Financial Strategies for Bal Seal Engineering
Coordinate benefits; monitor incentive programs; measure training.
Design your compensation andbenefits system to be competitive yet cost-effective. Simple to administer,simple for the employee to understand, based on the 60th percentile for yourindustry in your demographic area - these are the usual criteria. However, takeit one step further. Does your system have a variable pay component thatencourages all employees to share in the risk and rewards the companyexperiences? Do your financial and non-financial incentives producecost-effective behaviors? Does the system help create an environment conduciveto employee choices that align their desires, expectations, and goals with thecompany's?
Your compensation and benefits systemcan have a direct affect on production - motivated employees are productiveemployees - and at the same time balance recruiting and retention needs withminimizing response to the labor market. Pay employees well, but wisely, and notanymore than market realities require.
Coordinate benefits to achieve costsavings. For example, a well-designed 401(k) program can produce sufficient taxsavings for the company so that administration costs for an equally welldesigned Section 125 plan will be more than covered. Usually this also means thehourly employee experiences sufficient tax savings in order to meet minimum401(k) contribution requirements without seeing a change in their take-home pay.The company wins and the employee wins.
Develop the metrics appropriate inyour business for measuring the key human resource indicators on at least amonthly basis. Use these tools to monitor such trends as labor costs, overtime,turnover, headcount, and employee relations. Compare these trends with trends innet profit, bookings, sales, or other appropriate indicators. Understand theoperation of your business well enough to pick trigger points. When the trendsapproach a trigger point, take action. With a little practice and intuition youcan begin to forecast labor issues, avoiding unnecessary overtime, layoffs,turnover, and training.
Monitor incentive programs,including commission and bonus program performance, recognition and suggestionprogram performance, and performance or merit program performance. Don't assumebecause you have these programs that they are actually making a difference.Statistically compare human resource and production trends with incentiveprogram trends to determine the relationship, if any. If a contribution to thebottom line can't be determined, change your measurement criteria. If you arerewarding people with dollars for additional dollars the company produces, therewill be a contribution you can identify that is attributable to the incentiveprogram.
Measure the specific impact oftraining in improved bottom-line results. If training is not producing theresults you want, adjust the training until it does. This is a specificapplication of the metrics developed in number three above and the process ofstatistical validation developed in number four above.