Audit questionnaire of compensation and benefits 1. How is the compensation program and total compensation package communicated to employees?

2. What are the cultural issues or beliefs related to compensation in your organization? 3. What is the eligibility requirement for vacation? 4. Is there a cap to limit the amount of vacation accrued? 5. Are employees permitted to substitute sick leave for vacation? 6. How is unused accrued vacation treated? 7. Can employees contribute sick leave to other employees, and if so, what are the limits? 8. How is employee communication regarding compensation and benefits delivered in your organization? 9. Describe the health insurance program provided by your organization? 10. Are dependents covered, and if so, in part or in full? 11. Are domestic partners covered? 12. What are the eligibility requirements for health insurance and other benefits? 13. requirements for coverage? Dental Vision Disability Employee Assistance Program Life Insurance Other wellness benefits Flex benefit plan Other benefits 14. What is the pension or retirement plan? 15. What is the vesting period? 16. Can employees contribute? 17. Can pretax dollars be put into some form of deferment plan? 18. What holidays are paid and who is eligible for them? 19. What is the vacation schedule, and how is it earned?

20. Is there a formal compensation program? 21. How are wages set? 22. Are formal salary ranges set? 23. If formal salary ranges are set, are they made public to employees? 24. How are jobs rated? 25. How frequently are jobs re-evaluated or updated? 26. Are any salary surveys used? If so, which ones? 27. Are pay ranges revised as a result of these surveys? How frequently? 28. Who in your organization (what position) administers the compensation program? 29. Are merit increases given, and if so, are they integrated with performance evaluation? 30. Is there a bonus system, and if so how is it structured?

Compensation and Benefits

The compensation and benefits processes belong to most important HR Processes, which are critical for the organization and modern HR organization. The compensation and benefits is about managing the personnel expenses budget, setting the performance standards, setting the transparent compensation policies and introducing the competitive benefits for employees. The organization with effective compensation and benefits drives its personnel costs, manages the performance of employees and rewards the extraordinary performance.

Compensation and Benefits Role

The compensation and benefits processes introduce the transparency into Human Resources and rewarding employees for the achieved performance. The compensation and benefits provides the managers with the compensation tools to build a difference among employees as the high performance corporate culture can be built in the organization. The compensation and benefits department monitors the external job market and optimizes the personnel expenses budget of the organization. The compensation and benefits defines the compensation strategy, sets the transparent and simple compensation policy and defines the general rules for the extraordinary payments, bonus schemes applied in the organization and introduces general other compensation policies like the

Relocation Policy, Short-Term Assignment Policies, Benefit Car Policies and other.

Compensation and Benefits Responsibilities

The compensation and benefits department is usually responsible for the transparency in the compensation practices in the organization and keeping the internal fairness of the total cash. The compensation and benefits has to supervise the development of new compensation components and keeping the general rules for the design of the compensation component. The compensation and benefits department is responsible for the personnel expenses budget of the organization. The compensation and benefits department sets the standards for the individual salary increase, the mass salary review and the rules for the bonus payout as the organization keeps the financial stability and the planned personnel expenses budget is kept. The compensation and benefits department has special processes to monitor the external job market as it can set the right compensation policy, which is compliant with the approved compensation strategy. The compensation and benefits department is responsible for the extensive monitoring of the market and designing the new compensation components inspired by the HR Best Practices in the compensation area. The compensation and benefits department is always closely attached to the development of the new compensation components, which support the performance and effectivity of the organization. It co-operates with the different business units and it aligns their requests into the general rules for the compensation components, which are transparent and fair.

The compensation and benefits designs new adjustments to the compensation strategy and the compensation policy as the organization does not lose its competitive advantage on the job market.

Compensation and Benefits Content

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Compensation Strategy
Compensation Strategy Key Content Pay Market Strategic Position Setting Compensation Consultants and Compensation Strategy Compensation Strategy building Competitive Advantage Why is compensation strategy important?

