Client Stories | February 28, 2019

How Compensation Structure Gives Your Organization an Edge

Who gets paid what—and why—is one of the most complicated problems your organization needs to solve. Our experts can help you get it right.

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Getting your compensation structure right

In particular, we consider three key areas:

  • Job structure and evaluation systems. Creating an effective compensation program requires a thorough understanding of an organization's jobs — in particular, the relationships between job functions, titles and families. This lays the foundation for the development and support of a sound pay-for-performance system that has accurate and current job information.

  • Salary structure. Salary structures provide a framework for organizations to manage employee base salaries. A salary range within the pay structure typically encompasses a particular grouping of jobs (e.g., jobs with similar job responsibilities and levels, employee skill sets and strategic importance to the organization). The pay levels associated with the salary ranges (i.e., minimum, midpoint and maximums) are developed based upon the organization's overall compensation strategy and pay positioning.

  • Pay equity. Pay equity issues arise from flaws in the compensation process that will continue to produce issues unless they are "caught" with audits and redesigned. Compensation process flaws can impact employee morale and motivation because of a lack of trust in the pay system, and these flaws can also impact the bottom line because of compensation cost creep versus competitors.

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How we've helped with compensation structure consulting

Below, you’ll find just one example of how our team successfully impacted an organization’s performance through compensation structure.

The issue

An international consulting firm was experiencing unacceptably high levels of turnover among its technology professionals.

A number of outside factors contributed to the problem. Tax laws, investment credits, and rapid industrial growth in the area of information technology created a demand for talent that outstripped the current supply. Large, established employers of technology professionals face competition for business and talent from nimble, aggressive start-up companies offering unique value propositions.

A deteriorating cycle developed as employees left and existing client teams shouldered the burden. This threatened the quality of work and caused a decline in employee morale. Turnover management challenges ensued. A great deal of divergence existed among the senior leadership about solutions to the problem.

In order to achieve better alignment between business and employee needs, the firm wanted to examine the rewards and development strategies for its technology professionals.

Our solution

In response, Segal:

  • Developed a career management solution to redefine the success profile of technology professionals and more directly align the firm’s skill sets with client demands
  • Created a career model to accommodate and support the revised success profile and optimize the capabilities of various employee populations
  • Reconciled the needs of the business with the needs of employees, thus creating a more cohesive and executable company strategy
  • Proposed future work on the solution to include introduction of modified management practices in the areas of performance management and recruiting and selection
  • Proposed a development of a rewards strategy to align and support the newly developed career strategy 

The results

By addressing the root causes, Segal helped the firm:

  • Create a stronger performance culture, raising employees to their highest and greatest contribution levels
  • Encouraged most-valued technologists to stay and develop into the next level of contribution

Find out how we can help organizations like yours.

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.

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