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Guiding Principles for Fair Compensation

No matter what specific steps an organization takes to support or improve the delivery (or perception) of fair compensation, some essential principles support their effectiveness:

• Identify what you control. While budgets may be fixed, managers may have flexibility in distributing rewards. Also, they can identify the pockets of dissatisfaction. Would some clarifications, adjustments, or alternatives help? Managers are responsible for knowing what motivates their employees. Even if they cannot control policies, they can get a better grasp of what employees want and pass that information along to the human resources function.
  
  
• Understand and fairly implement existing programs. It is important for managers to be up-front in howthey communicate salary adjustments. Their job is to manage, as best they can, their organization’s policies and budgets. The manager should promote the advantages of the current programs and befrank about their disadvantages.
  
  It is incumbent upon the manager to know what benefits the organization offers and to look for ways to promote these to employees. Critical also is keeping rewards linked to performance. When raises are based on merit, employees need to know what they did to earn them. Simply saying, “This is all I could give you” is not a demonstration of leadership.
  
  Consider this creative approach taken by a leadership consulting firm. The You Business LLC, a leadership consulting firm in New York City, not only upgraded the titles of employees feel good, but it also let employees choose where they worked (at a home office or at the company’s headquarters, for example), and when they worked (9 to 5, early morning, or late at night). To offset the lack of pay raises, the company created a handsome bonus-incentive program that rewards employees for revenue generated from their work. The firm switched from fixed costs to variable costs and continued to make employees feel fairly compensated.
  
• Compensate with other recognition and rewards. Managers should strive to keep employees feeling psychologically rewarded. Aside from formal benefits, there are quite a few other benefits that managers can control, such as department celebrations, new equipment, time off, telecommuting, and flexible hours. »
  

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