One of the first questions we often hear from a potential Client is, “How do I know if I’m paying my key people the right amount of money?”
We find that when private business owners evaluate their key people, they often have a good idea about whether or not they’ll stay with the firm. However, many times the owners haven’t designed a compensation structure that combines these elements: Feedback to the employee; Compensation that is tied to key movers of the company; and Methodology for ongoing communication about employee improvement.
We believe that, in many instances, compensation design needs to involve all three actions listed above. Many smaller companies don’t have formal review processes because the owners believe they give constant feedback to those around them. If you ask your own employees about the feedback you give, they may tell you they don’t receive enough information about how well they’re doing or about whether or not their work is helping move the company forward.
We encourage our Clients to find ways of integrating their company purpose into all of the actions that are taken around compensation design. One of the key questions we ask is, “How are your key people helping move your company toward your companies goals?”
At Stage 2 Planning our job is to help make your life better. We continually ask how our own staff helps move our company forward toward this goal. Some of the actions we offer to our Clients for compensation design are the following:
- Helping to achieve a baseline for fair compensation
- Helping to develop a review process that is easily operational.
- Illustrating how to integrate your review process with your company mission.
- Helping to present the total compensation package to your staff so they understand how much they get paid.
- Assisting in the design of a variable compensation structure that integrates key performance indicators in your company.
- Helping you determine the role your current compensation versus deferred compensation plays in helping to retain key people.
- When, and if, you should share equity in your company with key individuals.
Your first job is to answer the question of whether or not working on compensation strategies would make your life better. If the answer is yes, it’s our job to help you define which activities will help with that goal.