Compensation Policy Executive Compensation

Executive Compensation Plans

Salary Surveys Sales Incentives Compensation Plans

Compensation Strategy Key Content

The compensation strategy is the underlying strategy for the general HR Strategy and its main role is to support the implementation competitive and of the HR Strategy and building the the high effective organization with

performance corporate culture. The compensation strategy

does not explain the detail of the compensation scheme and the details of the individual compensation components, but it sets the general guidelines for the compensation components and sets the priorities to be implemented over the period of the HR Strategy implementation.
The high performance corporate culture and the high performance Human Resources organization have to be supported by the compensation strategy, which is designed to be business driven strategy and with the right compensation tools, which motivate employees to go the extra mile and rewarding the real successes.

Main Compensation Goals

The compensation strategy has to set the main compensation goals of the organization and they have to be kept as the main target for Human Resources to be achieved. The compensation goals have to be set in accordance with the business strategy and they have to visible in the HR Strategy. The top management and Human Resources have to decide, what the goals are of the compensation schemes in the organization. The compensation goals should be aligned with the corporate culture and the general long-term expectations of the employees, when the organization does not implement a huge change in the corporate culture. Main compensation goal is about the role of the compensation in the organization. Each organization pay salaries, but the role of the compensation has to be balanced with the other aspects of the overall motivation scheme applied in the organization. The organization has to choose to pay higher salaries and offer less development or career opportunities or it can offer lower salaries

and better career opportunities to keep the motivation system balanced. When the organization defines its basic compensation goals, it can continue with structuring the main compensation decisions formulated in the compensation strategy.

Main Strategic Compensation Decisions

The compensation strategy allows smooth and efficient operation of other HR Processes like the recruitment and staffing, performance management, proper KPI and goal setting process, performance appraisals. As the other HR Processes can run smoothly and they are not blocked by the wrongly set compensation strategy, the main compensation decisions have to be included in the compensation strategy and the top management and Human Resources have to be aligned in the understanding to the main compensation decisions.

Role of Compensation in Human Resources

The compensation is a part of the complex HR processes, policies and procedures. The top management and Human Resources have to decide, what will be the primary role of compensation in the organization. Some organizations prefer the supplementary role of the compensation and other organizations prefer the dominant role of the compensation. This compensation decision is extremely important as it sets the general framework for the compensation components, if they will exist in the organization or they will be the part of the other HR policy. The compensation strategy has definitely include the description of the role of the compensation in the organization.

Competitiveness
The competitiveness of the compensation is another important compensation decision. The organization can decide to be aggressive with the compensation strategy and it can set the aggressive position on the pay market, but this strategy is extremely expensive for the organization and it has to balance it with high margin on the products and services. On the other hand, the organization can choose to offer the career and development opportunities, it can increase the responsibilities of the individual employees and it can balance aim to the lower level of the compensation on the pay market. The decision about the competitiveness of the compensation strategy is extremely important as it has a huge impact on the costs of the organization and it requests the right setting of other HR Processes.

Internal Structures
The organization does not have to follow the same pay market and the same level for all the job positions. It is extremely important compensation decision to be included in the compensation strategy. The organization can decide about making huge pay differences across different units or it can decide about the different pay level for the experts and managers as it protects the know how.

Administration
The administration is a tough compensation decision in the compensation strategy as it sets the roles and responsibilities of Human Resources, managers, top managers in the compensation processes.

The organization can decide about preferring the decentralized compensation model, when the manager decides most issues and pay increases, but Human Resources is in a danger of not keeping the total personnel expenses budget. In the centralized compensation strategy, the HR Managers are the main decision makers and the employees and managers do not feel the comfort of the free decision.

Pay Market Strategic Position Setting

The right position on the pay market is a key to successful compensation and benefits function in the organization. Setting the right position enables other HR Processes with value added to work and it supports the recruitment, staffing, retention and talent management. The right position on the pay market allows the organization to allocate the personnel costs efficiently and to keep the organization competitive.
When the organization sets the strategic position on the pay market, it has to evaluate several basic questions, which help to set the target position correctly. The decision is not formal as it forms other compensation and benefits processes, has a huge impact on the allocation of the personnel costs and limits the potential for quick changes in the compensation schemes used in the organization.

