Experts in the design and implementation of remuneration plans for companies are known as compensation consultants. These people help organizations create salary structures and incentive plans. They also work with HR management to resolve compensatory issues and apply performance management programs. With that in mind, we’ll cover what to expect from compensation consultants.
First though, let’s look at the concept of compensation.
What is Compensation?
Most people automatically go to money when considering this question. And, while cash is indeed a fundamental aspect of compensation, there is considerably more to it than that. In terms of organizations, the term compensation refers to the rewards, both monetary and non-monetary, that workers receive in exchange for their work.
In general terms, compensation is usually comprised of an annual salary or hourly wage, any raises, a retirement plan, bonuses and incentives, perquisites, and health benefits.
It is important to note that a solid compensation plan is critical to attracting and holding on to top talent. This is particularly true in highly competitive industries. In far too many cases, the temptation might be great to over-compensate, just to score a win. This is where the services of compensation consultants can be particularly valuable.
What is a Compensation Consultant?
Highly skilled in the design and implementation of compensation strategies, compensation consultants strive to put in place the precise incentives to make your package as attractive as possible to potential hires — as well as existing employees.
Compensation consultants also advise HR teams regarding trends and developments in compensation, as well as what sorts of rewards a given industry is offering. In other words, they help organizations ensure that their compensation packages are as competitive as possible. They also work to make sure a compensation strategy is in line with Total Rewards, and develop pay for performance plans.
What Compensation Consultants Do
Chief among the tasks performed by compensation consultants include:
- Developing, designing, and implementing compensation programs for various job categories within a company.
- Researching pay levels to update existing compensation and incentive packages.
- Analyzing compensation data to identify potential issues and ensure equitability.
- Working with the HR department to discuss salary requirements for individual employees.
- Ensuring compensation plans are in line with labor legislation.
- Preparing job descriptions to match compensation programs.
- Recommending improvements to compensation plans and pay levels.
- Ensuring compensation plans align with the company’s revenue goals.
Choosing a Compensation Consultant
Key questions to ask when looking for a compensation consultant include:
- Are you certified in compensation or are you a Total Rewards pro?
- What kind of data do you use for your approach?
- What are the top handful of issues you factor in when seeking appropriate market data?
- Do you have any experience with my kind of company? If you deem that irrelevant, why?
- Specifically, what will you deliver and how often should we expect you to report back?
- Who specifically will conduct the work? How experienced are they?
- Once the engagement ends, can you provide ongoing support?
- How do you stand out in a field of compensation consultants? What makes you special?
Understanding what to expect from compensation consultants will help ensure that you find the best match for your organization in this regard. Going it alone in this area is ill-advised unless your HR team includes someone with all the skills, capabilities and insights outlined above.
After all, your compensation package is one of the main factors prospective employees will consider when deciding whether to accept an offer from your company. With that in mind, it’s important to do everything possible to be certain it is as competitive as possible.