Once again, we have another great guest author, Zachary Weinberger, Managing Consultant of Remuneration Resources, sharing his wisdom of compensation and benefits. Zachary is an experience global consultant, business advisor, and an expert in compensation, benefits, and global rewards. He has worked in large, medium, and small companies, both for-profit and not-for-profit, as an executive and internal consultant, or as an external consultant helping address the full range of human resources issues. Zachary has lived and worked in Latin America and the Middle East and has worked on six of the seven continents. We’ll let Zachary take it from here.
An organization can have many reasons for reviewing its compensation and/or benefits programs. Here are 5 of the top reasons to consider a compensation and benefits review.
1. To be sure your practices are aligned with organization strategy
To solve immediate problems new comp and benefit programs are put in place. This is good for the issue addressed, but may not consider integration with existing programs or alignment with company philosophy or strategy. A review can identify where things are aligned and if there are inconsistencies. After a review, decisions can be made about needed change.
2. To be sure programs still support your objectives
Over time, organizational objectives may change and compensation and benefits programs may no longer support new objectives. Therefore, unintended consequences from compensation plans may arise. For example, a bonus plan that emphasizes top line revenue may generate a lot of sales but could encourage deep discounting that leads to poor bottom line performance.
3. To prepare for growth or expansion
As you prepare to move to new markets understanding competitive practices in those markets will help you attract and retain talent. It will also help you establish sustainable costs relative to your competitors. Compensation practices in one location can be very different from those in another—particularly across international borders. You don’t want to offer too little or pay too much.
4. To ensure competitive practices
It is important to review your compensation and benefits program periodically. If you have very high or very low employee turnover, it’s a sign that compensation and benefits programs are not competitive.
5. To ensure legal compliance
Countries around the world have laws and regulations impacting compensation and benefits programs. New laws and regulations are enacted all the time, making it easy to fall out of compliance and risking fines and penalties. As a result, a periodic review can help manage this risk.
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Other reasons for a compensation and benefits review include improving efficiency, creating consistency, or managing costs. A review can be as focused or as comprehensive as needed. For example, if you are concerned about the competitive practice in one country or location, focus on benchmarking in that location. Or, if time has led to inconsistencies across your business and it has become difficult to efficiently manage and administer the annual merit and bonus processes, use a more comprehensive review and action plan. As previously mentioned, there are lots of situations that can benefit from a compensation and/or benefits review.
Here are some great resources for understanding compensation and benefits best practices:
- This article by SHRM titled “The Art of Setting Pay”
- From the EEOC a chapter from its compliance manual on “Compensation Discrimination"
- Summary of major laws enforced by the US Department of Labor
Thank you for reading!
Managing Consultant
Ensure Accurate Compensation and Benefits When Going Global
Do you have more questions about compensation and benefits reviews? We are always happy to start a conversation. Velocity Global's suite of global expansion services that includes our global Employer of Record solution has made global expansion a reality for hundreds of companies in over 185 countries—and we can do the same for your organization's compensation, benefits, and other needs. Are you ready to join hundreds of other organizations that have realized their global expansion goals?
Topic:
Payroll
