A compensation plan is used as an agreement between two or more parties that state what one would get in return for the work it does for the other. The most common is between an employee and a company. This includes salaries, bonuses, and perks like medical aid, health insurance, etc. A sample compensation plan helps you develop a contract that states all details of the compensation the employee should expect for his/her work and services.
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15+ Compensation Plan Templates
Compensation Plan Template
Compensation Word plan helps you keep in check whether or not all the employees are being paid equally for the work they do, without partiality. It will help you create a business document that will detail your employee’s salary, benefits, and terms of payment. Because the employees’ salary is important, you have to be organized when you record and document it. Check it out now!
Sales Compensation Plan Example
It is always better to divide your compensation plan according to the departments you have in your organization. The above template is a compensation plan for the sales department. Check sales compensation plan templates to know how to create a sales compensation plan for your employees who work in the sales department. This will help inspire and motivate your sales team based on giving out good incentives and bonuses for the team.
Employee Compensation Plan Template
An employee compensation plan outlines the salaries and benefits that an employee receives and how they are given. With the help of this template mentioned above, you can prepare the needed compensation plan for your entity. It is a fully editable and customizable document, which you can change according to your liking and needs of your organization. This template allows you to be organized and professional in presenting compensation plans to your employees.
Simple Incentive Compensation Plan
It is mainly designed to retain key employees and align their interests with that of the organization/company. A key employee receives a type of compensation based on the performance of an individual and this plan in Google Docs details on performance measurements, eligibility, plan period, etc. Check it out now!
Sample Sales Compensation Plan Template
Sales Compensation Plan Template
The above-mentioned template is used to draw an agreement between a business organization and the sales representative it has. It includes salary, duration, bonuses, perks, terms of termination, etc. This way, all the expenses and the incomes of the company are taken note of and it makes it easier for the extra costs to cut down easily.
Incentive Compensation Plan Template
The incentive compensation plan template that is mentioned above can be used to offer incentives to essential employees for their outstanding performance in the organization. This is majorly a factor for motivating the employees to improve their work and exceed their targets. It includes incentives corresponding to the percentage by which their targets have exceeded and the duration of their work. Try the template out now!
Professional Compensation Plan Template
Employee Compensation Plan Template
This is a basic compensation plan template in PDF applicable for employees at all levels but is mostly used for unskilled ones. This plan includes basic salary and overtime payments. It can also include any perks if applicable.
Executive Compensation Plan Template
These compensation plan sample templates are provided to employees hired at senior management levels. Compensations are based not only on the performance of the employees but also of those under them and are not only monetary but also in the form of stocks.
Corporate Compensation Plan Template
Life Abundance Compensation Plan Template
Loan Originator Compensation Plan Template
What Is a Compensation Plan
A compensation plan can be defined as a complete package of all the compensations like salaries, wages, benefits, etc. which have to be paid to the employee. It also has the terms of payment, the purposes of receiving bonuses, salary increases, incentives, etc.
Data from the United States Bureau of Labor Statistics revealed that 67% of employees in the private industry received medical care benefits from their employers in March 2017.
In addition to that, the minimum wage of the workers in the United States as of 2019 is $7.25 per hour.
According to LinkedIn, 61% of the surveyed job candidates deemed the information about compensation as a vital part of a job description.
Benefits of a Compensation Plan
A compensation plan provides a sense of security to the employee. The job security helps the employees focus on their work and increases their productivity. Added perks give employees a feeling of job satisfaction, which not only improves their work but also helps in leading a happy life.
Additional perks help in recruiting highly qualified people. It is highly useful in retaining key and highly skilled employees. Some benefits, like health insurance, are tax-deductible and thus help the company financially. Conditions relating to termination of employment are also legally binding in cases of dispute.
Using Compensation Plan Templates:
These plans can also be used for SMO (small to medium organizations), as well as startups to large scale businesses. Plan templates can be used by any company, institute, or entity to design the right plans for their growth. Any place hiring people on various levels can use the template depending on the profile the employee might have.
Steps to Create a Compensation Plan:
Step 1: Develop a Plan
The first thing you need to do while making a compensation plan is to know who your employees are. Make a list of all the employee positions that are available in your company and explain their job descriptions. Research the market properly, so you know how much you can pay for that position. Consider whether or not to give incentives and benefits.
Step 2: Draft the Compensation Plan
The next thing for you to do would be to outline your compensation plan. List all the job descriptions. Set employees hours for work. Explain their benefits and also state when they would get their appraisals, the percent of appraisal, etc. Analyze your plan regularly so that you can make changes whenever required. This way, you can stay updated with the market as well.
Step 3: Add New Jobs
In case you add new jobs in your organization, then do not forget to mention that in the compensation plan as the new employees for those positions need to be paid too. But before that, you need to make sure that whether or not you can afford to hire a new employee as that is a whole lot of responsibilities and costs for your company. Write the entire job description for the new position and mention the estimated compensation for it too.
Step 4: Pay Raises
Once you know the base level of compensation you need to give to your employees of each level, you should start budgeting for pay raises to reward your best performers. When creating a budget, make sure that you mention all job descriptions and salary ranges for each job post without fail. Make sure that all your employees are being compensated equally for the work they are doing.
Step 5: Review
The last and the final step would be for you to review your plan time and again, Keep updating it whenever you can, so that you can keep up with the shift in the market anytime. Make changes in favor of your company and employees, so that they do not leave due to reasons concerned to pay. Simple plan templates will help you create the right plan for your company.
How are Compensation Plan Templates Used?
A compensation plan contract is a binding contract that is used when hiring employees. These are the terms a person agrees to as what he or she will receive in return for their services to a particular organization. The template is selected based on the qualification of the person and the post the person will be hired for.
The templates are to be filled as per the compensation the organization is willing to provide along with the required details of the organization and the employee and thus will result in a binding agreement. Agreement samples will be of great help to you if you need to create an agreement.
Factors to Consider for a Compensation Plan:
The below-mentioned points should be kept in mind when choosing the right compensation plan template for your use:
- The scale at which the company is working. This is necessary to decide which benefits will not financially hamper the company’s progress.
- The post at which the employee is being hired. Providing costly benefits to low-level employees may not be beneficial for the company.
- Even with an improved work ethic and productivity, the net profit provided by the employee may not be enough to sustain for the company.
- Existing competition in the market. In cases where the business is new, higher compensation plans must be considered for recruitment to attract new employees away from the existing competition.
The free plan templates mentioned are very useful in achieving the business plan of the organization by creating a healthy relationship with their employees. These templates can be used for a variety of organizations and are sure to result in a profitable workforce.
1. Why is a compensation plan important?
A compensation plan is important because creating one leads to strong job satisfaction. The right plan includes benefits, along with the other bonuses. It is a tool used by management for a variety of purposes to extend the existence of a company by rewarding its employees time and again.
2. What makes a good compensation plan?
A good compensation plan satisfies the needs of both the company and the sales team. A compensation program helps the company by motivating its employees to meet the goals of the company. When this is done, they reward the employees with bonuses as and when required.
3. What are the different types of compensation plans?
The different types of compensation are – hourly compensation, salaries, commissions, and bonuses. Plans for these include – salary, commission only, salary plus commission, profit margin, etc. The compensation one gets solely depends on the kind of work they do and whether or not they have met the goals set for them.
4. Who needs a compensation plan?
A compensation plan can be used to recruit and retain employees that are qualified. It can also be used to increase and maintain morale/satisfaction. Compensation plans are usually used by HR’s, accountants of a company, etc. to keep a check on the bonuses they are giving to their employees.