Building a Compensation Strategy That Fits Today’s Organizational Needs, Says McLean and Company

In the new blueprint, the McLean & Company approach guides HR in developing a compensation philosophy that supports organizational goals and is relevant to the operating environment. The master plan is intended for human resource managers to explore the internal and external factors influencing remuneration and to develop the remuneration philosophy.

McLean & Company emphasizes that a compensation philosophy provides decision makers with guidance to ensure that compensation practices are consistent and aligned across the organization. To ensure consistency, the compensation philosophy should be guided by the organization’s strategy and support the achievement of strategic objectives.

Employee compensation often comprises the majority of an organization’s ongoing operating expenses. However, few companies have plans in place to sustainably guide and control these expenses. Due to a missing or outdated compensation philosophy, many experience inconsistent application of compensation programs due to a missing or outdated compensation philosophy. This results in internal and external inequalities that can easily become organizational problems, such as:

  • Competing organizations in the labor market offer more attractive compensation packages.
  • Employees are paid differently for the same work, and there is no clear reason or justification.
  • Too little turnover, which can lead to outdated ideas or the retention of employees who are poorly suited to the organization.

Additionally, the right compensation philosophy will also describe the organization’s target market position and its total target compensation, which will determine the selection of base and variable compensation for each employee segment.

According to McLean and Company, pay inequality is the root of most pay discrimination complaints. A well-designed compensation philosophy clearly articulates the organization’s high-level approach to compensation for each of its employee segments, including its target competitive position. Therefore, it is good practice to assess the internal equity of compensation practices at least annually.

To see the full plan, download McLean & Company’s Craft a Compensation Philosophy research.

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About McLean & Company

Using data-driven insights and proven best-practice methodologies, McLean & Company offers comprehensive resources and comprehensive assessments, action plans and training to position organizations to meet current needs and thrive. prepare for the future.

McLean & Company is a division of the Info-Tech Research Group.

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Aubrey L. Morgan