Asking the right core questions when establishing a compensation philosophy will help align rewards to business goals, which is essential in an increasingly competitive talent market.
What is your credit union’s compensation philosophy? Well-thought-out compensation philosophies provide the groundwork for important pay decisions for your organization. Far too often though, these philosophies are antiquated and include general phrases like, “we strive to provide competitive compensation” and “the goal of our compensation structure is to attract, retain and motivate.” While few can disagree with these types of platitudes, they are rarely helpful when actually making decisions.
The purpose of a compensation philosophy is to provide a framework for compensation decision-making. However, the clichés associated with a standard compensation philosophy typically do not provide an actionable foundation for the board of directors when setting CEO compensation, or for human resources when designing salary structures and incentive plans.
If your approach to pay is so broad that it doesn’t support decision-making or guide strategy, what is its benefit? As American author, salesman and motivational speaker Zig Ziglar once said, “If you aim at nothing, you will hit it every time.” To bring actionable specificity to your philosophy, we recommend having answers to the following key questions:
▪ Who are your biggest competitors for talent?
▪ How does your credit union want to compare to the market?
This whitepaper focuses on these core questions that credit unions should be asking themselves when setting meaningful compensation policies that align with their unique business goals.