The main questions to be answered are:

1. 2. 3. 4. 5. What do we want to achieve by setting the strategic position on the pay market? Who are my competitors? What reactions will we see to follow from the competitors? How many strategic positions do we need? What are the costs of the setting the strategic position on the pay market?

Why to set the strategic position on the pay market?

The modern organizations and modern and effective Human Resources Management are based on setting the competitive advantages. The right and efficient compensation strategy is a definitely the competitive advantage and it cannot work without the strategic position on the pay market. The modern organizations are based on the talent management, offering the career opportunities and having other HR Processes to prolong the length of employment of the key employees and key job positions. The strategic positioning on the pay market allows the other processes to function properly and keeps the organization healthy. The recruitment strategy cannot work without the adequate compensation strategy as it can easily miss the goals. The company can target the best potentials on the job market, but the salary offered has to be adequate to the qualities of the candidates.

Knowing your competitors on the pay market

The organization always knows its competitors in products and services. But the organization has to know and understand the competitors in Human Resources as well. They can be different. But employees can see the competition on the job market differently.

Knowing the competitors on the job market is extremely important for Human Resources. HR Recruiters have to analyze, which companies are sourcing the organization and the HR Front Office has to monitor, what companies hire new employees from the organization. The compensation strategy has to be set as the organization can compete with the competitors on the pay market and the compensation strategy has to be inspired by their compensation strategies. The employees from the competitors working for the organization are usually open to help and they can provide the excellent information, which can save many discussions in determining the right compensation strategy.

Predicting the reaction of the competitors

It is extremely important to have several scenarios describing the reactions of the competitors. When you are the market maker and you change your compensation strategy, you can expect all the competitors will react and you can start costly war on the job market. When you are a niche player and you hire several employees per year from your competitors, they will not react. In case, you hire just the experts, you can expect, the initiatives to protect the experts and key employees will evolve at your competitors and the price of hiring the expert from the competitor will rise.

One or more pay market strategic positions

Human Resources has to decide, whether it will use just one strategic pay market position for the whole organization or it will

identify groups of specific job positions, which will be evaluated and positioned on the pay market differently. The general pay market position is simple, it is easy to explain, the organization uses just one, but the organization loses the flexibility in the setting of the compensation strategy and this can lead to many exceptions in the compensation policy as the key groups of employees are not protected by the compensation policy in general and the managers will ask for the increased protection by using the exceptions. The general pay market position can be more expensive than more pay market positions as the system tends to set the system to protect the key employees and the key job positions and the rest of the populations benefits from it.

The costs of setting the strategic pay market position

Money is driving the compensation strategy. Each proposal for setting the strategic pay market position has to be carefully calculated, analyzed and Human Resources has to prepare the predictions and forecasts of the future development. Setting the strategic pay market position without the proper analysis and calculation is just a hazard with the future of Human Resources in the organization as the top management can be amazed, how expensive the strategic pay market position is.

Compensation Consultants and Compensation Strategy

The compensation strategy design and development is too difficult to accomplish purely internally. The compensation and benefits team is usually asked for the external benchmarks and the common practice on the market and the compensation consultants can be a huge help, when the HR team is able to manage their deliverables.
The compensation consultants are expensive and HR has to have a clear goal for the compensation consultant to be achieved. The compensation consultant is always able to bring the creative and innovative compensation solution, when the goal is not given. The organization has to pay for the services, which are not utilized. With the clear goal, the compensation consultant has a clear navigation tool and forces the effort to reach the defined vision.

Compensation Consultants Benefits or Value Added

The compensation consultants bring the huge external know how in the compensation and benefits area, the previous experience and the experience with different solutions of the issues in the compensation schemes. The compensation consultant should provide the advice on the strategic position of the compensation strategy on the pay market

and to provide the information about the best practices in the compensation and benefits area. The compensation consultant should never decide about the final compensation strategy, but can provide the useful feedback and advice in the process of designing the compensation strategy. The excellent compensation consultant always asks the clients about the feedback and how the solutions work in practice to have the experience to build on. The compensation consultant can see a new creative solution in one company, which can help to build the HR competitive advantage in another organization. The compensation consultant can help to design the state-of-the-art compensation strategy and can save huge costs to the organization in the future.

