At a time when securing skilled workers, transparency, and strategic alignment are key challenges for small and medium-sized enterprises, the topic of compensation is becoming increasingly important. A fair, comprehensible, and future-oriented compensation structure is no longer a “nice-to-have”—it is a decisive competitive factor that is also accompanied by increasing compensation transparency requirements.
Why it is necessary to modernize compensation models in medium-sized companies
Many medium-sized companies are faced with the task of modernizing established compensation models. Often, there is a lack of clear criteria that make salaries comparable and transparent. Much of this has developed historically within companies. This can lead to dissatisfaction, a lack of transparency and, ultimately, unwanted staff turnover. The aim is therefore to develop a clear and transparent compensation strategy that is linked to job profiles, career levels and competence models in a grading system.
Introduction of a grading system with salary bands
A central element of the compensation principles is the introduction of a grading system linked to salary bands. This system creates comparability across departments and enables fair classification of jobs, roles, and responsibilities. Employees can thus better understand where they stand in the company and what development opportunities exist.
Binding principles for greater orientation
In addition to the technical structure, cultural clarity is also important: Binding principles that define how compensation is handled within the company should be established at the outset. These include criteria such as performance, market comparison, experience, and responsibility. These principles should not only guide the actions of managers, but also provide orientation for employees.
Target and bonus model under review
Another building block is the review of existing target and bonus models. These are analyzed to determine whether they still fit the company’s strategic goals and whether they have the desired motivational and steering effect. Where necessary, adjustments are made – always with the aim of creating a fair and performance-enhancing system.
Structured approach to implementation
In order to successfully implement these ambitious goals, we follow a clear, structured process:
- Analysis of the current situation
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- Survey of existing compensation models and practices
- Benchmarking with comparable companies and industries
- Identification of ambiguities, imbalances, and potential for optimization
- Definition of guiding principles
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- Development of principles for fair and transparent compensation
- Definition of criteria for salary development and differentiation
- Development of the grading system
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- Development or adaptation of job descriptions
- Structuring job descriptions into job families
- Establishing a grading system for evaluating positions within the company
- Assigning salary bands to grades based on market and company data
- If necessary, consultation with the works council (if applicable)
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- Early involvement in concept development
- Joint development and negotiation of new compensation principles
- Revision of the target and bonus model
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- Evaluation of existing target systems
- Adaptation to strategic company goals and new framework conditions
- Communication and training
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- Transparent communication to all employees
- Training for managers on how to use the new systems
- Implementation and evaluation
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- Rollout of the new compensation structure
- Regular review and further development based on feedback and key performance indicators
A modern compensation strategy is more than just a salary model—it is an expression of the company’s culture and its commitment to acting fairly, transparently, and with a view to the future. Getting there requires the courage to change. But it’s worth it—for the company and for everyone who works there.
THE MAK’ED TEAM develops compensation concepts for your company based on existing structures and a defined target structure. In connection with this, job profiles, job families, and a grading system are developed, and employees are integrated into a transparent and fair compensation and development model.
