When talking about employee compensation, there’s a lot more to consider than money alone. A comprehensive compensation plan will not only address salaries, but also benefits of all kinds, from health insurance to retirement planning.
Compensation planning gets even more complex for companies that hire globally. If you have employees around the world, you need to consider labor laws and other relevant legislation in the countries where they live. This will help ensure global compliance, so you can avoid consequences like government fines.
A well-designed employee compensation plan doesn't just help you remain in compliance. By outlining what you can offer potential employees, you can use your compensation plan to recruit top talent, attracting the best of the best worldwide.
It's also helpful for improving job performance, since a compensation plan will outline details like how often employees are subject to performance reviews—and how those reviews may impact advancement and compensation increases. This helps to keep workers motivated, as they can clearly see a path ahead.
Finally, an effective compensation plan can also help improve equity in the workplace by laying out acknowledged standards for pay, benefits, and advancement. This can help minimize the risk of favoritism as well as accusations of unfair treatment in the workplace.
The easiest way to stay on top of pay and benefits is through a compensation plan template. With a ready-made template, you'll have all the relevant points laid out in front of you and can simply fill them in for each employee.
So, what should you include in your total compensation plan template? This guide covers the essentials. You can adapt the template below for your business needs, ensuring comprehensive compensation planning wherever you are in the world—and wherever your workers are.
Compensation plan template
Exactly how you structure your compensation plan is up to you. You might create a simple spreadsheet, table, or Word document, depending on your preferences. Your template can be created offline or via an online cloud-based tool, like Google Docs, which makes it easier to share and collaborate.
Whatever tool you decide to use, the essential details of your incentive compensation plan template should be consistent. Make sure to include the elements below in your total compensation plan.
What compensation looks like across geographies
Companies that hire globally need to have geographic-specific compensation planning because every country has its own labor laws. You’ll need to outline exactly what compensation—including pay and benefits—you offer on a country-by-country basis.
For example, some countries require employers to provide workers with health insurance, while others don't. Different places also have different legislation regarding the basics, such as setting standard working hours versus overtime hours. For example, the basic workweek in Mexico is 48 hours, while it's 40 hours in Spain.
Include these points in your total rewards package, making sure to consider them from a country-by-country perspective.
1. Employee pay and equity
Pay should address base salary as well as bonuses and incentive pay. Also, make sure to address overtime pay, if relevant. If your company offers equity incentive plans, such as stock options or restricted stock units, lay out the terms for these perks.
2. Commission compensation
Some fields, like sales, rely heavily on commission-based pay. In this case, you may want to create a separate commission compensation plan template that details exactly how commission is earned (for example, what percentage of a sale goes to the employee).
3. Employee bonuses
If you plan to offer employees bonuses of any kind, whether monetary or otherwise, outline the requirements for receiving bonuses and how they'll be awarded. It may be helpful to create a separate bonus compensation plan template.
4. Time off
Define the amount of paid time off (PTO) employees get, keeping in mind country-specific laws. If you plan to offer unpaid time off, note this as well. You might also offer alternative types of time off, like sabbaticals or educational leaves.
5. Leave
There are many types of leave companies may offer, including parental or family leave, military leave, leave for religious observances, educational leave, leave for jury duty, and more.
6. Volunteer time off
Some companies give their workers a set amount of time off that they can put toward volunteer initiatives. This can be a wonderful way to align employees with your corporate values.
7. Childcare benefits
Parental and family leave is an important consideration for employees who have kids. You may also offer childcare benefits, for example, with an on-site daycare or an individual stipend for childcare.
8. Insurance
This is another instance where requirements vary according to the country. Consider health, dental, vision, disability, and death-in-service insurance (in case of an on-the-job accident).
9. Pension plans
How will you help your workers prepare for retirement? Keep in mind that pension planning is mandatory in many countries. There are also optional extras you can provide. For example, in the U.S., employers may offer 401(k) matching on a vesting schedule.
10. Wellness coverage
As employers become more attuned to the importance of employee well-being, they're increasingly offering wellness perks. Examples range from gym memberships to meditation sessions. Some employers also provide well-being stipends that workers can put toward self-care.
11. Learning and development
Will your company provide incentives for employee career progression, such as coaching, career planning, or education budgets? Detail those points, how employees can access them, and what they'll entail.
12. Work environment accommodations
Are your employees working from home? If so, will you give them a budget for office equipment? Alternatively, you might offer a coworking space membership. Also, consider the details of the work environment in terms of timing—is work flexible and/or asynchronous?
13. Employee discounts
Depending on the services or products your company offers, you may provide discounts to employees. Determine exactly what discounts you'll offer and outline them in the compensation plan.
How compensation will be calculated
When it comes to salary and equity, you can't assign numbers arbitrarily. It's important to detail exactly how compensation will be calculated. For example, you might refer to the standard market rate for a given position in order to determine salary figures.
There are also country-specific norms to consider. Average salaries in Bulgaria may be lower than in France, for example. Whether or not geography impacts pay depends on whether you're offering location-agnostic pay versus location-based pay.
You may also want to differentiate tiers in your compensation plan. For example, some companies only offer equity such as stock options to more senior workers. Clarifying these details helps to ensure transparency and equitable treatment of all employees.
Finally, consider the implications of compensating people all around the world. What currency will workers be paid in? How will exchange rates be factored in? What compensation tools will be used to make sure workers get the money they're due? Be sure to spell out all these details.
How will you communicate the plan to stakeholders?
An incentive compensation plan doesn't do much good if it's just sitting in a drawer in the human resources office. Make sure you share your compensation plan with all relevant stakeholders. This includes all employees as well as management, board members, and investors.
You may want to have employees sign a copy of your compensation philosophy during onboarding to confirm that they've read and understood it. This helps avoid misunderstandings and protects against potential accusations of inequitable treatment.
How often will you review compensation?
A total compensation plan should also detail how frequently employee compensation will be revisited. How often will you review employee performance and the related pay and benefits they may receive as a result? For example, you might institute a quarterly review system. This can help keep workers motivated.
Trust Oyster to help create your global compensation plan
A comprehensive employee compensation plan template is crucial to a standardized and fair global pay and benefits philosophy. Get a handle on your global pay with Oyster Total Rewards and simplify salary, equity, and benefits in more than 180 countries worldwide.
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