How to use Compensation Consultants

The organization should invite the external compensation consultant at the right moment. The organization cannot leave the compensation consultant to set the whole compensation strategy. The organization has to set the clear goals for the compensation consultant and it should use the deliverables of the compensation consultant in the following decision process. Without strict goals, the organization cannot manage the compensation consultant and it cannot use the best know how of the compensation consultant. The consultant has a deep knowledge of the compensation pay market and has know how about the compensation best practices and these should be used for building the competitive advantage, but the organization has to keep the final decision about the design of the compensation strategy.

Compensation Consultants Deliverables

The organization has to define the deliverables, which support the organization in its decision process. The deliverable of the compensation consultant can be easily the content of the discussions with the executive top management as the consultant has a broad knowledge of the pay market and the top executives likes the discussions about the general market and the best pay practices in the industry. The common deliverables of the compensation consultant are about the comparison of the proposal from Human Resources with the best practices available and the comparison with the real pay data. The consultant usually has the access to the detailed salary data and is able to make a comparison and to point out the key components and key jobs to be included in the compensation strategy as the jobs building the competitive advantage.

Compensation Strategy building Competitive Advantage

The competitive advantage is a necessary component for the modern organization. The competitive advantage has to be in products, services, internal and external processes and in

Human Resources Management. The employees are the assets of the organization and the competitive advantage in Human Resources Policies can generate a huge impact into the net profits and overall performance and profitability of the organization. The competitive advantage in compensation area usually generates a huge portion of the overall competitive advantage in HR Management.

What is competitive advantage in compensation?

The competitive advantage in the compensation area is not about beating the pay market by paying higher salaries and bonuses to all employees. The managers tend to think, the better the pay of employees, the more competitive the organization is. It is not true, the organization has to carry the higher personnel expenses and during the crisis or the recession, it can be a huge competitive disadvantage in the compensation and the compensation strategy has to be redesigned quickly as the organization can continue in its operation and it has a destroying influence on the overall employee satisfaction. The competitive advantage can be built by using two general approaches:
1. General competitive position on the pay market 2. Competitive pay market position for key job positions

General competitive position on the pay market

Setting the higher position than the median on the pay market is quite common competitive advantage setting in smaller companies, who have to fight for the best talents with the big organizations in the same industry.

It is quite dangerous to set the pay market position too high as the organization has to carry the increased costs and eats more from the margins on the products and services. The organization cannot make quick changes and the recession can be deadly dangerous for the organization as it carries higher costs to keep the processes operating and functional. The competitors have a better and bigger space to decrease the personnel costs in bad times. The higher competitive position on the pay market can be used in the time, the organization grows dramatically and it needs the best talents from the job market and there is no time to decide about the key job positions in the organization and all employees are treated to be of the same importance. Keeping the long term higher pay market position is suitable just for the companies in the modern industries, with high margins and the companies with the excellent brand name being known for employing the best of the best.

Competitive advance through strategic pay market position for key job positions
The competitive advantage in compensation can be set just for the key job positions in the organization. This solution is cheaper as the rest of the population can be kept in line with the median of the pay market or it can be below the median as the whole organization keeps the median in general. But, the organization has to be able to reach the consensus about the key job positions in the organization. Setting the key job positions is the painful procedure for Human Resources getting the consensus from the top management is a bit mission impossible, but HR has to accomplish this procedure successfully as the key job positions are identified and Human Resources can set the right compensation strategy for the key job positions.

The differentiation in the compensation strategy and setting the different pay level for the key job positions is quite usual for the larger organizations as they save the personnel expenses and they are able to protect the key employees. It does not protect the key employees automatically, but it support the managers and other HR Processes as the employees feel pretty satisfied with their salaries. The competitive advantage for the key job positions is usually the best pay strategy for the mature organizations, which does not grow aggressively and are purely focused on the product innovations. The key employees bring the innovations and the rest is paid fair enough for their job content.

Why is compensation strategy important?

