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Compensation

Rewarding participants for improving processes, performance, productivity and profits is as much a science as smart companies commit to make it.

Starting a new enterprise, bringing up a new product or expanding capacity can be optimized by making the right decisions in the beginning and throughout the processes.

Paying people for their hard work and rewarding them for exceptional performance is as much a business process as the three examples just given.

So too, making smart decisions about how to pay people optimizes performance, productivity and profits.

Compensation planning involves three major sectors:
  • Base compensation - a "draw" as expenses of the company for applying core sets of competencies.
    • It is important that base compensation is competitive with the market - e.g., for similar positions in similar organizations in local, regional or national markets.
  • Annual incentive compensation - a "reward" for meeting and exceeding targeted business goals and objectives and improving mastery in core competencies.
    • It is critical that annual incentive compensation motivates rewards and retains exceptional talent and that it recognizes exceptional improvement in average talent.
  • Long-term incentive compensation - a "reward" for meeting long-term objectives (normally over a three year period) that clearly add tangible and intangible value to the market value of the company.
    • It is essential that long-term incentive payments are for demonstrated and validated additions to the book or market value of the company.

Since compensation is a significant expense for all companies, it is critical that all compensation paid have minimal accounting and tax implications.

  • Not classifying compensation correctly, not paying payroll taxes correctly and on time, and not adhering to federal and state unemployment and payroll tax laws is inordinately penalized under current laws and guidelines.
  • So too, paying incentive compensation inefficiently for tax and accounting purposes inordinately affects cash management.

Smart organizations engage experts early on in executing business processes in order to optimize their decisions.

The HARLON GROUP uses expertise gained over time in several successful engagements to help you optimize your decisions.


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Harlon Group PO Box 1929 Broomfield, Colorado 80038 303.910.3704