Compensation Services

Compensation Plans

In today’s competitive economic environment an organization’s focus often turns to reducing fixed costs. Before considering expensive and traumatizing activities like layoffs and restructuring, however, it can prove beneficial to take a systemic look at the company’s compensation program. Oftentimes, in a vain attempt to “pay for performance,” companies let their salary systems get out of control resulting in situations where payroll costs are well in excess of what is competitive. In other instances, key contributors are paid so far under market that they feel compelled to leave the organization to correct the inequity.

At Energage, we believe it is critical to be able to tell employees that you “pay fairly for what they do.” The only way to do this with integrity is to have systems that are properly tied to the market place and checked with reasonable frequency. You simply can't afford to pay too much! On the other had, paying too little can be equally costly.

Reviewing your compensation plans should be more than merely determining competitive levels of pay, however. Compensation plans can and should be a strategic part of your organization. Designed properly, compensation plans will help an organization attract and retain best-in-class employees, build a high-performing culture, and encourage behavior that drives up the bottom line.

Compensation Strategy

As with any successful work process, it is important “to begin with the end in mind.” Desired business outcomes should be clear and precise before compensation practices are chosen to achieve them. Energage can assist your leaders in developing a compensation strategy statement that will act as the foundation for all programs intended to influence performance.

When management asks for one thing but pays for another, it should not be surprising to discover that they get what they incentivize. We help clients create a simple, straightforward model that energizes and engages employees to produce optimum results with minimal gamesmanship and maximum integrity.

Key Business Outcomes are reduced fixed costs, increased retention and greater focus on achieving key business indicators.

Market-Pricing and Market-Based Job Evaluation

Most Energage clients adopt a simple philosophy toward base salary administration: “We pay fairly for what you do.” Ultimately, that means the company pays what it takes to "get and keep good people" for each major job type. Energage assists clients in developing a market-based job evaluation system by following the same basic procedures practiced at much larger firms. With us, however, you’re working with senior experienced practitioners instead of fresh MBAs and the cost is substantially less than that charged by a major accounting firm. We help identify the benchmark positions, choose appropriate survey sources, and determine ("market price") competitive levels of pay. We can create systems from scratch or simply update and calibrate an existing system.

Key Business Outcomes are controlled costs, knowledge and perception of fairness, and reduced legal exposure.

Salary Administration

Once your compensation plans are designed it is imperative that your organization have a system that administers these plans. A solid salary administration system will assist your organization in administering base salaries and can help managers determine annual increases, assist them in communicating the plan to employees and ensure that your plan stays "evergreen" once you determine competitive levels of pay. Energage can assist you in reviewing various salary administration approaches such as career bands, market reference points as well as a more traditional grades and ranges approach to see which one best meets your needs.

We’re also available to help you teach employees where salary increases really come from, demystifying a process that once felt like it was operated by “Santa Claus” or the “Easter Bunny.” We teach employees to have adult-to-adult conversations with their managers about compensation issues. Feelings of “entitlement” are eliminated along with the inevitable disappointments when annual increases begin to decline with age.

Key Business Outcomes are employee empowerment, increased internal promotions and reduced legal exposure.

Incentive Design and Pay Delivery

Not only is important to determine how much to pay employees but also "how" to pay employees. This is often referred to as determining the mix of pay. Mix of pay generally differs based on the type and level of position in the organization so there really isn't one correct solution to this issue. Some organizations prefer to pay only base salary while others prefer to utilize incentives.

Organizations typically use incentives to address three issues -- attempt to provide a meaningful reward to top performers, reduce fixed costs, and focus employees on desired behaviors. There are many types of incentives to choose from ranging from individual-based, team-based, profit sharing or even long-term stock and/or equity plans. If you want to focus employees on a desired behavior -- measure it. If you want them to do even more of it -- tie pay to these measurements! Energage can work with you to determine and design the plans that are best for your organization.

Key Business Outcomes are increased goal achievement, reduced fixed costs and creation of what W. Edwards Deming calls “constancy of purpose.”

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