|You're Going to Spend it Anyway!
-- May as well get something for your money.
I'm talking about your Compensation System.
Is it the engine that drives your organization, propelling it forward at sometimes-mach speed? Or is it an albatross, fitted snugly and heavily around your neck, acting effectively as an organizational "anchor?"
It can be the former, if we just give it some serious attention.
Your Compensation System, called "Total Rewards" by compensation geeks, consists principally of three components: Cash, Benefits, and Perquisites. Some try to sneak in "work environment," which is also important. It just isn't a part of our Compensation System.
Cash is just that: green folding stuff in various forms. It includes base compensation, incentives and bonuses (yes, those are different!), and other reasonably direct cash payments, including (generally) deferred compensation and employer contributions to deferred plans - both incentive and retirement.
Benefits are those employee welfare assistance plans, such as medical, dental, and disability insurances. Also included here are vacation, PTO, and the employee-side of various retirement plans (including long-term deferred compensation).
Perquisites, or "Perks," are those things specifically allowed or provided by the organization that have a dollar value or worth to an employee. This includes automobiles, special trips, some seminar incentives, club memberships, and in some cases, unique work arrangements.
Now, knowing my definitions of Compensation System components doesn't mean a whit to you, unless we can further define what it means to your organization. Is it simply an expense? One more line item in an endless sea of operational costs - and a damned big one at that??
Or is it truly an investment of sorts?
How about we agree that it's somewhere in between those two extremes? Compensation - all three components mentioned above - are, in fact, a heavy burden on an organization's expenses. They can also, however, be similar to an investment if we take the time to align - really align - our Compensation System with our business strategy.
In this small newsletter space, that simply means we:
1.Manage compensation on a relatively consistent basis, and
2.We understand the "levers" that our Compensation System can use to further our organizational objectives.
In other words... that we get what we pay for.
WHAT, you say???! That's crazy talk...