A compensation plan even the smallest companies can implement

The big companies have the resources and staff to develop detailed compensation structures that are unique to their organization.

Smaller firms, however, don’t usually have that luxury.

And for these companies, comp is more about picking a series of pay ranges that they can live with – and hoping to stay competitive. But it doesn’t have to be that way.

Finding the right strategy

Compensation Consultant Mykkah Herner has helped many small businesses revamp their comp plans for the better.

The best part: It doesn’t take a ton of time or resources to make your pay strategy more effective.

The key is determining what your compensation strategy is and going from there.

To help determine your strategy, Herner suggests answering the following questions:

• How does your company define your market? (After all, without a clear definition of your market, it can be difficult to find the right benchmarks for your positions)
• How competitive (i.e., how much you can afford to pay) do you want to be relative to your market?
• What factors do you want to reward with your compensation dollars?

The role of pay-for-performance

With a clearly defined comp strategy, it’s much easier to reward deserving staffers’ accordingly.

According to Herner, pay-for-performance is even more critical at smaller companies where one worker can make a huge difference.

Problem is, many firms feel they need to draft lengthy performance evaluations to accurately reward workers, which scares them off.

But all that’s needed is a simple rating system, Herner says. Example: Determining whether an employee “Exceeds expectations,” “Meets expectations,” or “Does not meet expectations” is enough to reward employees fairly.