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The Compensation Scorecard: What Gets Measured Gets Done
Abstract
Employee compensation, one of the largest expenses in any organization, is also one of the least managed. While transparent data and scorecards have greatly improved the management of other aspects of performance, compensation often goes unevaluated beyond the fundamental measure of incremental costs. The invisible nature of compensation leads to problems. These include failing to differentiate pay for performance, over- and/or underpaying jobs relative to the market, having compensation spending grow faster than revenue and allowing employees to suspect they are not being paid fairly.
Using a "compensation scorecard" can greatly increase an organization's compensation effectiveness. Since it is true that "what gets measured gets done," it is critically important to measure and manage compensation. With the right measures in place, organizations can more effectively use what they spend on compensation to help execute their strategy.