Incentive compensation audits are an essential part of creating and implementing a suitable and pertinent bonus payment scheme. Incentive compensation audits have convinced many businesses seeking to accelerate their growth and stimulate employee motivation. Let’s take a look at how this diagnostic is implemented and why it is so essential.
The incentive compensation audit: definition
Integrating a variable portion into staff wages is all about trying to boost their motivation and push company performance forwards. However, a badly calibrated incentive compensation plan, based on pillars that are too numerous or vague and disconnected from the company’s needs and resources can of course be totally counter-productive. If you want to avoid fundamental mistakes, you must have advance diagnostics.
The incentive compensation audit is an essential phase that will allow you to analyse your company’s global strategy, performance objectives and the effectiveness of its current pay structure in the finest detail. The objective is to establish a detailed, coherent and realistic set of specifications which will guarantee the installation of a bonus payment scheme based on clear, legible pay scales that will garner employee approval.
The audit’s advantages
Every business is unique and the methods necessary to implement an incentive compensation plan for one company will not necessarily work for another. The diagnostic phase is essential to establish an individually tailored plan. The advantages of such an audit are manifold:
- Identification of any failing in the current pay structure
- Analysis of the company’s expenses
- Analysis of the company’s global strategy pillars
- Definition of the performance objectives to be reached
- Evaluation of the coherency of current wages with the market average
- Verification of compliance with payroll regulations and laws
- Employee motivation and expectations survey
The importance of the audit in the establishment of an effective pay structure means that professional expertise is an absolute must. Unfortunately businesses only too often call on general agencies with less experience or knowledge of incentive compensation than those that are specialised in the domain. With over 25 years of experience in incentive compensation, Primeum proposes its recognised expertise to businesses seeking to improve their performance. Its rigorous methodology is what allows them to successfully overhaul incentive compensation schemes.
Our expert advice at your side
The incentive compensation audits proposed by Primeum use four decisive stages to set up engaging bonus payment schemes that will become genuine vectors for improved results.
Diagnostics
This first stage involves a methodical analysis of the company’s current incentive compensation scheme and any incoherencies it may raise with the company’s strategies and objectives. The diagnostics are based on an analysis of the bonus scheme’s current results and, if possible, an employee survey phase which seeks to build up an understanding of their motivation and perception of the company’s strategies.
Elaboration of a payroll policy
The diagnostic conclusions provide the means to define the guiding principles of the company’s payroll policy. These are then set down in a precise and detailed specifications document. The main fundamental issues, such as employee differentiations or the exact performance to be rewarded are laid down in order to produce clear numerical data. At Primeum, our experts do not just stop at proposing concepts: each detail of the incentive compensation scheme is the direct calculated result of our methodology. The audit is far more than just a concept; it provides the means to produce genuine results.
Creation of the incentive compensation scheme
The third phase is dedicated to setting up the pay scales. These pay scales are then used to produce a series of incentive compensation prototypes, using innovative calculations made by our specialised tools. Our experts work with the best possible solutions, these are able to complete complex calculations and produce genuine realistic projections of the results that will be achieved. This data cannot be got from classical objective-indexed bonus processors. These simulations are an essential part of validating the incentive compensation scheme and adjusting it where necessary.
Presentation of the incentive compensation scheme to employees
To guarantee staff approval and acceptance of the new incentive compensation scheme, the Primeum experts will take their involvement beyond the simple diagnostic approach by supporting the company through this change period. This support generally involves training the managers, presenting the new schemes to staff representatives and creating and publishing legible, simple and easily understood documents for all of the staff.
Businesses that want to complete an incentive compensation audit must be prepared to call on wholly specialised professionals. Breaking down an existing bonus scheme to replace it with another more successful one, requires proven expertise, innovative tools and effective support that can ensure compliance with the company’s global strategy, relevant applicable legislation and employee expectations. As a specialist incentive compensation agency, Primeum’s knowledge and methods are here to guide you.
