An organizational compensation strategy is developed.
The organization’s compensation strategy is periodically reviewed to determine whether it needs to be revised.
- The review is organized by the individual(s) assigned responsibility for coordinating Compensation activities across the organization.
- The compensation strategy is reviewed against its objectives and effects.
- Revision of the compensation strategy is considered.
- The decision to revise the compensation strategy is reviewed with executive management.
When appropriate, the workforce provides inputs for developing or revising components of the organization’s compensation strategy.
A documented compensation plan is prepared periodically for administering compensation activities needed to execute the compensation strategy.
The compensation plan is designed to maintain equity in administering the compensation strategy.
- The organization maintains an awareness of internal, market, and business conditions affecting compensation equity.
- Based on market and business conditions, adjustments are made to appropriate components of compensation to ensure that these components support the level of market equity intended by the compensation strategy.
- Adjustments are made to appropriate components of compensation to establish the levels of internal equity across individuals with similar position responsibilities, skills, or performance levels intended for these components by the compensation strategy.
- Guidance is provided for making compensation decisions that maintain the equity intended in the compensation strategy.
The organization’s compensation strategy is communicated to the workforce.
Each individual’s compensation package is determined using a documented procedure that is consistent with the organization’s compensation policy, strategy, and plan.
Compensation adjustments are made based, in part, on each individual’s documented accomplishments against their performance objectives.
- Responsible individuals determine compensation adjustments based on criteria established in the compensation policy, strategy, and plan.
- The documented accomplishments against performance objectives are used as part of the criteria for determining the size of the adjustment made to each individual’s compensation package.
- Responsible individuals perform adjustments to compensation in accordance with a documented procedure.
- Adjustments to compensation can be made on an exception basis, when required by business needs, with appropriate approval.
Decisions regarding an individual’s compensation package are communicated to the individual.
- Adjustments to compensation are communicated to affected individuals prior to their effective date by an individual responsible for communicating compensation information to the individual(s) affected.
- The basis for the size of the adjustment is explained along with appropriate information from the compensation plan that provides a better understanding of the basis for the adjustment.
- Individuals are guided to where they can obtain more information on, the compensation strategy or plan, tax implications of compensation decisions, laws and regulations governing compensation, implications about choices they make among compensation alternatives, or how to raise an issue about their compensation.
Responsible individuals periodically review compensation packages for those whose compensation they administer to ensure they are equitable and consistent with the organization’s compensation policy, strategy, and plan.
- Results of compensation decisions are compared within a unit to determine if compensation is equitably related to position responsibilities, skills, and performance across the members of the unit.
- Results of compensation decisions are compared across units to identify inequities in how compensation is being administered.
- Results of compensation decisions are reviewed across units to identify inequities involving individuals with similar position responsibilities, skills, or performance.
Action is taken to correct inequities in compensation or other deviations from the organization’s policy, strategy, and plan.
- When inequities are identified within or across units, they are communicated to both the appropriate unit managers and to individuals responsible for coordinating Compensation activities across the organization.
- An approach for addressing the inequity is developed that accounts for fairness to the individuals involved, compliance with laws and regulations, consistency with the compensation strategy and plan, effect on morale and retention, phasing of corrective actions, immediate and long-term impact on the compensation strategy and procedures, and precedence established for later compensation decisions or actions.
- Corrective actions to improve equity are taken and communicated to affected individuals.