Repositioning Your Pay Programs for Recovery - Six Steps for Conducting an Effective Compensation Audit

As companies resume hiring and revise compensation programs after a prolonged and painful focus on managing payroll costs, they should also be taking stock of whether they're still getting the best return on one of their most significant business expenditures. An in-depth examination of current compensation programs can ensure they continue to align with changing market practices and evolving business strategies during the recovery.

This article outlines a six-step process for performing an employee compensation plan audit that provides an effective roadmap to updating programs to the changing economy, including guidance on:

• Ensuring the company's compensation philosophy and strategies align with actual pay levels and practices
• Evaluating the effectiveness of market comparisons
• Reassessing survey sources and usage
• Determining the appropriateness of pay delivery practices, including eligibility and opportunity levels for annual incentive/bonus plans
• Effectively communicating programs and getting participant feedback