Five Myths About Compensation Plans

Five Myths About Compensation Plans

1. They’re unnecessary for small companies. If you have only a few jobs, this may be true. But once you get a little larger, you need a mechanism to determine what each position is worth to your organization’s success. Another reason: Managers seldom like to talk to their employees about money, but if there’s a clear plan in place, the conversation is easier.
2. They’re complicated. Not if they’re well designed. If a plan is too complex for managers to explain to employees, it’s not going to work very well.
3. They motivate, reward and retain people. Not all by themselves, they don’t. People accept and remain in jobs for all kinds of reasons: benefits, of course, but also the pleasure of doing their jobs well, camaraderie with other employees, and sympathy with the organization’s objectives. “Total rewards” means more than just money – a fact good comp plans recognize.
4. They’re boring. Not if we’re talking about your compensation!
5. Once in place, they’re good forever. Definitely not so. Compensation plans, like health insurance plans, need updating as your organization, your marketplace and other external conditions change.