Experts in Compensation Plan Design
We are committed to providing the best compensation design services, custom and industry surveys, and implementation support to companies who want to strategically align compensation with organizational goals.
Experts in Compensation Plan Design
We are committed to providing the best compensation design services, custom and industry surveys, and implementation support to companies who want to strategically align compensation with organizational goals.
In the world of broad-based compensation (as opposed to Sales or Executive Compensation), plan developers often help companies create internally equitable and externally competitive compensation structures for their broad employee population. There is often one structure for non-exempt employees and a different structure for exempt employees (referring to whether or not they receive overtime pay as mandated by the Fair Labor Standards Act (FLSA)). These compensation structures typically involve developing salary ranges, job grades, job families and career ladders, and may include developing or revising annual incentive plans for broad employee populations. Let's look at each piece of work separately so you can understand what is and is not included and if Prosperio may be of help.
Many organizations use job grades and salary ranges to ensure that titles, responsibilities and pay are aligned throughout the organization. The chief benefit from job grades is an understanding of which jobs are "alike" in terms of skills, education required, responsibilities, and scope across different departments. This ensures internal equity in pay and can help with career development, enabling employees to seek other opportunities that they are ready for in other departments. Without job grades and salary structures, managers tend to devolve to just offering whatever pay is needed to attract and retain employees and pay levels can quickly get out of whack. At a minimum, this can lead to disgruntlement among employees when they realize there is extreme pay disparity based on nothing more than who one's boss is or one's ability to negotiate upon hire, and at worst it can lead to a discrimination law suit. We worked with one organization that hired a brand new employee with no experience (male) into the same position as an existing employee with 20 years of experience in the role (female) and set his salary at more than $20k a year higher than her salary. This was a lawsuit waiting to happen. Management didn't do it to be discriminatory - the new male employee simply negotiated harder and the longer tenured female employee had never made much fuss about getting a raise. This doesn't make it right or safe from a legal perspective however. People in the same role should be paid the same (within a range to allow for variances in both experience and competence) as pay should be a function of the work performed, not the personality of the person hired.
Prosperio has worked with several trucking organizations to develop a streamlined method for analyzing jobs (called job leveling) and setting up grades and salary structures for the jobs. Outside of trucking companies, however, we would recommend that you reach out to Madell Consulting (http://madellconsulting.com/) as Moira and her team are much more experienced with job leveling and salary structures in a variety of industries.
What about job grades for sales reps? Sales reps present a unique challenge for HR professionals trying to "slot them into" an existing structure because they often have very small (or non-existent) salaries, which is one of the primary factors used to normalize jobs across departments. For this reason, sales jobs are usually managed under a different structure entirely, with "S" code grades (vs "A", "P" or "M" grades). This enables HR to account for using target total cash vs. salary as the job value determinant. Whatever your industry, Prosperio can help you figure out the best approach to slotting sales jobs into an already defined job structure.
A side benefit of a well-defined job structure is that you now have a way to group roles into job families and provide career ladders for your employees. This will help you attract and retain highly motivated employees who want to stay with an organization for a long time as they will be able to "see" a future path where they can continue to be challenged, grow professionally, and see their pay increase.
This work can be as simple or as complex as needed based on what level of detail you would like in your career levels. Often, Prosperio helps companies understand career paths within a closely knit group (e.g., operations in a trucking company, warehouse jobs, customer facing roles in banking, or sales and operations within freight brokers) and develops a quick and easy job structure (Sales Rep 1, Sales Rep 2, Sales Rep 3) along with qualifications for promotion from one level to another and what a lateral move to another group might look like.
Note that we rarely recommend just using production (or any other purely objective) metric for promotion from one level to another. The basic volume of work done for the job should be a minimum requirement to open the door to promotion, but not a guarantee that they will walk through the door. We often tell clients to consider this the "we don't promote jerks" clause in the employment agreement. Just because someone is a top sales rep, if they are obnoxious, have poor attendance, don't complete their paperwork or any host of other common behaviors found among top producers, they SHOULD NOT be promoted. If your incentive plan is done properly, and aligned with job levels, then this lack of promotion will actually have a detrimental financial impact on the individual. It should HURT for them not to be promoted, and more than just from a lack of increase in salary - their commission or incentive earnings should be hampered as well.
Many organizations use annual bonus plans to provide additional pay, usually phrased as a percentage of base salary, for their non-executive, non-sales, exempt employees. These plans are usually quite structured, but organizations sometimes need help taking a decentralized historical approach and putting more structure around it, to ensure consistency in approach and sensible budget management throughout the organization.
In this webinar, Beth previews key topics covered for her upcoming training and answers questions from the audience. Learn more strategies to recruit and retain top talent and how to shape your organizational structure to fit your compensation needs.
