February 17, 2021
At Total Reward Solutions, we offer a broad range of employee compensation and total rewards services for organizations of all sizes. Oftentimes, smaller companies have a single person in charge of HR compensation programs while larger companies have sizeable employee populations that require more complex compensation programs and solutions. Our services can be tailored to meet the unique needs of each client type.
In a recent blog article, I described how we serve clients with Base Pay and Market Benchmarking services. Here, let’s look at how we help clients overcome their employee compensation challenges with their incentive/bonus programs and executive benchmarking:
Incentive/Bonus Plan Development
Incentive plans feature variable pay that must be re-earned by hitting goals and objectives during a given period, usually quarterly or annually. Due to periodic and inevitable economic downturns, employers have been increasingly implementing variable pay incentive plans while allocating less funds in straight salary and merit pay programs.
Well-designed incentive plans can help elevate job performance, behaviors and results needed to achieve business objectives. When incentive plan goals are tied closely to objectives an individual can truly influence, these goals can keep employees engaged and motivated to deliver better bottom-line results.
There are many types of incentive or bonus plans, including short-term and long-term. Before implementing such a program, it’s important to understand the various types. The most frequent short-term incentive plans include goal sharing or gain sharing (which are company-wide plans), as well as Manufacturing or Production Plans, Management Plans, Team Plans, Sales Compensation Plans, and Customer Contact Plans.
Long-term incentive plans are usually in place for three to five years and are typically designed for senior management or very high-level individual contributors who can strategically and significantly drive business results. Long-term incentive reward programs typically include Stock Plans and Cash Plans. Stock Plans feature awards in the form of company stock which vests at a certain percentage each year. Cash Plans, on the other hand, might start out with a lower cash payout in the first year, and then escalate to the largest cash payout in the final plan year.
With this background in mind, here are just a couple of examples of how we’ve recently helped clients design and implement their incentive/bonus programs.
In one recent case, for example, we first analyzed client needs and goals. From there, we helped the client develop a more structured bonus plan with better calculation and distribution of rewards based on important corporate measurements.
In another situation, we helped a client with a small staff (serving three different entities) develop a bonus plan that was easy for employees to comprehend and act on. The bonus plan also fulfilled the board’s desire to have a plan that was spelled out rather than subjective but was still simple enough to determine performance awards.
Executive Benchmarking
Of course, it’s important for frontline employees to be fairly compensated. But it’s also critical for the executive leadership team to be compensated in a way that rewards their leadership responsibilities and acknowledges their worth in a competitive industry.
Executive benchmarking helps make sure these goals are met. With this service, we analyze industry data and identify competitive pay levels for executive positions in the external market (external equity).
Recently, we provided executive benchmarking for a client in the manufacturing industry. We evaluated their executive pay to include consulting on pay mix changes. This empowers them to be more competitive as they attract new talent due to upcoming retirements.
In another case, we helped two not-for-profits with data specific to their executive situations. We provided recommendations to ensure their executive pay was fair and market competitive. This helps them be better positioned to retain their essential executive leaders.
The Bottom Line:
Both of these essential compensation program services require industry perspective, access to key market data, and deep experience in developing competitive solutions. That’s where we come in, and it’s why we’ve become the trusted partner for compensation solutions for companies in more than 30 industries over the past 15+ years.
Whether your need is for incentive program development, executive benchmarking, or any of our other services, we’re here to help and ready to serve. Contact us today at 317.589.8529.
Cassandra Faurote
About Total Reward Solutions:
Total Reward Solutions is your trusted partner for compensation services. Led by Cassandra Faurote, professionally certified Compensation and Human Resources expert and author of the book Compensation Sense 101, Total Reward Solutions offers a broad range of compensation and total rewards consulting services to help your organization attract top talent, motivate employees and retain top performers. We can partner with you on a project basis, on retainer, or as your total outsourced solutions provider for compensation services.