Changes to a company’s employee remuneration system can lead to resistance. It is not uncommon for the introduction of incentive compensation to be met with scepticism from employees and social partners. However, there is one person in companies who is particularly well placed to support the development of employee performance and to enable companies to achieve their objectives. This essential person is the HR director.
Nowadays, HR directors no longer only have to manage staff. Their task is to support employees in achieving their company’s goals. This is what we call the HR business partner. As a key member of management committees and executive committees, HR business partners are responsible for advising managers, managing a company’s human resources strategy, and working with project decision-makers.
HR business partners’ expertise is needed to support their company’s business strategy. Their knowledge of employees allows them, for example, to plan a comprehensive employee training programme with a view to achieving the company’s objectives. Their involvement in business development also enables them to adapt the recruitment process or to manage a strategic workforce planning project.
The modern HR director’s privileged relationship with both employees and operational management makes them a pivotal figure in a company. As the guarantor of employee development and the person responsible for developing their performance, they best placed to introduce changes in compensation. Their role in implementing an incentive compensation system is therefore particularly important.
To carry out their twofold mission of ensuring the satisfactory development of individual careers while achieving a company’s financial objectives, HR managers must have a range of effective tools at their disposal. Among these tools, incentive compensation is particularly useful because it is adapted to each employee’s performance and is incorporated into the company’s business strategy. It cannot be introduced without the involvement of the HR director.
HR directors are naturally at the forefront of incentive compensation calculations. Their proximity to employees and their knowledge of their company’s strategy make them especially well suited to defining the objectives to be achieved and calculating the amount of the variable component. They are also in the best position to explain to employees the benefits of incentive compensation and to stress its appeal.
However, this form of non-guaranteed remuneration may cause concern or even rejection by social partners and works councils. In some cases, the latter may even decide to veto organisational changes in a company. It is then up to the HR director to embody the change decided by the company while maintaining dialogue with employees and their representatives.
Here again, their experience in the field and their close collaboration with the company’s strategic decision-makers give them greater credibility in discussions and negotiations with employees and social partners. Their combined role as HR director and strategic partner of the company puts them in a privileged position to successfully implement changes in compensation policy.
While HR managers in large groups are more business-oriented, increasing numbers of SMEs are deciding to adopt this model. The unique skills of HR business partners make them attractive to companies of all sizes.
When introducing incentive compensation to a company, it is therefore essential to involve the HR director and to strengthen their involvement in the company’s business strategy.