Personnel and Organization Policy
We discussed Compensation Structures. An important aspect is the philosophy a company has driving the system. A compensation philosophy is developed to guide the design and complexity of compensation programs; this is done by identifying goals and objectives, considering the company’s competitiveness in attracting and retaining employees, the emphasis on internal and/or external equity, and whether performance is tied to increases. Understanding what balance is desired to achieve between direct salary and indirect benefit is critical in developing the overall total compensation approach. A consistent philosophy provides a strong foundation for both the organization and the employee. Without a philosophy, leaders often find themselves unsure of what to offer as a starting salary for a new employee. This can lead to offering too high a total compensation package for a new employee in relation to existing employees, or being unable to successfully hire because the total compensation offer is too low to be competitive.