The reality of budget constraints is an obvious presence when planning any compensation strategy and in practically every other conversation as well. However, it cannot be the only consideration.

As with all other aspects of the business, keep the overall goals uppermost in your mind as you make hiring decisions and draw out your compensation strategies. How can you motivate your employees to join you in pursuing your goals, rather than feeling that the necessity of hiring them is at odds with other goals?

Short-Term Compensation Strategies

There are two primary approaches to tying goals and strategy together. The first is to reward performance for achieving specific goals or metrics, the second is to share success for overall profitability.

The first school of thought is more focused on specific, identified drivers of profitability and value creation. To be effective, it requires clear metrics be established to fund the awards. Still, it can be difficult to plan, particularly over several years and performance periods.

The second approach is more direct, sharing the results of profitability and value creation. It does require the executives to identify the overall strategic direction, and so is more entrepreneurial.

Both approaches consider ways to motivate and reward performance results in the short term, obtaining positive outcomes sooner and connecting with employees over their hard work. If your compensation strategy doesn’t already incorporate some amount of one or both of these approaches, you may be missing out on a valuable opportunity to see improvement and growth while prompting your employees to take ownership of their positions in the company.

Long-Term Incentives

It doesn’t all have to be about the salary. Indeed, there are many ways to provide employment incentives that are more valuable than their dollar amount’s worth.

Encourage employees to pursue a full career with you. Rather than offering a position, offer a place within your company that will last. You can demonstrate this by showing the variety of promotion opportunities, then more concretely through a 401(k) plan with a corporate-matching or profit-sharing component based on a timeline of employment.

A graduated, vacation schedule awards employees with more and more vacation days the longer they stay with your company, and private equity options can be extended to employees who have remained for a certain number of years. Think of bonuses that you currently give — or others that you have available to give — and find ways to expand upon them as employees become more tenured with your company.

By building a compensation plan that is full of benefits for employees who stay on long-term, you give new recruits something to work towards and current employees more reasons to stay.

Whereas once employees would frequently remain with one company for decades, even their entire career, recent trends point to a workforce that is less loyal to a single employer, and more willing to experiment with other opportunities. By building valuable incentives into your employees’ plans if they stay, you are laying out a path for them that influences them to see their place at your company as permanent and enables them to make it so discover this info here.

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