Most SMEs today start their business practices without fully organizing their company. Companies have a lot of processes, needs, and guidelines that need to be set in. One of the most important among them is compensation management.
Compensation management has everything to do with your employees. It includes their salaries, employee benefits, and appraisals, among other things.
You can’t measure things like the employees’ behavior, feelings, and attitude towards your compensation practices. However, things like bottom-line profitability, employee productivity, and employee turnover rate, can be good indicators.
All of these are affected by your compensation management practices. This affects your company and how well it’s doing.
Here are some compensation management guidelines for SMEs.
Make a Rudimentary Compensation Structure
It doesn’t matter how many employees you have, you should still have a proper compensation structure in place. The idea is to build your company with a long-term and scalable approach.
You need to formalize the entire compensation management process. This includes setting performance review dates, salary review dates, salary appraisal, as well as, bonus dates.
You can set salary guidelines so managers know the minimum and maximum salary deferrals. You should also develop salary scales for different positions in your company.
This will make it easy for any HR person you hire or your manager to understand. It will also ensure that all practices are within your company’s values and resources.
Relay Information to Your Employees
Keeping your employees happy is important and one way to do so is to be transparent with them. You should always try to keep your employees in the loop. This means that you should keep your employees informed on the compensation management policy, and any changes that may come with it.
Usually, if you don’t do so, there are false perceptions and rumors which turn into false expectations. Conveying the details to the employees will make sure that they understand the decision process behind it and will help them comprehend any changes.
Verbally transmitting all the details of your compensation management strategy may not be ideal. People may forget or remember only some parts of it. To ensure that all the details and objectives of your strategy are conveyed properly, provide your employees with a formal written policy. This will ensure that communication is efficient and clear.
Moreover, being transparent like this shines a positive light on the company. However, make sure you don’t divulge the salaries of the employees.
Organize Your Managers
Your managers are your link to your employees. If you, for whatever reason can’t directly talk to your employees, consider training your managers. Well-informed managers can adequately relay any new compensation management policy to your employees.
You will need to train them so they are able to explain everything and answer any questions employees may have. Provide them with the appropriate tools and information so they can support any salary-related decisions at the executive level.
This way, any changes in compensation will be received well by the employees. This is because employees have confidence in their managers even if they don’t feel that way about company heads.
Compensation Management with Strategic Objectives
One of the most important things to keep in mind is to make sure your compensation strategy aligns with your company culture and values. It should resonate with your company goals, objectives, and overall strategy.
Compensation determination should be done by analyzing what your company considers more important. For example, if you’re focused on providing retirement benefits, it should be emphasized during compensation management.
Your business values and strategy constantly changes so you need to make sure that your compensation management strategy changes accordingly.
Analyze your compensation policy periodically and make sure it aligns with any external or internal changes. Don’t forget to convey the changes to your managers and employees.
Stand Out from Others
While salaries may not be the primary factor when deciding on jobs anymore; benefits definitely are. Compensation management is more than just salaries, and you should make sure that it’s enough to help you stand out.
Companies like FedEx have started to focus on giving better employee benefits than their competitors. It’s a good way of retaining employees while taking care of your employees.
SMEs tend to be much more flexible and subject to change than larger corporations. You can use this as an advantage because it lets you be more diverse. You can even create customized compensation management plans for different employees or departments so that you can take their interests into account.
All in all, when developing compensation management plans for SMEs, you just need to keep your employees, and their best interests, in mind. Plus, you should consider their financial needs as well, in case they need to refinance a mortgage, or learn how to start investing.