By Claudine Kapel
How do you optimize the value of compensation programs at a time when organizations are focused on cost containment and reluctant to increase pay levels?
The answers are both simple and complex.
Even if your organization has no plans to implement major pay increases in the coming year, you still need to ensure established programs are functioning well and aligned with business needs.
That means taking a close look at how compensation programs currently operate. What is recognized and rewarded? Are programs administered consistently? Are there opportunities to consolidate or simplify programs to make them easier to administer?
And in a period when delivering more to employees isn’t really the priority, it can be helpful to ensure employees at least appreciate what they have. How well are compensation and total rewards programs understood? How are questions addressed?
The continuing focus on cost containment has implications for the role of the compensation function and how it adds value.
Not surprisingly, a recent WorldatWork study found the number one priority of compensation departments is to increase the function’s value proposition to the business. This topped the list in terms of both current and future areas of focus. The study covered responses from 656 compensation professionals in North America who are members of the association.
The study notes organizations continue to be cautious around increasing pay levels or expanding new pay programs and remain focused on cost control and achieving productivity improvements.
In addition, compensation departments “are operating in a lean environment” and in many cases have fewer staff members than they did before the recession. This may help explain why respondents also reported the prevalent use of HR staff members outside the compensation arena as the primary contacts for line managers on compensation matters.
Overall, 73 per cent of respondents indicated their compensation function is focused on improving access and response to internal customers, with 33 per cent reporting this will be an area of greater or much greater focus in the future.
One of the priorities they identified is to educate and enable line managers to they can handle more of the day-to-day compensation questions that may arise from employees. Some 44 per cent of respondents said manager education will represent a greater or much greater focus in the future.
Communications was also identified as a key area of focus for compensation departments going forward. For example, 28 per cent of respondents plan to place a greater or much greater focus on increasing the content and frequency of compensation-related communications. Further, 46 per cent said they plan to place a greater or much greater focus on effectively communicating the value of total rewards to employees.
And from a productivity enhancement perspective, 87 per cent of respondents indicated they were looking to automation and technology to reduce workloads, with 49 per cent indicating this would be a greater or much greater area of focus in the future. Similarly, 72 per cent said they were investing in employee and manager self-service tools, with 42 per cent indicating this would be a greater or much greater area of focus in the future.
The bottom line is that compensation programs represent a foundational part of any employment proposition. Even when program designs remain steady state and pay increases are lean, organizations can take important steps to ensure their compensation programs continue to deliver value.
Claudine Kapel is principal of Kapel and Associates Inc., a Toronto-based human resources and communications consulting firm specializing in the design and implementation of compensation and total rewards programs. For more information, visit www.kapelandassociates.com.