Tips & Tricks: The Intricacies Of A Succesful Compensation Review Process

What Do You Mean By Compensation Review Process?

The compensation review process refers to the systematic and formal evaluation of how an organization pays their employee's salary and on what basis. But, it involves reviewing various factors like:

• Performance review of the employee
• The market value of their job role
• An organization's compensation budget
• Standard living cost in a city 
• The current industry compensation trends
• The working hours of the employees.

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As the best job consultancy in Bangalore, we at Cube Consultancy Services have closely followed the payroll services in Bangalore. And, we have found that the compensation review process includes factors. Like ensuring the employee benefits and salary pay align with the market standard. 

You must also ensure that your annual compensation review cycle does not just include the salaries. But, it should also consist of bonuses, increments, benefits, and non-monetary packages of the total payment package. 

Why Conducting A Compensation Review Process Is Important? 

If you are thinking of conducting a compensation review process for the salary structure of your team members. Then, make sure that it meets your organization's compensation strategy and goals. 

According to a study, almost 51% of employees said that they do not mind a job change or are looking for a new company for a salary increase as the prime factor.

Therefore, it is important to create compensation reviews to dismiss pay equity. So that, you can stay updated with the industry's fair compensation standard for your employee job satisfaction and retention. 

Now that you know the importance of compensation review objectives and compensation benchmarking. Let's discover the evaluation process for an effective compensation review process. Read on! 

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10 Steps To Follow For Your Fair Compensation Review Process

1. Communicate Your Compensation Policy

Your annual compensation review process should align and reflect your company's compensation philosophy. You can start by answering questions like:

How should compensation information review reflect your company values and culture? Or, should your compensation review include promotions for high-performing team members? 

Remember, a clear compensation structure. That reflects your company's principles, boosting satisfaction and trust among your employees.

2. Understand The Aim Of Your New Compensation Review

The objectives of your compensation review should match your organizational policy. For example, if your company's core principle is to incentivize employees based on their performance. Then, the compensation goal should be to review the variables of your employee's pay structure. 

You should also set a frequency standard for your compensation review. Like reviewing compensation once in six months or annually. Depending on how much you want to stay updated. 

3. Collect Relevant Data

You might need relevant data for finalizing the compensation review process, such as:

• The current compensation package of all your employees.
• Data based on team member's performance results and the outcome of such results.
• Data on the geographical site of your various employees. This can help you to note if the current compensation is fair or not according to the location.
• The total budget you have for the annual salary of the employees.
• Data of the compensation structure differing for employees being favored over others. 

Thus, collecting the right data is mandatory. Otherwise, your review may be incomplete or improper. 

4. Appoint A Dedicated HR Personnel For The Review

You might think what is the need of appointing your HR personnel for a small task like review, isn't it? 

Well, the process may be straightforward yet it is not so simple. Your HR department or HRs have all the relevant information about your employees, their performance, pay structure, bonuses, benefits, and much more. 

Thus, taking the help of your HR during the compensation review might help you get the results fairly and faster. 

5. Check Market Compensation Levels And Trends

Do you want to stay ahead of the curve in the industry? 

Well, then why not test your competitors and the market trends of the compensation structure with yours? 

Doing in-depth research and evaluation will help you to identify areas of rectification and improvement in your current compensation structure. 

6. Analyze The Collected Data

Now that you have collected all your employee data, it is time for you to analyze and make decisions based on it. Several factors might help you to analyze your data, such as -

• Does your compensation range align with the market or not?
• Does any of your employees get benefits packages more than the others at work?
• Or, are the employees satisfied with the current compensation rates as per their roles in the organization?

You can also take the help of compensation management tools. Like HR systems, accounting tools, spreadsheets, and business intelligence software.

7. Make Clear And Fair Compensation Changes

Once you have decided after evaluating the data. You can now make certain changes in your compensation plans if needed. You can ask yourself certain questions like -

What have you concluded from your research and analysis? Or, are there any compensation gaps that you need to fill? 

Next, communicate the compensation changes to your team leaders and stakeholders. So that, they can make the necessary adjustments to form the new compensation package.

8. Include Non-Monetary Compensation Benefits

If you want to increase your existing employee experience. Then, adding non-monetary benefits is another great way. You can include flexibility in work timings, development sessions, learning opportunities, and recognition programs as a part of your new compensation plan. 

This will not only make your loyal employees happy. But, will also help you to attract talents from worldwide. 

9. Install Your Updated Compensation And Benefits

Communicating the outcomes of your compensation review process should not be only based internally. Rather, you must share your changes and compensation plans with the outside world as well. 

• Start by updating your compensation package in relevant systems.
• Make offer letters that reflect the new compensation plans to attract talent.
• Share your compensation listing to the external job market.
• Lastly, discuss the new changes with your team members and stakeholders by holding meetings.

10. Seek Reviews And Feedbacks From Employees

There is nothing better than involving your employees to share their thoughts on your compensation review outcome. You can encourage your employees to give honest feedback about the new changes. Or, see if they want to add something more to the compensation plans. 

Thus, you can foster a positive and inclusive work environment. 

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Conclusion

Conducting a compensation review process at intervals is very crucial for every organization. It can help you to stay updated, and competitive, attract top talents, and ensure fairness in the company. 

So, by aligning your business goals with your compensation practices. You can achieve long-term success.