Employers fall short handling compensation

Survey shows challenge of effectively achieving business goals
By
|hrreporter.com|Last Updated: 09/05/2007

A recent survey in the United States finds disparities between the importantance of compensation in achieving corporate goals and how well organizations leverage compensation for business results.

The 171 HR respondents to the May poll by Authoria, a Waltham, Mass.-based provider of talent management solutions, say they consider compensation “very important” to business goals, including retaining key employees (66 per cent), attracting high-quality employees (56 per cent) and aligning individual performance with corporate objectives (49 per cent).

But when asked how effectively their organizations use compensation to achieve these goals, far fewer respond with “very effective” (21 per cent for retention, 17 per cent for attraction and 15 per cent for alignment).

Respondents cite a variety of impediments keeping their organizations from using compensation more effectively, such as lack of budget, compensation managers focusing on tactics instead of strategy, HR processes not integrated with each other and inadequate tools.

The compensation practice most used is communicating total rewards statements to employees (56 per cent) while the least-used is aggressive pay-for-performance measures (29 per cent).

“Most of the respondents’ companies consider compensation a key element of their strategy, have a multi-function talent-management strategy in place and are effective in using compensation for tactical purposes such as compliance,” said Tod Loofbourrow, chairman and CEO of Authoria. “They are clearly frustrated, though, in their efforts to leverage compensation for the impact it can have on strategic corporate goals, such as engaging and motivating top talent or aligning individual, group and organizational performance.”

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