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Let's talk Compensation

With a new year, come new targets, stretch goals and a review of compensation. As with everything in leadership in this current normal, the discussion is likely to be a complex one. As a leader you need to be able to position, explain and discuss the total compensation package for your employees.

Done well this will increase performance and engagement. Sadly the opposite is also true. In light of the "great resignation" or "great reshuffling" here are some pointers to have that discussion.


There are many elements that make up total compensation. Your organization may use some or all of the following:


Base Pay: the fixed amount of money paid regularly - salary in other words

Short-term Incentives are discretionary, variable, non-contractual payments based on performance of the business and individual contribution over the performance year. Examples include an Annual Bonus or a Sales Incentive scheme. And if you've ever been in sales leadership you know you need to have really understand the mechanics of this one so that each seller you speak with knows the ups, downs and benefits of every aspect of the plan.

Long-term Incentives are also discretionary, but tend to be equity-based reward plans and reflect the future potential to contribute. Stock and stock options are the most typical examples of this kind.

Allowances: In Singapore you might see a telephone or travel allowance, in the US or Australia there may be a car allowance

Wellbeing Benefits: These support employees health, financial and physical wellness. Typical benefits include health care, Employee Assistance Programme (EAP) pension, long-term and short-term disability, life assurance,

Recognition Programs: Not strictly compensation, but as part of the total reward for being with a given employer they should not be overlooked. These are usually by peer nomination (my current employer have the Shining Star Awards for non sales, customer and non customer facing roles). Technology has improved this facet of total compensation with platforms like Kazoo, Bonusly and Nectar (there are many many platforms I simply use these 3 as an illustration) helping create a positive work environment through recognition and simple rewards (vouchers, corporate swag etc.)


How well you can define and explain each of the above helps the employee see what they have, what they get and how their behaviors on the job link to each element of their compensation.


Taking the above and then linking it to each employees' purpose, or to the meaning they derive from their role goes a long way to helping them stay long and productively within your team.


As a leader how do you approach the conversation about compensation?

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