Matching of Compensation Turnover with the Motivation

[chrmpteam]

A thought-provoking question Adeel!

I think HR’s role is that of creating a balance where they can reduce the compensation turnover, while also keeping up the employees’ morale. Compensation planning has multiple objectives, such as balancing equities, improving morale, recruiting and retaining talent, reducing compensation turnover, etc.

The planner has to decide the strategies while being mindful of all the above objectives. If you curb the salaries too much you won’t be able to attract or retain good talents. If you reduce the workforce too low or increase the working hours too high, it might be stressful for the existing employees.

So, the strategies must support all of it while also reduce the compensation turnover. And in doing so will the compensation planners shine.

Let me know your thoughts!

[Adeel Nasir Mir]

Thanks. I think it’s important to keep the balance as you mentioned but how will go about it. Can we develop scientific approach or model for the same keeping an in view different factors under consideration including internal and external factors. Is there any established model available . Thanks

[chrmpteam]

You took me thinking @Adeel and I did some research to find if there really exists any scientific approach or model but could not find one. The external internal equity approach seems to be a kind of scietific approach, isn’t it? That is taken care of by grade range and other research-oriented approach one can take. It might not be a plug-and-play kind of approach, though. Any thoughts on this?

Please let us know if you come across any such standardised approach.

[Adeel Nasir Mir]

Hi Sunny

Thanks for your reply . Perhaps I also don’t find any model and this opens the opportunity to anyone who can made a system like CHRMP did for evaluating the effectiveness of training interventions. However, as you mentioned that external equities can be a tool to measure the compensation what you are offering, but perhaps these are not fully translate how to achieve optimum balance when you also strive for reducing compensation turnover. For example, government regulations they usually talk about minimum wage standard not the maximum so you can have the mid point, competition and Industry on other side often moves in the same direction to minimize the expenses thus treating the employee as a cost center .

Based on historical data of compensation perks and benefits within industries , a model can be developed based upon the accuracy of data , any other tool may be to check tax amount deducted within the industry at same grade as Tax authorities are now mostly automated .

If you ask me to give the rough idea I think low compensation theory shall always prevail in capitalist societies. The balance is desirable but not achievable.

[chrmpteam]

Hmm maybe a CHRMPian can start to build up a model around all this @Adeel The model might take into consideration all this as you speak of. Maximum salary might be difficult as we must also consider individual equity. But definitely, an organization can have a maximum salary for itself. And all organization can do the same thus starting to think along those lines. As far as employees being a cost center is concerned, everything is a cost in a company and that will always remain there with most organizations. So, we have to keep that in mind.

[Kalpana .]

Hi Adeel,

Reducing compensation turnover is indeed the most important objective of C&B Planning while maintaining a balance between the internal, external and individual equities. Also, fair pay and working conditions are important factors to influence employees morale. Most organisations follow a structured pay scale reflecting the highest pay grade at the top and the lowest pay grade at the bottom based on different factors like designation, experience, qualifications, job responsibility etc. It allows the employee to view the compensation he or she will receive in relation to the factors given. Also, C&B professionals use job evaluation to establish pay differentials among employees within the company.