A Product Manufacturer-Compensation Design
“Our consultants developed an innovative compensation model that collapsed the large number of pay grades into a few wide bands.”
Compensation problems often arise in today’s diversified and ever-changing corporate settings. A major consumer product manufacturer was experiencing problems with a pay grade structure that over the years had become too inflexible to accommodate their multiple plant locations.
This pay structure produced several problems. Frustrated employees perceived that only job promotions ensured salary growth. The employer realized that not all individuals sought management roles, eliminating promotions as a viable incentive. Those in professional and technical occupations, such as engineers, wanted upward mobility within their field without becoming managers.
After doing an in-depth analysis of the growing needs of the manufacturer, our consultants developed an innovative compensation model that collapsed the large number of pay grades into a few wide bands, each representing a different level in the company hierarchy.
This solution provided an alternative to the up or out mentality that was formerly associated with their system. The new program encouraged cross-training by motivating employees to move laterally. Employees gained new skills and increased their earning potential without being promoted in the traditional sense. The increased flexibility and latitude within the salary bands empowered managers to reward and retain high performing individuals, and addressed geographic differentials without requiring customized pay decisions for each region of the country.
Managers soon gained more independence within the guidelines of the new system to reward key performers and critical skill sets. Employees gained the ability to learn new skills outside their traditional roles and were rewarded without the pressure to earn a grade level promotion.