Interpreting Your Compensation Metrics

Access your KPIs online;
Measure your success;

Navigation: All Balanced Scorecard Articles > General

A lot of people wonder why the new guy gets higher pay. Compensation metrics is a widely debated topic, especially in rank and file levels of a company. Check additional information about Compensation metrics.

One day, a new guy comes into the office. He takes a seat, occupies a table, and starts working. You do not actually mind him, thinking that he is just one of those interns who will not last the week. After all, you have been there for several years already. However, weeks passed; even months, and the guy is still there. You start to get curious. Then suddenly, you get the shock of your life when you discover that he gets paid better than you. You then wonder what your company's compensation metrics mean.

In current company trends in management, the amount of compensation paid to a worker is no longer based on the fact that the worker has been working there for a long period of time. In short, just because someone has been working in a company for far longer than the other, he should always get a higher pay. Although this may be the trend before, this is not true in the present day. This is because managers have started giving more value to the quality of work, and no longer the quantity.

In giving more emphasis to the quality of the work done and not the quantity, the manager makes sure that the company only retains those who give the best quality performance. A company having thousands of average workers cannot outdo a company having a few hundred workers whose performance levels are through the roof.

So, now you ask: "What is on the mind of these managers these days?"

It is all about metrics. Metrics are used in almost every aspect of human existence; from the length of your belt to the amount of money you have been accounting for a large firm. In the same way, metrics are used to calculate the compensation amount of workers in a company.

Metrics that have dealings with compensation matters actually mean only the obvious: metrics are being used in order to determine the compensation level of a worker based on performance, capability, and the overall benefit of the same to the company.

So, how do these metrics work?

These metrics work basically the same way as any other metric system works. The performance of a worker is used as the basis for the computation of the compensation income. In other words, if the performance of the worker is higher, the higher his or her compensation will be. In the same way, if the performance of the worker is good, metrics for compensation would also be good. It does not take a rocket scientist to figure out the general idea here. If compensation is usually low, then there is usually a problem with the performance of the worker.

The usual reaction of workers when they find out that they have been receiving lower pay despite their length of service is that the system is unfair and discriminatory. In reality, this only means that the workers have no idea how basic compensation metrics work. If only they would step up their performance a notch or two, then it will be most likely that their compensation will also improve.

If you are interested in Compensation metrics, check this link to find out more about compensation scorecard. Also, you can check other articles in General category.

Balanced Scorecard Toolkit includes step-by-step manuals, documents, presentations, check lists designed to help business professionals with successful development and implementation of Balanced Scorecard. Learn more about BSC Toolkit.