How do you design a compensation system? Well, there's a number of ways of going about it. The first step that I recommend is to go on the web and visit one of the many websites that list compensation schedules. So, if you're going to hire a manager for a florist shop, you go onto one of these sites and you see what the average salary that a florist shop manager is getting. Now, if you're hiring a new hire for this position, they may not get that much, but if you want to keep this person you know that they are going to have to arrive, sooner or later, pretty much at that average amount. The next step is to decide what kind of employee benefits, insurance, days off, personal days, all that other kind of stuff that you're going to offer this employee. Remember, if this employee has a family, or you expect to keep them long enough so that they'll end up with a family, then you've got to provide benefits that allow them to raise that family. Finally, there's a whole slew of benefits that I call incentives. This is kinds of things that you want to provide employees for doing a good job and it could be a night out on the town, it could be tickets to a show, they could be dinner for the employee and their spouse, they could be a trip to Bermuda, or a trip to Hawaii. It all depends on what kind of dollars these employees are bringing in. How do they affect the bottom line? But you need to have some kind of periodic show that you appreciate the job they're doing and that you really think they are doing a good job. In general, I recommend that you review your total compensation system at least once a year. It may be necessary to do it more often. If the compensation system, now remember part of the compensation system is employee motivation, and so if the employees don't seem motivated, or their job performance is not reflecting that motivation, then you need to go back and review how you're compensating them to increase that level of motivation to do a good job.
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