Magazine article Workforce Management

Companies Ready to Tackle Changes Must Use Kid Gloves

Magazine article Workforce Management

Companies Ready to Tackle Changes Must Use Kid Gloves

Article excerpt

As the economy continues experiencing growing pains, more organizations are revamping their compensation programs.

Sometimes they want to open up the purse strings and make up for withheld compensation over the past few years. In other cases, the need is to better align compensation systems with business goals and ensure that the right people are being rewarded for the right things.

Some organizations are shifting their compensation strategies to variable pay, where the full amount an employee receives is based on a number of quotas met by the individual, group, department and organization. Other employers are adopting behavioral compensation practices--using compensation and bonuses as the carrot to drive desired behavior and employee performance.

Whatever the goal, experts warn that there are plenty of potential pitfalls when tinkering with a compensation program. A well-executed program can motivate and engage employees, but a poorly executed one will almost certainly frustrate workers. Employees often fear the worst when their compensation plan comes under review.

Charles "Chuck" Baker knows that fact well. Currently the director of benefits and fleet services at GAF Materials Corp., a roofing and building materials manufacturer based in Wayne, New Jersey, Baker has been involved with numerous mergers and acquisitions for both his current and previous employers. Three years ago, for example, GAF bought Elkcorp Inc. and followed that acquisition a year later with Correct Building Products, a deck and railing manufacturer.

Each time he marries different compensation cultures together following an acquisition, Baker spends most of his time on education and communication, easing fears about lost income potential. He also pays special attention to one of the most common pitfalls: putting all the attention on the top performers. "It is a hard trap not to fall into," Baker says. "The desire to make sure all the high-flying talent is rewarded, and let everyone else suffer."

Baker believes that's the approach taken by too many compensation managers who want to keep top talent at any cost. But that strategy could backfire on companies as employees see more opportunities in the job market and head for the door. "People have long memories, and they will remember how you treated them during the tough times," Baker says. "You need to make sure everyone is covered by your incentive program, regardless of the job they do."

Coupled with that is the need to design a compensation plan that is flexible and responsive to individual contributions, that is not locked to job titles, and that has standardized processes for aligning desired behavior with performance goals, says Robert Buckley, a behavioral pay and predictive behavior consultant. …

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