Every Small Company Needs a Compensation Strategy

Every Small Company Needs a Compensation StrategyEvery Small Company Needs a Compensation StrategyEvery Small Company Needs a Compensation Strategy ChildersWhile many small businesses have a solid business plan in distributionspolitik, they often falter when it comes to implementing a compensation strategy. That is unfortunate.As a result, its easy to offer too much or too little money to compete for the best talent. Even worse, some businesses neglect to have a compensation strategy in place that reflects their overall strategy and values.Katie Busch of HR Communication Consultants in Boynton Beach, Florida, says small businesses need to keep their salary structure current, while also offering a competitive advantage over other small businesses in the same market.Many small businesses mistakenly believe that having a compensation program in place isnt something they need to worry about until their company gets much bigger, Busch says. They often believe having a compensation plan wi ll limit their ability to make good business decisions in regards to employee pay, but often the opposite is true.To create a comprehensive compensation strategy for your small business, consider the following stepsLook at the job and its location. Salaries for small businesses are not necessarily based on the same data used by large companies. When determining a jobs market value, job location is oftenas important as the job title. The Small Business Administration recommends doing an online search using keywords such as Administrative assistant, salary range, your location to determine how to better understand the market for particular jobs in your area.Experts recommend taking it a step further. Look at where youre competing for talent, says Tim Low, Senior Vice Presidentof Marketing at Payscale.com in Seattle, Wash. For many positions, especially in technology, companies may be national, rather than regional.The takeaway if youre seeking candidates who live outside of your immed iate area, be sure to utilize a salary relocation calculator to help determine fair compensation.Be durchschaubar about your compensation strategy. In the past many businesses believed that talking about compensation should only be done behind closed doors, but Low says that successful small businesses today believe in an open pay policy that reveals a compensation strategy that is committed to investing in top talent.Being honest and candid about your compensation practices and how you benchmark salaries can have a positive impact on trust and employee morale, Low says. Consider implementing salary ranges. While not all small businesses feel as though they are ready to implement salary ranges, Low says that creating pay ranges can be good for your business.By establishing a salary range, you can show employees where they are starting on the range, and illustrate how they have room to grow, he says. If an employee is at the top of the salary range, you can talk to them about a growt h track, and how they can thrive at your company, perhaps by getting the skills and training needed to be a manager.Anticipate employee expectations about raises and bonuses. Low says many small businesses are moving away from annual reviews, preferring instead to offer more frequent feedback. This strategy is particularly important for retaining Millennial employees.Many large companies including IBM, Microsoft and General Electric are leading the trend by replacing annual performance reviews and offering employees more frequent informal reviews, where they can set and update quarterly goals and offer opportunities for individual growth.At Grady Britton, a creative agency in Portland, Oregon, Paige Campbell, the agencys president and partner, says employees receive quarterly rewards based on performance including a bonus day off or a long leisurely lunch paid for by the company.Employees and work teams are also celebrated throughout the year when they have demonstrated superior per formance. If someone has done an outstanding job they may receive a mid-year raise, we wont wait a full year to acknowledge their achievements, Campbell says.Get creative with rewards. Busch says one of the first rewards she encourages small businesses to implement is a simple thank-you given to an employee who has exceeded expectations.Its especially important to verbally acknowledge an employees contributions in a group umgebung that also serves to demonstrate to other employees your companys expectations.