The recent tough economic environment presents many organizations with challenges finding ways to continue to grow their business. Yet, some organizations have proven to be resilient. How? By concentrating their effort on their business niche, ensuring that they have the right leadership team in place, and making sure that they have solid compensation programs to retain and reward them.
Tooling International (not real name) is one of these companies. This privately held manufacturing organization continues to experience real business growth during this economic time by focusing on custom machining of parts to its clients around the world.
In order to maintain their edge, company ownership made a bold decision to evaluate the current leadership team and identify any talent gaps while ensuring that their executive compensation practices are based on sound competitive market analyses. They retained Keystone Compensation Group LLC (Keystone) to review their pay practices, benchmark their base pay and total cash compensation for the executive team and to develop individual pay recommendations for each executive.
Discussions between Keystone and the ownership quickly focused on building a compensation strategy for the organization. The strategy would further guide the decisions about overall pay level and the proportions of overall pay to be delivered in fixed (salary) and variable (incentive/bonus) pay.
The exercise also involved streamlining some of the current roles and evaluating the potential future roles that organization needs to support its growth. Keysone evaluated peer group comparisons, level of pay in comparisons within the industry, and proper matching of roles. Information accumulated laid the foundation for establishing sound market references.
With a pay strategy in place, a good understanding of compensation relative to the market, and potential future roles evaluated, the leadership could now focus on what gives the company a competitive edge and fuels its future growth. Keystone’s guidance replaced gut-based decisions about pay with fact-based decisions to support how the company competed for talent in the market place.