In this issue...

•Raising the Stakes

•Does Your Compensation Structure Measure Up?

•What Kind of Raise Did You Get?

Raising the Stakes

So much about the perfect employee-employer relationship is about finding the correct match, and that match also extends into the area of compensation.  Cultivating such a relationship isn’t about forcing a square peg into a round hole; it’s about putting together the pieces of the puzzle in a way that completes the big picture for both parties.  In this issue of The Animal Science Monitor, we discuss the future of compensation, including raises, bonuses, and incentives—and why the old rules are out the window.  We hope you enjoy this issue and that you also enjoy a very merry holiday season!

—Don and Dan

Does Your Compensation Structure Measure Up?
(By Dan Simmons)

Have you ever lost an employee you wished you hadn’t?  Retention can be a concern for any company, especially in this candidate-driven market.  Candidates are often wooed by what they believe are greener pastures, and if your retention program is lax in any area, it can provide an opening for your best employees to pursue other opportunities.

One part of your retention program, whether your realize it or not, is your compensation structure.  However, the traditional compensation structure, one based almost solely on incremental raises and paid benefits like medical and dental, won’t cut it in today’s marketplace and certainly won’t get the job done in the marketplace of the future.

What they need when they need it

In the fast-paced world in which we live, candidates’ needs are changing.  You need to make sure that the way in which you offer compensation changes along with that, especially when it comes to compensating the best and the brightest.  It all boils down to one thing: ensuring that you’re giving your most productive employees what they need when they need it, regardless of whether that involves their base package or an incentive package, as well.

The key is to be flexible, both in terms of what you offer and how you offer it.  Before we delve into specifics, however, we should discuss your base compensation structure.  How, exactly, does it measure up against other companies in the industry?  Although it’s true that money isn’t everything when candidates decide which job offer to accept, what you’re offering should be on par with everyone else.  In fact, it’s probably a good idea to offer just a little more.  View it as an investment that could pay off in a big way down the road.

Okay, now that your base package matches up with the competition, what can you offer that will differentiate you from everyone else?  And here is where you can employ flexibility and creativity in order to make yourself more attractive to star candidates (as well as effectively retain those you already have on board).

Identify their motivation

Giving raises that are larger than average for excellent performance (the average raise in 2007 is expected to be 3.7%) is one place to start, but that’s just the beginning.  Today’s employees and candidates are motivated by other forms of compensation, too, some of which I’ve listed below.

• A flexible working schedule—We live in an age of almost constant communication (laptops, Blackberries, etc.).  Allowing some flexibility when employees need it not only counts as a form of compensation, but also builds a sense of loyalty with that person.

• Opportunity for more paid time off—Workers in America take less time off than in any other country in the world, but I’d be willing to bet that it’s not intentional.  Rewarding top producers with more paid time off is an inexpensive yet valuable investment in those employees.

• The chance to earn bonuses—Rather than giving across-the-board raises, more companies these days are opting for variable compensation structures that reward the best employees with bonuses.  These aren’t paid out at the end of the year, though.  They should be given when the employee reaches certain production levels and goals.  Once again, that differentiates you from other companies and cultivates loyalty with your star employees.

• Promotions—If an employee is excelling and could be given added responsibility in a supervisory role, it makes perfect sense to promote them.  This is not in lieu of a raise or other earned compensation benefits, but in addition to them.  Of course, such a move should only be made if it makes sense for the company (i.e., will allow the employee to continue to grow and be more productive).  Consider each of the key people on your team and see if you can provide a way that they can develop professionally and/or provide a career path.  Once you’ve determined a course of action, share this with each person.  This shows that you’re looking out for their career and will provide incentive for them to grow to their potential.  Don’t wait to do this until they have an offer from one of your competitors.  Be pro-active.

Making the best of 2007As we prepare to enter 2007, you should look carefully at every aspect of your compensation structure.  The first question to ask is, “Will this structure do its part to help retain our star employees?”  If not, decide what changes need to be made and then implement them.  It would even be a good idea to ask your employees what they need and what is important to them.

The next question to ask is, “Will this structure help us to attract the best and brightest candidates in the industry?”  Chances are good that if your structure is helping to effectively retain employees, it will help to attract candidates, as well.  But make sure that you have all of the bases covered by conducting research or through other means.

