Technology, education and generational differences are all factors affecting change in the economy and labor market, effectively changing the working world we knew yesterday into an ever evolving sector, according to Human Resource Executive.
Companies no longer use dial-up internet or typewriters and instead now ask for additional credentials, such as graduate degrees, to meet qualifications for a professional position. So how, in an era of rapid change, do they stay up to date and competitive? One answer could be incentive compensation salary structures.
What is ICM?
Incentive compensation management (ICM) is a structure of salary payment that is supported by the concept of merit increases. Further, the practice of ICM sets employees up to have more autonomy over their salaries, professional goals and company objectives, as ICM encourages the them to go hand-in-hand.
Many growing companies look to ICM software to help them adapt to the technological and financial changes that have occurred in the labor market because it allows employers to build professional milestones into the software. This lets managers and workers design a compensation structure together that accurately reflects mutually beneficial financial outcomes.
For example, a hospital company that has certain qualifications for administrative roles, such as a master’s degree, might incorporate the goal of obtaining the certification into the position and once the employee achieved the diploma they would be bumped to a compensation amount reflective of a worker with an advanced degree.
This method allows the employee to feel empowered to continue education and special training that will ultimately lead them to a bigger paycheck. Additionally, the employer will be able to stay competitive by boasting an employee pool of advanced workers with skills that go beyond basic.
ICM to drive change
Studies have shown that incentive compensation structures are not the be-all and end-all of an organization’s ability to be competitive or to motivate employees to work harder, according to Forbes, but they do certainly play a role.
When ICM software is used in conjunction with other workplace policies that foster individuality, a commitment to advances in technology and positive morales, it can be a key to a successful environment.
Peter Grundy, managing director for Towers Watson, said while he does not believe there is a “silver bullet” ICM plan, when designed, implemented and maintained properly they can have lasting affects on a business’ long-term success. Grundy noted in Resource Executive that 31 percent of companies that utilize ICM structures experience sustained benefits for at least five years.
