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Doesn’t Employee Performance have a lot to do with a company’s Compensation Strategy, contributing significantly its Business Plan and Strategic Plan, and ultimately to the bottom line?  Well, I say, everything!  It is important to build into the company compensation plan an atmosphere of symbiotic bilateral relationships between team members and managers. As that will achieve:

1. Common goals toward achieving company success.
2. Higher individual productiveness
3. Accountability between team members and management, as well as, upper management and the executive tier.
4. Happier employees work harder and smarter
5. Retain highly valuable, well trained, experienced employees as this system fosters trust, improvement, loyalty and advancement.
6. Achieves the same objectives as do Stock Option Plans. As people improve and add to a Company’s success, the advantage of stock appreciation is the financial payoff, more so than pay raises.

However, the question to be asked is where do Benefits fit into Compensation Planning for new and growth small companies?  Well, I conclude that it is more a part of employee morale than it is a part of the compensation package.  Ok, so you maybe scratching your head on this one as Benefits are often viewed as an built-in component of a compensation package.

Where most companies dangle the Benefits Package, which in turn can be very expensive to the company, as a carrot to attract and retain talent, the most progressive companies understand its importance in the grand scheme of things.  Young, growing companies have a hard time affording comprehensive Benefits Packages and find them to be a big strain on cash flow.  However, if your Compensation Package includes Stock Options, Tax Preference Compensation, Key Person Protection and a Proactive-based Performance System, then the Benefits Package becomes less the focus, as does pay scale for that matter.  Let’s not, however, diminish the fact that Benefits are critically important to retaining and keeping talent, but if your Compensation Structure is designed as previously indicated, the entrepreneur will find employees who are amenable to defray the cost of Benefit Packages with the Company via cost sharing, HSAs, etc.

A Benefits Package should be comprehensive in its offering, i.e. Health, Disability, Life Insurance and a Retirement Investment Vehicle, but if designed as part of a whole, a progressive Compensation Package whose sum of the parts is very competitive in attracting and retaining top talent, then it becomes more a question of structure than importance.  The best advice I can give to companies, as a Business Plan Consultant with a Financial Planning background working with small businesses: hire a Financial Planning Expert who specializes in designing and implementing Benefits Packages which aren’t seen as the focal point of a Compensation Package but a part of.  If designed and packaged properly, a Benefits Program does not necessarily have to drain cash flow, and for minimum financial contribution on the employee’s end, it can still be an attractive incentivized component of the overall Compensation Package. 

I highly advocate using a specialized financial services company to put together and implement the entire benefits package. This bundling will save the business significant money, and the employees will have a cohesive and comprehensive plan, offering a single customer support platform.  It is vitally important a Company utilize the expertise of a Benefits Expert to find a Financial Services Company which offers substantial-breath of investment options and benefits to fulfill a wide range of employees, managers and executives.  A well-crafted Benefits Package should pay for itself and not be a burden on Company Cash Flow. 

I also make the argument that Pay Scale is not very important in the overall scheme of things as long as pay is not the focal point but a part of a Progressive, Incentivized, Comprehensive, Competitive, Proactive based Compensation Plan.  Highly talented and experienced people will work for less pay than the market offers if a Company offers a Compensation Package as prescribed in this article.  The Performance Preview plays into this fact that a fair employee and executive evaluation and education system considers Compensation Structures and Benefits, and if done properly, will save the company tons on their Compensation Program yet still promoting higher levels of profitability. It is necessary to have a good balance between the two areas to attract and retain talent at a level a company can afford and still have plenty of room to grow.

About Frank Goley – The Article Writer

Frank Goley is a business consultant, business turnaround consultant, business plan expert, small business consultant, business coach, business plan consultant, marketing consultant, business planner and online marketing seo consultant for ABC Business Consulting. He has been helping companies to succeed for many years. Frank wrote his first business plan over twenty years ago. He is an expert in developing business plans, marketing plans, funding plans, strategic plans, turnaround plans, web marketing strategies, and project specific business plans. Frank is the author of a business plan book, The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he has over 50 published articles and e-books on business success strategies. He also writes the Business Success Strategies Blog.