The current competitive conditions in the business world make it difficult to acquire and retain the top talents. Once the organization is able to identify, it can be unable to offer the right pay and to manage the pay increases to retain top talents. The compensation strategy is the extremely important piece of the overall HR Strategy to keep the company competitive and successful. On the other hand, the compensation strategy is important to keep the personnel budget under the control and to manage the jobs in the right salary (pay) brackets.

The compensation strategy differentiates the organization on the job market and builds the attractiveness of the company for the top talents. They love to be hired by the attractive organization, they do not like to be hired by the average company offering the same conditions as any other average organization in the industry.

Competitive Advantage and Compensation Strategy

Today, the products are similar. It is difficult to distinguish the cars from different car makers. The employees are in the same situation as the consumers. They have the problem to distinguish the employers and they are not able to recognize the excellent organization, when it is not different from the rest. The competitive advantage is the essential part of the mix for the success. The organization has to present itself differently, not just by the presentation, but it should differentiate itself by the different approach toward its employees. The compensation strategy is one of the most successful differentiators. The excellent compensation strategy does not just differentiate the organization from the other organizations on the job market, it brings the differentiation into the organization as well as the successful employees and top talents feel the success in their pockets. The effective compensation strategy makes people feel the success and they speak about their successes with their friends. It build the extremely excellent competitive advantage among the competitors as the people feel, the organization really values the success and it can pay the successful employees. The effective compensation strategy manages the personnel expenses of the organization, but it supports the performance

management and differentiates the employees as the successful ones are not motivated to search for a new job opportunity. The good compensation strategy does not provoke employees to search the web job boards during the working hours, it makes them to focus on delivering the results as they can be highlighted and they feel the highlight in their salaries. The successful compensation strategy gains the competitive advantage and can speed up the innovation processes and improve the performance management practices in the organization.

For what HR Processes is Compensation Strategy important?

The compensation strategy is not important just for the competitive advantage, but it supports the other HR Processes and helps them to become highly efficient HR Processes and being on the top in the industry (when measured and benchmarked). The compensation strategy has a strong influence on the performance of the whole Human Resources, which is a good vehicle to manage the performance of Human Resources, but has to be managed carefully as it does not destroy the performance of the whole organization. Smart compensation strategy supports the HR Processes and helps to bring the top talents from the job market to the organization and helps to retain the best talents in the organization as they do not feel the need to find a new job opportunity elsewhere.

Recruitment and Compensation Strategy

The effective Recruitment and Staffing cannot exist without the effective Compensation Strategy. The recruitment can be based on the excellent HR Marketing Policies, but the HR Recruiters have to be able to offer the competitive salary packages, which are competitive

externally and fully aligned with the policies and the compensation strategy internally. The recruitment of the best top talents from the job market cannot be based on exceptions from the compensation policy. The recruitment and staffing processes have to be supported and backed by the excellent compensation strategy as the HR Recruiters can offer the competitive conditions to the right talents from the job market and they are able to identify the key job positions, where the compensation strategy allows to be more aggressive against the pay market. The job candidates are extremely sensitive to the salary package offered in the Job Offer letter and the compensation and benefits department should measure the number of failures in the job offer acceptations. It is the extremely important sign of the wrongly set compensation strategy, when the job candidates do not accept the job offers made by the organization.

Motivation and Compensation Strategy

The salaries or bonuses are extremely important for the motivation of employees and managers. Generally, the motivation is not about the compensations, but the compensation should support the general motivation framework in the organization. Even the best managers in the world are not able to keep highly motivated teams, when the compensation strategy is not in line with the job market. The employees usually know the common levels of salaries in the industry and when the organization is below the median or the average, it has to compensate the difference in other area. But, when the difference is too high, the compensation by a different motivation tool does not work and the employees start to feel demotivated as they receive no equal value for their effort.

Talent Development and Compensation Strategy

The compensation strategy provides the key support to the talent management processes in the organization. The talents have to be clearly supported by the compensation strategy as the talents usually expect higher salary increases than the average employees and the compensation strategy has to allow the limited freedom to managers to do so. The successful top talents management cannot survive without the adequate support from the compensation and benefits side. The talents have to feel the different approach of the organization and the compensation is extremely important in this. The top talents cannot live on the promises for a long time. They have to see the real improvements and advances. They deliver, they expect the organization the same. The compensation specialists have to co-operate closely with the career advisors and career development specialist to introduce the right mix of the career opportunities and the compensation strategies for the top talents.

