When considering the components of a compensation strategy, indirect pay options can provide a significant boost to the value of the overall plan. There is no doubt that both the employer and the employee seek to establish financial stability through competitive base pay components in the form of an annual salary or an hourly wage. Salaries and wages, forming part of the monetary components of the compensation plan, are built on the premise of a fixed amount. As a result, once the compensation plan is put into place, it usually does not need too much tinkering over time, subject to a periodic strategic review.
This is where the value of indirect pay options comes into play. If the monetary plan is bound by financial constraints and budgets, sometimes the indirect pay plan can expand the options for compensation without incurring significant additional costs. This does not mean that indirect pay plans deserve lesser consideration in the planning stages. In fact, indirect pay plans need a higher level of scrutiny and due diligence in order to ensure that they provide their intended value to the workforce.
Further, the flexibility of indirect pay plans allows for the creation of motivational incentives that can be adapted based on changing organizational need.
A recent article posted by B2C (Business 2 Community) outlines a seven-step approach to using indirect pay plans effectively for short-term gains as part of a long-term rewards system.
As noted in the article, indirect pay plans can include monetary items such as bonuses or commissions which must be included as part of the funding allocated to the organization’s compensation systems. More importantly, non-monetary incentives can provide a creative push that achieves increased productivity and high employee engagement without having a negative impact on the bottom line.
These types of plans depend on the inputs of adaptability, focus, and commitment in order to achieve an output of successful rewards for all.
- As the Compensation Specialist for your current organization, outline three short-term non-monetary rewards that would provide effective incentives to boost morale.
- What types of measures can the employer put into place to ensure that incentive planning adapts to the changing needs of employees?
- In addition to a base salary/hourly wage, what types of incentives are important to you as an employee?