Whenever I create a compensation training presentation, I start with sharing the purpose of the total compensation elements base pay, short-term incentives, and long-term incentives.

What is the purpose of base pay?

· It is to provide security and address the short-term needs of employees.

What is the purpose of short-term incentives?

· To reward individual employee goal achievement and short-term company success.

What is the purpose of long-term incentives?

· To reward long-term success with an incentive tied to company overall market performance/value and shareholder interests.

· It is an opportunity to reward and recognize high performers.

· It is meant to aid in the retention of employees through the vesting schedule.

· It provides a meaningful, competitive long-term value accumulation opportunity.

Then I share an annual timeline of when these rewards are delivered to employees and what is needed from managers to make that happen. That includes performance reviews, performance ratings, spending of budgets for merit increases and bonuses, etc.

What do you include in your compensation training?

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