Executive Compensation Plans

Top management needs an outstanding compensation plan. The executive management is responsible for the delivery of the business results to shareholders. They represent the company to the outside world. They handle the strategic initiatives. They are in a risky position. Their job contract can be cancelled within minutes. They want the protection. The executive compensation plan has a highly motivating component, and it guarantees the income protection in case of the job cancellation.

Executive Compensation Plan Principles

The shareholders buy the shares of the company to keep the value of money. They expect even more. They expect to earn the extra from the increased value of shares. The top management is paid for the constant increases in the valuation of the company. It is an absolute rule of the business. The shareholders define the executive compensation plan. They usually cooperate with the CEO, who engages Human Resources in the process of designing the executive compensation. The shareholders define targets; shareholders expect the executive management to reach targets. The executive managers are not paid for developing the warm and friendly environment in the organization. They are not paid for the sympathetic and people oriented corporate culture, when it does not bring benefits of increased profits for shareholders. The company exists to make profits, it does not exist to employ satisfied employees. The principles of the executive compensation are:

Clear focus on profits generation Long-term orientation of the compensation scheme Motivation of manager by high bonuses Non-cash focus of the compensation (stock options, shares, share phantom schemes) Risk Management Balanced Scorecard implemented into the Compensation Scheme

The executive compensation scheme has to support goals given by shareholders. The executives take risks of failing. They have to be over-compensated for meeting goals. They should receive an enormous extra bonus for exceeding the expectations (goals given by shareholders). The balance in the compensation has to be in favor of exceeding goals. The HR Professionals have to support the CEO in setting the executive compensation scheme, which support the top management in pushing the organization. The top managers have to make tough decisions. They have to be compensated for overcoming the stress, the pressure of the line management and employees complaints about constant changes in the business operation. Human Resources has to understand the main business goals. HR has to help in setting the executive compensation and alignment with the performance based compensation for the rest of the organization.

Compensation Policy

The compensation policy is the basic document, which drives the detail of the compensation practices in the organization. As the compensation strategy sets the high level compensation goals of the organization, the compensation policy describes the details of the individual compensation components, their behavior and their role in the compensation scheme of the organization.

What is the compensation policy?

The compensation policy describes the details of the compensation components in the organization, how they are used and the conditions for the employees as the compensation component can be applied in their specific situation. Each organization uses many compensation components and they have to be described. The compensation policy provides the basic explanation of the compensation component, how it is calculated, who is eligible for the usage and the approval procedure. The compensation policy belongs to most read and discussed internal policies of the organization as it drives the salaries of the individual employees. Each employee is interested in the structure of the salary and the potential total cash achievable in the organization. The compensation policy is the main tool to find out the details about the compensation components and the way, how to achieve the highest total cash. The compensation policy drives the effort and performance of employees as the employees will find the smart and easiest way how to achieve the highest possible income with the smallest possible individual performance. The compensation policy has to be set the smart way as it avoids the potential work-around and abuse.

What is important in the compensation policy?

The compensation policy has to be transparent and it has to provide just the only way of the interpretation. It is extremely important, the employees and managers are not unsure about the compensation component and they understand clearly, what conditions are applied for the approval of the specific compensation component. The transparent compensation policy supports the high performance corporate culture organization as the employees understand, what behavior and performance levels are expected to be eligible for the specific compensation component and it drives the behavior and performance specifically the right way for the organization. The policy has to cover all the compensation components, which are used in the organization and affects large populations. The exceptional managerial component tools can be referenced from the general compensation policy, but they should not stay hidden. The employees cannot trust the compensation policy, which does not mention all the compensation components.

