Compensation & Benefits Metrics

Executives sometimes suffer from short-term vision in slow economic times.

Don't let them drag you and your company down with them. They think that in hard times compensation and benefits plans can be cut because employees are lucky to have jobs. Such short term thinking really loses sight of the big picture. Let's remind ourselves, what is the objective of our compensation and benefits plans? The objective of compensation and benefit plans is to effectively recruit and retain key employees in key roles that are critical to driving the business objectives now and in the future. That's the type of thinking that "real" leaders are made of. In tough economic times companies should covet their good employees because it is those employees that will help them through the tough times.

Many executives will use this time as an excuse to cut variable compensation and use the "I'm not going to lose anyone in this economy" excuse. For the most part employees go along with it but the long-term employer brand and retention impact is sure to sting the company for quite some time. In fact those same executives two years from now will be saying "I just don't understand why our employees are leaving". Real leaders understand the objective of compensation and benefits which is to recruit and retain key employees in key roles that are critical to driving the business objectives of a company both short and long term. They understand that variable compensation is meant to be variable (i.e., goals achieved = variable comp). Even in hard times, your top performing people frequently hit their goals only to see their variable comp plan changed or removed because of poor company performance or positioning for a tough economy. Companies that stay focused on the objective will win in the future.