You can make 2007 a highly productive year for your company by ensuring that your compensation structure is balanced, targeted, flexible, and most of all, fulfills the needs of your star employees and top-notch applicants

.If you any questions about compensation structures or retention programs, you can contact me at dan@consearch.com.

This time of the year is typically when employees are given their annual reviews, as well as any increase in compensation that might be warranted based upon their performance.

So—what did you get?

Okay, just kidding.  I only wanted to grab your attention, because this is an issue that some employees don’t think about in a very detailed fashion.  And it’s an issue that employees should be thinking about, because the rules regarding raises and other compensation are changing.  Recognizing those changes and adapting to them will give you an edge in the workplace and the marketplace.

Across the board no more

Chances are good that you’ve noticed that across-the-board-raises have pretty much become extinct.  There once was a time when top performers, as well as those who were just along for the ride, both received a raise, regular as clockwork.  Those days are gone.

Companies now reward those who go above and beyond the call of duty with raises that overshadow those received by underachievers—if those underachievers receive them at all.  Although pay-for-performance certainly seems more equitable than the previous model, a look at the projected numbers for next year paint a clearer picture.

In 2007, workers can expect an average increase in salary of 3.7% (Kiplinger’s Personal Finance Magazine, November, 2006).  That’s slightly above the 3.6% increase that workers received this year.  However, considering the fact that inflation is expected to be 3%, that number doesn’t look quite so good.  In fact, you could say that the average salary increase will actually be .7%, which, in effect, represents a wage freeze.

The future of compensation

But here’s the really important part: the way in which companies compensate their employees is evolving once again, and raises are becoming less and less a part of the equation.  Instead, more companies are opting for compensation in the form of bonuses and one-time rewards.  These rewards aren’t entirely monetary-based, either.  They could also take the form of a more flexible schedule or more paid time off.

This is a further indication of how workplace dynamics are changing.  Employers recognize the value of rewarding their top employees, those who have a discernable impact on the bottom line of the company.  However, they’re starting to reward those employees in a fashion that will decrease their long-term fixed salary costs.  And of course, most employers do not reward their underachievers at all.  Instead, they’re taking that money and applying it toward their variable rewards program for star employees.

The strategy makes sense—apply extra compensation to those employees who make the biggest impact.  During a time when companies are continually searching for ways in which to boost productivity and decrease costs, this strategy is more than likely here to stay.  And if that’s the case, it has implications for workers now and in the future.

What you should do

So what does all of this mean for you?  Well, first of all, you should have a very clear understanding of your company’s compensation structure.  Not every company is utilizing a variable rewards program, but some could be planning to start, or they might be considering a combination of new compensation strategies and traditional methods.

Meet with your supervisor to discuss the company’s current structure.  Ask about the different forms of compensation available to you and how you can achieve them.  Express your desire to be a top performer within the company, and then ask your supervisor to help you brainstorm ways in which you can accomplish that.  Not only will they appreciate (and note) your initiative, you will have a clear understanding of the company’s compensation structure and how to maximize it.

Those employees who recognize that the rules are changing don’t have to settle for an average raise that equates to a wage freeze.  On the contrary, they’re a step closer to making 2007 their most satisfying year ever.

If you have any questions about this topic, please send me an email at brg@charterinternet.com.  And if you’re currently engaged in a job search or are interested in advancing the scope of your career, be sure to send me your resume.  I’d be happy to discuss your career goals and ambitions, including ways in which I can help you to achieve them.  Keep in mind that any exchange of information, including resumes, will be kept in total confidence and handled in a discreet fashion.

Tell Us What You’d Like to Read About in 2007!
(By Matt Deutsch)

At The Animal Science Monitor, our focus is on you, our readers.  Our goal is to provide you with the most pertinent and up-to-date information regarding the job market and the animal science industry.  We’d like to thank you for all of the positive feedback you’ve provided to us over the past year; we’re glad that our publication has been well received.

However, with the new year upon us, we also want to produce an even better publication to our readers in 2007.  That means content that’s fresh, timely and can make an immediate impact in your workplace or on your workforce.  That’s why we’d like you to email us with the number-one problem or concern you’re facing right now or think you’ll be facing in the coming year.

With the proper feedback, we can provide articles and content that targets the topics you want to hear about and that offers the solutions and suggestions you need to help make 2007 a tremendous year.  You can send all feedback to me at matt@animalsciencemonitor.com.

Thanks for being a loyal reader of The ASM, and I hope that you enjoy a blessed holiday season!