Trust Management With Your Compensation Program

by on June 16, 2009 · 0 Comment POSTED IN: HR Info Center

Managers are in a better position to determine how the compensation program should be distributed to individuals

So failure to train and trust your managers is another big mistake in setting up a compensation program. HR shouldn’t sit up in an ivory tower and dictate compensation managers. HR’s responsibility is to set up the system where managers can make compensation decisions and manage things by budget and provide managers with the guidelines.

So, managers are in most cases in a better position to determine how the compensation program should be distributed to individuals. And if you’re in doubt, you should trust your manager here.

Show them how the compensation program is designed to work and then set up the parameters. And again, you have to give them some responsibility here. Think about being able to manage people without having control over their compensation. That removes a huge tool from their managing toolbox. So they need to have some responsibility for the compensation program.

And if they can’t manage a compensation program properly, it’s a big responsibility for every manager but that’s what we pay them to do is manage the compensation part of managing their people. If they can’t do that, we may need to get another manager.

And so, though managers are considered the employer to most employees so most of how an employee feels about their company can be attributed to how the employee interacts with their manager and the manager’s general management style.

Managers can be tough and demanding. Employees don’t have problems with that as long as the manager is fair and consistent with their dealings with them. So, you know, it seems like a lot of HR things end up with training managers well. Well, I think compensation might be one of those areas.

Turnover. If you’re having turnover problems – and turnover should be decreasing for most organizations given this economic environment that we’re in. Generally, back in middle of 2008, it was averaging around 21% or 22% on a nationwide basis.

But literally, 50% of the turnover rate – if your organization is like a typical organization – 50% of the turnover actually occurs within 12 months after hire. And that’s not a compensation problem, it’s a selection process. The employee found that they were not a good fit with the manager, the environment, the job that they were being asked to do, et cetera. So, it’s a bad fit. Fifty percent of your turnover actually occurs within the first 12 months.

Demonstrate respect for employees. Offer feedback, praise, good efforts, et cetera. So, you need to talk to your – managers need to talk more to their employees. In fact, there was one survey that showed that one of the top things employees wanted from managers was more time with the manager.

Involve employees to decision that affect their jobs. Recognize – celebrate success. Try not to do more overtime than people can handle because people do get burned out. Provide opportunities for training. Communicate goals, roles, responsibilities.

Edited Remarks from “The Seven Deadly Sins of Employee Compensation Plans (and How to Fix Them)” by Rick Olivieri

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