Remunerating for profitability
If you want the wages and salaries you pay to enhance the profitability of your business you must factor in the value of both the work and the individual's contribution.
The first step is to assess the value of a particular job. Here, you must look at the work, not the person doing it, and ask how much value it adds to your business. Based on this assessment, you can set a wage or salary range for the job.
Of course, you will also need to keep an eye on the labour market and be sure to set and maintain remuneration levels that are competitive.
The next step is to decide where on the wage or salary range to position a particular individual, and when it is appropriate to offer additional incentives. Here, you are looking at the individual, not the job, and evaluating what value his or her performance adds to the business.
You need to assess traditional criteria such as attendance, motivation, initiative, reliability, and safety, but the most important thing is to evaluate the individual's contribution to the profitability of the business and reward it accordingly.