December means year-end bonuses for many businesses. In the current job market, retaining key employees has become even more critical. A good compensation plan is essential, both for recruiting and retention. Now is an excellent time to consider whether your compensation plan is right for your business and those you employ.
Do you have questions about how your compensation plan can work harder for you? MLA has business advisors who can help you design a good compensation plan.
Even before the COVID-19 pandemic, employees wanted more flexibility. Now that flexibility has become a must. Progressive employers were already offering balance-focused compensation like company-sponsored sabbaticals, job-sharing arrangements, and productivity-focused hours. But financial compensation and good benefits are still the bedrock of building and maintaining an effective workforce.
Low-end workers have been hardest hit through unemployment. But executive compensation has also been scaled back, setting the tone for a company’s response to the economic uncertainty. This means employees up and down the ranks are facing changes in compensation, and the comparisons between the top and the bottom earners can make a negative public impression.
Scott Liston is a Strategic Advisor for MLA. He has worked with a variety of companies to create bonus programs for key employees. “I help business owners and leaders make decisions,” Scott says. “Leaders need to see that the numbers are important, and not just rely on gut instinct.” This may involve helping business leaders create fair and data-based performance driven bonus programs.
In one engagement, he worked with an MLA client to create benchmarked bonus programs for both mid-level managers and top executives. For the mid-level bonus program, bonuses were revised from what was negotiated at hire to be tied to responsibility level, individual performance, and departmental results. For the Division Presidents, he created a bonus program tied to both financial results for their division and the overall results of the firm.
“I interviewed these Presidents to understand their expectations and interviewed the CEO to get his expectations,” he says. “It was important that the bonus structure reward both division results and the ability of the division President to work across mutually dependent organizations.” Scott then recommended a transition approach to the new program.
A significant contribution of Scott’s was to help the CEO communicate the changes to all the stakeholders. “I prepared and delivered multiple presentations to enroll the Board, management, and employees in the new program,” Scott says. “Finally, I assisted the CEO in calculating the bonuses at the end of the year and communicating results to his team.”
This is a high-stress environment for business. Showing your employees that you value them is essential for a healthy and productive workforce. There are many ways to do this well, but a fair and well-executed compensation plan is an essential start.
At MLA, we are financial experts. Our services are available to small to mid-sized companies on a contract or fractional basis. Contact us for more information.