Salary Surveys
The salary surveys are extremely powerful compensation and benefits benchmarking tool. They are important for the setting right compensation strategy and for following and

monitoring the desired pay market. The salary survey is provided by the external compensation consultant, who gather the compensation information and salary details about the individuals, match the information and provides feedback about the pay market and pay structures back to the participating organizations.
The salary surveys are always based on the proper job evaluation methodology, which is standardized across the industry as the compensation consultant can compare the jobs with the same job size as the job titles are not the suitable for the salary comparisons. The company has to choose the right and suitable job evaluation methodology and this know how is usually provided by the compensation consultants for free.

Salary Surveys Benefits

The salary survey measures the competitiveness of the organization on the pay market and provides the benchmark information about the salaries on the general pay market and the specific industry pay markets, when the organization operates on several pay markets. The salary survey helps to set the internal compensation policy and to set the right optimal salaries for each job and to keep the desired position on the pay market as defined by the compensation strategy. The salary surveys provide the information about the average salary review percentage and the allocation of the growth of the salaries into specific job positions across the participating organizations. The salary survey can act as a tool to identify the key job positions in the organization as the competitors can protect the key job positions and it is usually visible in the salary surveys.

The salary surveys provide the information about the new trends in the compensation and benefits area and many surveys bring the additional information like the average number of employees per manager, the average length of service for the company, the number of promotions and many other.

What is important to know about Salary Surveys?

The participation in salary surveys is a difficult decision as the organization has to choose the right compensation consultant. The salary survey needs a standardized approach to the job position creation and the job position evaluations as the results of the salary survey are credible and useful. Human Resources has to have a clear plan for the usage of the salary survey results and the presentation including the action plan has to be prepared for the top management. The salary survey is about strictly confidential data and the compensation consultant has to be widely recognized for the data privacy practices and has to present the large population of the participating organizations in the salary survey.

How to participate in Salary Surveys?

The organization has to select the right compensation consultant, who brings the methodology for the job evaluation and determining the job size. The organization has to evaluate all job positions and prepare the salary data in the predefined structure as the compensation consultant compares the right data. The good compensation consultant will prepare a detailed implementation plan and will act as the project manager for the first

initial salary survey and will provide the help, when Human Resources prepares the salary survey results presentation.

Sales Incentives Compensation Plans

No business company can survive without the sales. The sales brings the blood of the organization. The organization needs the sales to grow and to successfully compete with other organizations on the market. The sales incentives compensation plans are the compensation tools to support and motivate the sales function to compete and to increase the sales volumes of the organization.

The art of Sales Incentives Compensation Plans

The sales incentives compensation plan can really motivate the salesman to sell more products and services. Or, they can easily destroy the company, when the design of the sales incentive plan is not good and it does not support the business goals. The sales incentive plans should be always focused on increasing the profitability of the company or gaining the additional market share. That is the theory behind the sales incentives plans. As the incentive plans are usually introduced purely by the business

function, they fail and they do not support the goals of the organization, they just allow the employees to earn more. The art of developing the sales incentives plans takes several years of learning and measuring the results achieved. The senior manager of the Sales function usually knows, what has to be achieved, but does not know, how to achieve that by using the incentive plans, which are cost-efficient and not hurting the future of the organization. The sales incentive plan has to be fair to the whole organization. The employees in the Back Office and the support functions should not feel the internal unfairness. They understand, that the sales representatives have to be motivated by the additional compensation component, but it should be aligned with the overall compensation scheme and the compensation strategy applied in the whole organization.

Sales Incentives Development

The development of the sales incentive scheme has to be a joint initiative of Human Resources and the business function. HR has to define the general principles, which have to be applied in each incentive scheme as it follows the compensation strategy and does not break the internal equity in the organization. The effective sales incentive plan does not evolve on its own. The development process is creative and full of the conflicts between HR and the business. The good incentive plan is always tested on several employees to see the real results from the field as the joint team can do the adjustments into the incentive scheme and can make it more realistic. The sales incentive scheme can be developed in the co-operation with the external compensation consultant and it is recommended

for the first incentive scheme in the organization, but the compensation consultants should not be invited later in the process as they can set a generic incentive scheme, which does not fully support the goals of the organization. The organization should develop its internal know-how for the development of the incentive schemes.