+7 (495)
The initial consultation is free!

Remuneration system

Carrying out an analysis of the remuneration system and defining the appropriate salary level for each employee is rather challenging at times. After all, when paying for work, one would like to be sure that this is not just an operational expense, but an investment in the improvement of the personnel performance. Practice shows that in similar situations the most effective mechanisms are: development of a motivational system; grading; and development of a competency profile.

It is very important, that a company doesnt incur any unnecessary costs, while the personnel feel that their work is paid fairly. For this purpose a motivation system in any organisation is developed using different types of compensation including the salary, additional payments, awards, bonuses, etc., each having its own mission: some aiming to stimulate the operational activity; others focusing on personnel retention; and others on achieving the companys strategic goals.

To know how to combine different types of remuneration means to be able to manage the employee performance and, correspondingly, to improve the performance of the company as a whole.

One should bear in mind that the remuneration system, also known as the motivation system, should be dynamic and should change as the company develops, i.e. always be relevant and up to date. For this purpose it is necessary to regularly monitor the conformity of a motivation system with the companys operational and strategic goals.

The situations in which our clients turn to us (the presented examples are real questions received from company managers):

  • We should sort things out, create a uniform situation for remuneration in our holding. I think it is necessary to conduct grading so that the remuneration policy is fair and transparent for everyone.
  • I have a branch in another city. Every month its head asks to raise the employees salary. I do not understand what is going on there. I want to manage it and in order to do this I need a qualitative analysis of the remuneration system.
  • Im paying too much to my employees and they just do not deserve it.
  • We are going to merge with another company. It has already been decided that after the merger we will keep our bonus system, but it demands revision. I believe that well have to analyse the old motivational system and develop reference profile competencies.
  • I have a system administrator who has been working for me for five years and who is paid the same as our new chief accountant. I cant manage to comprehend if it is fair.

Our experience enables us to create or adjust the existing remuneration system, and undertake administering of the variable part of the compensation (employee performance data collection, preparation of analytical reports, calculation of the variable part of payment, monitoring of the appropriateness, adequacy and effectiveness of the remuneration system, analysis of the personnel motivational system, etc.).

Grading and proper remuneration system ensure:

  • alignment with the business goals;
  • improvement in employee satisfaction, which means that the employees will not only keep their jobs, but will also try to perform well;
  • match between the remuneration fund and performance efficiency; and
  • transparent game rules resulting in increased unbiased decision-making, and, as a consequence, mitigated sources of conflict.
More information about the Project