with 360 degree employee feedback demystifies labour relations and encourages retention.
Taking Care of the Fine Details
If a payroll doesn't process until a day late, it may be an inconvenience for a CEO. To an employee, it could determine whether to call in sick tomorrow and hunt for other opportunities.
Regardless how much they love their jobs, professionals can't afford to work for charity. Software-based compensation tools handle the incidentals so that managers have time to deal with other tasks and employees stay motivated to work hard. Learn more about incentivising lucrative performance and healthier employee relations by checking out Cornerstone Compensation online.