Innovative Compensation Model: Consumer Products

Using compensation to drive performance and career development at a consumer products company

Client Case Study

Situation

This major consumer product manufacturer was experiencing problems with a pay grade structure that over the years had become too inflexible to accommodate their multiple plant locations and evolving talent strategies.

Complications

The current pay structure produced several problems:

  • Frustrated employees perceived that only job promotions ensured salary growth.
  • The employer realized that not all individuals sought management roles, eliminating promotions as a viable incentive.
  • Those in professional and technical occupations, such as engineers, wanted upward mobility within their field without becoming managers.

Approach

  1. Analysis: Conducted an in-depth analysis of the growing needs of the manufacturer
  2. Design: Developed an innovative compensation model that collapsed the large number of pay grades into a few wide bands, each representing a different level in the company hierarchy.

Results

  • This solution provided an alternative to the up or out mentality that was formerly associated with their system.
  • The new compensation program encouraged cross-training by motivating employees to move laterally.
  • Employees gained new skills and increased their earning potential without being promoted in the traditional sense.
  • The increased flexibility and latitude within the salary bands empowered managers to reward and retain high performing individuals, and addressed geographic differentials without requiring customized pay decisions for each region of the country.
  • Managers soon gained more independence within the guidelines of the new system to reward key performers and critical skill sets. Employees gained the ability to learn new skills outside their traditional roles and were rewarded without the pressure to earn a grade level promotion.

Related Information

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The experiential New Employee Orientation was an incredible success for over 2500 new hires in four years across the globe. They partnered with us to create an innovative solution on very short notice, and added a huge amount of value that isn’t reflected in their cost. We could never have done it without their unmatched combination of expertise, professionalism, and creativity that aligned everything with our unique culture. Even our experienced hires were blown away!

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LSA seamlessly integrated those components without our folks feeling like the intervention was forced. They understood what we were trying to accomplish, helped us clarify our objectives, and created a solid, refreshing approach that quickly got us moving and engage at all levels across the organization.Overall, I couldn’t be happier that we found a true strategy and implementation partner in LSA.

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HR Manager

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