Doesn’t Employee Performance have a lot to do with a company’s Compensation Strategy, contributing significantly its Business Plan and Strategic Plan, and ultimately to the bottom line?  Well, I say, everything!  It is important to build into the company compensation plan an atmosphere of symbiotic bilateral relationships between team members and managers. As that will achieve:

  1. Common goals toward achieving company success.
  2. Higher individual productivity
  3. Accountability between team members and management, as well as, upper management and the executive level.
  4. Happier employees work harder and smarter
  5. Retain super valuable, well trained, experienced employees as this strategy fosters trust, improvement, loyalty and advancement.
  6. Achieves the same objectives as do Stock Option Plans. As people improve and add to a Company’s success, the advantage of stock appreciation is the financial payoff, more so than pay raises.

However, the question to be asked is where do Benefits fit into Compensation Planning for new and growing small companies?  I contend that benefits are more part of employee morale than a company’s compensation plan. While benefits are typically viewed as part of the compensation package, the business owner needs to see them as a morale booster.

Where most companies dangle the Benefits Package, which in turn can be very expensive to the company, as a carrot to attract and retain talent, the most progressive companies see its importance in the grand scheme of things.  Start ups and growing companies sometimes have a hard time allocating assets toward building benefits plans, often finding them a huge strain on cash flow.  However, if your Compensation Package includes Stock Options, Tax Preference Compensation, Key Person Protection and a Proactive-based Performance System, then the Benefits Package becomes less the focus, as does pay scale for that matter.  Let’s remember that benefits are extremely important in finding and keeping great talent, and if your compensation plan is designed to reward performance, the business owner can find employees who can help defray the cost of that benefits package via cost sharing, using HSAs and so forth.

A Benefits Package should be comprehensive in its offering, i.e. Health, Disability, Life Insurance and a Retirement Investment Vehicle, but if designed as part of a whole, a progressive Compensation Package whose sum of the parts is very competitory in attracting and retaining top talent, then it becomes more a question of structure than importance.  The best advice I can give to companies, as a Business Plan Consultant with a Financial Planning background working with small businesses: hire a Financial Planning Expert who specializes in designing and implementing Benefits Packages which aren’t seen as the focal point of a Compensation Package but a part of.  If designed and packaged properly, a Benefits Program does not necessarily have to drain cash flow, and for minimum financial contribution on the employee’s end, it can still be an attractive incentivized component of the overall Compensation Package. 

I highly advocate using a specialized financial services company to put together and implement the entire benefits package. This bundling will save the business significant money, and the employees will have a cohesive and comprehensive plan, offering a single customer support platform.  It is vitally important a Company use the expertise of a Benefits Expert to find a Financial Services Company which offers substantial-breath of investment options and benefits to satisfy a wide range of employees, managers and executives.  A well-crafted Benefits Package should pay for itself and not be a burden on Company Cash Flow. 

I also make the contention that Pay Scale is not very important in the overall scheme of things as long as pay is not the focal point but a part of a Progressive, Incentivized, Comprehensive, Competitive, Proactive based Compensation Plan.  Highly talented and experienced people will work for less pay than the market offers if a Company offers a Compensation Package as prescribed in this article.  The Performance Preview plays into this fact that a fair employee and executive evaluation and education system considers Compensation Structures and Benefits, and if done properly, will save the company tons on their Compensation Program yet still promoting higher levels of profitability. It is necessary to have a good balance between the two areas to attract and retain talent at a level a company can afford and still have plenty of room to grow.

About Frank Goley – The Article Writer

Frank Goley is a business consultant, business turnaround consultant, business plan expert, business coach, small business consultant, business planner, marketing consultant, online marketing seo consultant, and business plan consultant for ABC Business Consulting. Frank is considered an expert in writing, developing and implementing business plans, business turnaround plans, funding business plans, marketing plans, strategic plans and web marketing plans. Frank offers comprehensive business consulting, business coaching, business turnaround consulting, along with web seo, web development and web marketing consulting, to small and medium size companies. Frank is the author of a business plan book, The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 50 published articles and e-books on business success strategies. He also writes the Business Success Strategies Blog.