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5 Tips For Effective Compensation Design
Facilitator
VINCENT CHOWLOGAN HR
Connecting the CPR: Career, Performance & Rewards
Rewards: a competitive pay structure, aligning with the Career Framework and Performance Process
Career Framework: a solid foundation for pay structure, employee career development/path and setting performance expectation
Performance Process: a robust process to align employees’ goals setting, to focus on personal development and to link with pay
Effective Compensation Design
- Provides guiding principles for compensation program design- Establishes line-of-sight between organizational goals and compensation
programs- Ensures a consistent approach- “5 Ps”
-Purpose of the compensation programs-Peer / comparison group-Market positioning-Mix/proportion of base and variable pay (if any)-Relationship to Pay for Performance
Clear Compensation Philosophy
“What’s Your P Number?”
P50
P75?
The “Right” Market
Choose the Right Approach
Career Framework / Internal Structure - Example
Closed Surveys vs. Open Surveys
Credible Design
- Guided by your compensation philosophy, combining internal and external equity
- Link to performance and career progression - Sustainable for maintenance and future growth
Salary Range / Structure Design Choices
Best Practice: Salary Range Zones - Example
Connect to Pay Increase Decisions - Example
Salary Range Zone
Performance Rating (EXAMPLES)
Low Zone Mid Zone High Zone
Top performers
Fully contributing
Needs improvement
3 Key Things for Management Training
Purposes of Performance Process
e.g. org objectives
and individual
goals alignment,
goal settings, key
focus and
achievements, etc.
e.g. personal
development plan,
career
development plan,
coaching plan,
competency
development, etc.
e.g. performance
ratings that can be
linked to salary
increase or bonus
decisions
Align & Drive
Organization
Performance
Align with
Reward
Develop
People
What about performance ratings?
Be Real with the Focus of Your Performance Process Design
Effective Compensation Design
