Members of TEC Detroit benefit from a wealth of timely information provided through their groups, exposure to leading business authorities and a vast library on MyTEC, the "members only" website. This "TEC Tip" offers a sample of the benefits that come from membership in TEC Detroit.

TEC experts, Ron Fleisher, Karen Jorgensen and Catherine Meek agree that before you think about designing and implementing a compensation plan, you must develop a clear and compelling compensation strategy.

Compensation

Define your compensation philosophy
Begin with a clear, focused compensation philosophy that defines and answers: What do we pay for? How do we want to pay for it? What is our competitive posture? How will we split the pie? According to Jorgensen, "Your pay philosophy should reflect the values and beliefs of the owner/CEO/management team, reflect the economic realities of your pricing structure and market share, take into account "softer" issues like corporate culture, industry standards and growth strategy, and provide a foundation to make consistent hiring and promotion decisions."

Link compensation to your overall business strategy
Compensation provides a very effective tool for getting employees to move in the same direction and follow the same path. For example, if a young company wants to increase market share, its compensation plan needs to reward people for bringing in new clients.

Change the culture and reinforce it with compensation
In order to get permanent behavior change, you must first change the culture and the environment. Then use compensation to reinforce the changes.

Reward the behaviors that drive results
According to Fleisher, "Value gets created in two ways. First, as an organization you must do things your customers want, need and desire (the qualitative side of business). Second, everyone in the company has to help do those things in a profitable manner (the quantitative side of business)."

Think total compensation
Most employees think of compensation as base pay plus the occasional bonus. They forget or never get told that anywhere from 30-50 percent of their total compensation comes from other areas, including profit sharing, retirement and pension plans, benefits, stock or equity, incentives and bonuses, recognition and rewards, vacation and personal time off, and opportunity income (tuition reimbursement, professional development programs etc.).

Measure your return on invested dollars
"Most companies don't measure their return on compensation dollars, much less determine whether it is a good one or not" says Meek. "To measure your compensation ROI, decide up front what you want to look at--productivity, morale, customer service etc. Identify the measures that come from your overall business strategy, then define and track them to see whether the return on your compensation dollars matches up to your expectations."

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