With 47% of U.S. adults reporting that they feel underemployed and underpaid combined with an average turnover rate of 9.3%, organizations are feeling the pressure.

Businesses often turn to management consulting for help determining starting salaries, performance bonuses, higher-base salaries, and total compensation packages that are not only attractive to team members but also sustainable for business.

Why Management Consulting is Beneficial for Your Business

Companies turn to management consulting firms to generate compensation structures that are competitive, innovative, and sustainable. These organizations provide companies with:

• Expertise – A project leader or management consulting team provides a wealth of skills, tools, and knowledge that stem from years of experience in helping businesses across varying industries identify and overcome complex issues, improve operations, and streamline the deployment of new strategies.
• Cost Savings – Identify cost-saving opportunities and fine-tune processes to foster efficiency and significantly reduce costs that improve an organization’s bottom line and free up internal resources.
• Innovation – Management consulting services enable businesses to stay ahead of the curve and deepen their competitive advantage by identifying and implementing new innovations and ideas that stem from industry trends, new business models, and emerging technologies.
• Objective Viewpoints – Financial management consultants provide insights into a company’s strengths and weaknesses and render unbiased insights on how to overcome them.

Additionally, organizations work closely with management consulting services to create customized compensation plans and communication strategies.

3 of the Top Compensation Consulting Services Challenges

Determining fair and appropriate compensation is tough. Among the three leading challenges are budgetary restraints, industry standards, and social values.

Budgetary Restraints

Ensuring employees are paid what they are worth and making sure the compensation package is financially sustainable requires careful budget planning and analysis to find out how much an organization can realistically afford. A few factors that must be taken into account include:

• Profit margins
• Revenue streams
• Operating expenses

Balancing the needs of business and employees is crucial, as failure to do so can result in low employee morale, financial instability, and high turnover rates.

Industry Standards

Businesses need to ensure their compensation packages are competitive with organizations operating within the same industry. If not, attracting and retaining top talent can be challenging.

To determine industry standards for compensation, compensation research and surveys can be performed. Through the information gathered, management consultants can help entities navigate industry standards and develop competitive compensation packages for the industry and region that help retain talent and keep businesses competitive in the marketplace.

Social Values

Compensation packages must align with an organization’s values and culture.

For example, if a business values a fair work-life balance, it should offer more flexible compensation packages, like flexible work schedules or telecommuting.

Additionally, it’s important to consider the impact that compensation packages have on social equity and inclusion. Not only should these packages be fair and equitable, they must not legally discriminate against employees based on factors such as:

• Age
• Race
• Gender

By integrating the wide-ranging expertise and regulatory knowledge of compensation management consultants, businesses can create competitive compensation plans that reflect an organization’s culture and social values yet ensure fair and equitable compensation for all employees.

How Management Consultants Roadmap Compensation Plans

Management consultants use advanced technologies and broad industry experience to map out compensation plans. As no two organizations are the same, there are naturally many factors influencing how compensation plans should be developed.

However, the ultimate goal is always be to:

• Align compensation strategies with your organization’s culture and values.
• Ensure pay practices comply with federal, state and local laws and regulations.
• Attract and retain staff with the skills and experience needed to fulfill your mission operational requirements.
• Maintain internal equity and market competitiveness.
• Motivate staff to be highly engaged and productive.

Using these goals as guidance, professional compensation consultants will then create a solid framework for them to ensure a robust and effective compensation structure is properly developed. From here, a tailored roadmap is created.

4 Components of Building a Compensation Strategy

When building a compensation strategy, management consultants look at information and data from within the organization, the industry, and relevant market conditions. They use this information to determine a fair, equitable, and competitive compensation plan.

Four examples of the components used when building compensation plans include:

• Competitor Research. Your competitors can take more than your potential customers, they can take your top-talent as well. Knowing how your competitors pay and treat their staff can help you understand what incentives are needed to keep your team engaged and loyal to your organization.
• Internal Assessments. Assessing and understanding your internal workforce can give clear insight into what is working well and what needs improvement. Are your compensation policies clear, consistent, and easily accessible to your employees? If not, there may be an underlying mistrust developing that needs addressing.
• Accurate Job Descriptions. Accurate and thorough job descriptions are essential to determine what value a role provides your organization and what level of compensation is fair in comparison to current market conditions. This can include behavioral expectations as well as skills, tasks, and responsibilities.
• Rewards and Incentives. Having a rewards and recognition strategy as part of your overall compensation package can be key to keeping employee retention rates high and your company’s mission clearly established and on track.

Get Better Results With Compensation Consulting from JER HR Group

Determining how to compensate your employees is never an easy task. Internal and external expectations, budget realities, and economic trends can all impact how you pay your team.
That’s why organizations turn to compensation consulting services for guidance and expertise.

At JER HR, we help teams from all industries and regions build compensation strategies that do more than just pay people. We’ve helped numerous organizations and we can help you too. To start getting the most value from your compensation practices, contact us today.