What Is a Compensation Plan?
A compensation plan is the details for your employee's salary, benefits, and terms of payment schedules. This also includes your bonuses, commissions, and benefits that you may pay your employee. Aside from a compensation plan for your employees, there are also these sales compensation plan, professional compensation plan, compensation plan in sales management, incentive compensation plan, and executive compensation plan.
How to Write a Compensation Plan
Compensation plans are important in order to be guided about everything how your employees are going to be paid. You need to entice people to work for your business and let your current employees stay in your business. You may use these steps to guide with starting your compensation plan:
1. Jobs and Job Descriptions
Firstly, you need to start with how many employees does your business or company need in order to operate. List down the job together with their job descriptions.
2. Decide the Compensation for Each Job
Provide the appropriate amount you have to pay for your employee in your basic plan. You can refer searching about how much your competitors pay their employees on their jobs. This can help you think of the sum you will pay to possible employees. Traditionally, newly hired are paid the end range.
3. Categorize According to Job Levels
Pay according to job classification. Pay levels can start from associate, intermediate, up to senior. In this way, the employees will work hard to move to another level and can be paid higher.
4. Plan Hours of Work
You should not forget to include in your compensation benefits document how long your employees will need to work. If you have a lot of employees, you can schedule them according to their jobs.
5. Include Overtime
Employees can work overtime if they have to or choose to. You need to make sure that you include this section to your printable plan because overtimes can leave you with giving a lot of money.
6. Fringe Benefit
Fringe benefits are the benefits your employees can receive that are outside the salary range. These can be for health benefits, housing allowance, car allowance, vacation pay, sick pay, meals, and others. Make sure that you can afford the benefits that you are giving your employees. "Showing that you care about your workers is a natural way to increase their loyalty and often to get their best work in return."
7. Giving Raises
You should have a policy with giving raises of the compensation and this should include calculating how much. Include a commission plan wherein your employees are being rewarded according to their performance. Make sure your job descriptions and salary ranges are recent. However, if your salary ranges are outdated, you need to raise the factor in order to get back to competition.
8. Regular Plan Review
You have to remain competitive. One of the ways to evaluate that is to take part in compensation surveys. Always review your data analysis, to make sure that you remain in the compensation market.