Our Approach:
For over three decades, The Croner Company has assisted a wide variety of clients with the development of their comprehensive compensation plans and programs.
As client organizations grow and respond to dynamic environments, company-wide compensation plans often fail to keep pace with the market for both existing and new positions. In some projects, we focus solely on the development of reward systems for certain types of employees such as executives, in other projects, the comprehensive compensation plans we design encompass all aspects of the client's organization as well as all of its compensation plans and practices. The scope of these projects typically include a competitive assessment of current compensation levels, the development of a base salary structure and plan, the creation of company-wide short-term incentives, sales incentives, and the definition of stock option, equity or equity-like long-term granting guidelines.
The most successful comprehensive compensation plan is one that: ensures that the financial interests of the employees are aligned with those of the company's shareholders; rewards the employees for demonstrable personal or unit outcomes; does not provide rewards when the individual or unit underperforms expectations. Typically, comprehensive compensation plans are developed based upon the market rates for comparable positions and ensure that employees are rewarded for the achievement of intended results. A well designed comprehensive compensation plan strikes a balance between short-term cash compensation and programs that reward the creation of long-term value. Good plans are easy for employees to understand and managers to administer.
Key Project Steps in the Design of a Comprehensive Compensation Plan:
Audit. Conduct a comprehensive audit of existing compensation plans and practices and develop a feedback report of our findings.
Compensation Philosophy. We work with top management and the board of directors to define the company's compensation philosophy which defines how and with whom the company intends to compete for its human resources and how and under what terms its employees will be rewarded.
Job Analysis. We conduct a comprehensive job analysis to determine the primary functions, duties and responsibilities of all or a sample of positions. This analysis serves as the basis for market pricing most of the company's positions.
Administration Guidelines. We work the client’s compensation team to develop a market-based salary structure and compensation administration guidelines for setting pay and for adjusting compensation based upon performance, promotions, changes in job content and changes in market rates of pay.
Incentive Plan(s). As appropropriate we, develop an incentive plan (or plans), based upon industry "best practices," that rewards participants for the achievement of specific, defined measures of outstanding performance and outcomes. Also, we develop a financial model of the incentive plan costs over a wide range of potential outcomes.
Long-Term Reward Plan. We develop a long-term reward plan (or plans) that reflects and rewards the creation of shareholder or long-term value. Such plans typically include granting guidelines for stock option or other equity instruments or equity-like ("phantom") plans, as appropriate. Often, we research market stock option granting practices, (e.g., How many shares? At what price are grants made? How do options vest?) as the basis for recommending stock option granting guidelines to the client. If long-term plans entail cash awards, we also assess the cost of such awards over a wide range of outcomes and develop measures for making long-term cash awards.
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