At the TIA’s recent Lunch and Learn, Beth gave a quick introduction to the most common Freight Brokerage organization structures, compensation methods, and the pros and cons of each.
The Ohio Trucking Association recently hosted their 2021 OTA Annual Conference, presented by Pilot Company, this week in Columbus. Over 160 in-person and virtual attendees joined exhibitors and sponsors for the event. The conference featured outstanding programming, opportunities to network and of course featured speakers, including Beth Carroll.
Earlier this month Beth Carroll was a guest on an episode of OTA on the Air with President & CEO Tom Balzer. For anyone unfamiliar, OTA on the Air features industry experts and thought leaders who provide updates on the regulatory, legislative and compliance environment. Beth will also be one of the Keynote Speakers at this year’s OTA Annual Conference in September.
n this episode of TIA Delivers Podcasts, Beth Carroll, Managing Principal of Prosperio Group, provides insights into the series she has been writing for TIA's 3PL Perspectives Magazine. The series, “Going Beyond Commissions”, details the different approaches to goal-based incentives. Her unique perspective and range of industry knowledge are extremely valuable to the 3PL community and this is an episode that you won't want to miss!
The Psychology of Motivation and Rewards - In this new category of blog post, guest columnist, John Burkholder, gives us the rundown about how restriction actually fuels temptation.
In this month’s issue of 3PL Perspectives, Beth dives into the differences between commission and goal-based incentives. For instance, did you know that A non-discretionary bonus is based on a formula, which can be every bit as precise, objective, and LUCRATIVE as a commission plan?
Beth was recently a guest on The Freight Advisors where she had a great conversation with Jared Taylor about the importance of compensation in the freight space. Whether you're a logistics provider or an asset trucking company, getting the right compensation package in place is incredibly important. They also walks us through what that looks like, how to think about compensation, and the importance of emotional intelligence while devising the right strategy.
Beth was recently invited to be a guest columnist for the Tenney Group blog and did a great Q&A regarding Incentive Compensation in a Post-COVID World. If you are interested in how other companies have been handling changes to their compensation plans as a result of COVID-19, you’ll definitely want to give it a read.
The answer depends, in part, on how the goal was initially set and if there was any provision for double crediting when goals were allocated. Sometimes each sales rep is an island unto themselves, and the sum of their goals equals the overall sales budget. Other times some overlap is built into the system of goal allocation and the sum of the individual goals may equal more than 100% of the overall sales budget. If the goals were set with the planned overlap, then the answer is easy – it’s fine to reward with double credit because the reps were double goaled. But what if the goals weren’t set that way at the start?
When your needs span several roles but you have only a few people and will not have much of an issue with change management, our Express Project is for you. We’ll spend time with you and your senior leaders getting to understand your business and working with you to develop your plans as quickly as possible. We’ve successfully executed a number of engagements for small to medium-sized organizations (5 to 20 people) just like yours.
An Express Incentive Project includes:
• Strategy and structure review/refinement
Compensation plan design for up to 5 roles (salary bands and incentives)
• Market benchmarking of pay levels for the 5 roles
• Plan documentation
• Pro-forma economic modeling (minimal historical testing)
• Roll-out training
• Development of simple Excel calculator
• 3 months of post-project support
• Turnaround is approximately 4-6 weeks
A 1P1P Project is great for start-ups and small companies, and those with an immediate need for a compensation plan for one person in one role. The 1P1P Project is a virtually delivered program that’s a fast, affordable alternative to big software firm fees.
The 1P1P Project includes:
• All plan design details
• Basic market pricing
• Economic testing
• Incentive plan documentation
• Outlining of goals and expectations
• Review of business goals and impact of this role on those goals
• Role clarification
• 3 months of post-project support
• Turnaround is approximately 2-3 weeks
When you need more in-depth assistance in clarifying business objectives, streamlining your organization structure, improving accountabilities and role definition, and are developing incentive plans for several interconnected roles for a large staff, we recommend a Full Service Incentive Plan Project. This solution features on-site meetings with our developers and your design team, and is often selected by medium-sized to larger companies, or small companies undergoing significant transition.
A Full Service Incentive Plan Project includes:
• Business goal clarification
• Business strengths assessment
• Compensation plan design for all roles in scope (salary bands and incentives)
• Development of career levels for highly populated roles
• Employee change management
• Extensive pro-forma and historical economic modeling
• Goal-setting guidance
• Incentive plan documentation
• Market benchmarking of pay levels for all roles in scope
• More detailed Excel template for use by your staff for doing plan calculations (variable based on your needs)
• On-site roll-out support
• Organization redesign and role change/definition
• 12 months post-project support
• Four+ on-site days
• Turnaround time is at least 90 days, but may take longer depending on size of organization and magnitude of change