Aligning Compensation with Contribution

ElementOne consulting practices involve systems designed to maximize the effectiveness of the performance management process, and effective performance management can translate directly to effective pay.  Organization design and job documentation ensures that jobs make sense, and that jobs are documented in such a way that they can be the forms used for performance management.  ElementOne’s compensation programs are designed to function with quality job descriptions and provide pay opportunities tied directly to employee contribution.

While ElementOne concepts may be grouped under the definitions of “merit” pay, or “pay for performance,” we believe these concepts have lost their meaning over the years, and have been so laden with the baggage of poor program design, that new terminology is needed. ElementOne calls it “RightPay™” and it is the final step of the compensation management process. It is truly “pay for contribution” because this method assesses the value, or “price tag”, of employees based on their proven ability to perform the responsibilities of their job.

With performance management focused on employees’ actual jobs, and pay ranges that accurately reflect the value of the job to the organization and in the market, the pay for contribution approach determines what part of the range is appropriate for the employee in a given year. The focus is not on “what increase should be given?” but “what should pay be?” The actual amount of the increase is an afterthought.

The Job Description-Based Approach

Merces designs job description formats that translate directly to performance and development assessment.  Creating a performance and development appraisal program from a description can be as simple as using a printout and a pencil in the margin, to a sophisticated system that allows multi-year appraisals with consistency checks across managers.

Performance X Control Point = Pay

The heart of the description-based approach is translating the results not to a “rating” such as “meets expectations,” to a score linked to a position in the pay range.  ElementOne helps our clients use their existing systems, or develop systems that meet their needs and resources, create that translation model so that every employee can be paid equitably according to their contribution.

With a specific target for every employee, it is possible to easily determine how much it will cost to equitably compensate every member of the workforce.  Analysis by job, department, location, function, or any other demographic category can identify the costs to make adjustments to achieve equity across the organization.