Compensation as a Strategic Asset

CHAPTER 8DESIGNING A NEW COMPENSATION SYSTEM: IT’S ABOUT PEOPLE

“Yes, compensation and incentives are important, but for very different reasons in good-to-great companies. The purpose of a compensation system should not be to get the right behaviors from the wrong people, but to get the right people on the bus in the first place, and to keep them there.”

—Jim Collins

If you had the choice between the “right” compensation system and the “right” people, which would you choose? While we cannot answer for you, we can tell you we’d take the right people any day. In this chapter, we explain why a key to getting the right people is having a compensation system that attracts and retains them and to share ideas about how to get both. While the process we propose may not be perfect, it may increase your chances of making smart hiring decisions.

THE WAR FOR TALENT IS NOT OVER

Many would argue the war for talent is more intense than ever. Some would argue we are just now learning how to fight the war. According to the Bi-Annual PCPS MAP Top Five Issues Survey, finding and retaining top-quality staff is the most pressing obstacle for most firms. Ask any managing owner in any size CPA firm about his or her firm’s greatest business challenge. He or she will likely tell you the number one issue facing the firm is a shortage of staff. And it’s not just placing bodies at desks, but getting people who closely match the firm’s culture (or desired culture) at those desks.

In 1998, readers were asked ...