Companies like Starbucks, Walmart and McDonalds have come under heavy scrutiny for high profits and executive compensation at the expense of livable wages for their workers. The attempted strike against Yum foods was press worthy but unsuccessful at getting management to change its policies. We are at a time when the rich are getting richer. Once again, billionaires increased their wealth disproportionately to nearly everyone else this year. And yet somehow wages at the bottom are nearly stagnant and hardly livable. According to the U.S. Census, 1 out of 14 working Americans lives below the poverty line.

Small businesses, start-ups and large corporations struggle philosophically and morally to determine proper pay that will stimulate performance, protect reputations and encourage longevity. It's not easy to establish reasonable compensation while trying to build a competitive, sustainable business model. Companies need to manage cash and fairly reward the risk of the entrepreneur and shareholders.

As Jack Stack has taught with SRC, ultimately the winners will be companies that generate long-term stability, wealth and opportunity for their workers and executives alike. Others will be shortsighted and doomed to volatility like Sears. When the people at the top strategically share the spoils of success, everyone wins.  It's heartening to see those companies do well by doing good.

Here are additional insights on compensation from my Inc. colleagues.

1. It's Not Always the Money

Determining compensation can be a tricky aspect of structuring your business. You walk the line between creating an environment of entitlement where employees expect raises and bonuses based on tenure only, and a plan that could impact your ability to attract and retain top-notch talent. The best compensation structures tie a meaningful portion of the employee's pay to the overall success of the company.  As the company does well, so do the employees.  When the company suffers through a slow period, employees also feel the pain.  Be sure to take into account that money is not the primary driver for all employees--some may be better motivated by time off, exclusive benefits or other perks. Eric Holtzclaw--Lean Forward

Want to read more from Eric? Click here.

Compensate with Culture

Growth-stage businesses dig a hole in the budget when they attempt to compete with corporate wages. Luckily, most applicants who want to work for a small company look beyond the salary if they recognize other benefits that are important to them.  For instance, employees of a small business can be involved on more levels than a corporate employee who is confined to a rigid job description. They may also appreciate a more intimate and flexible culture. If you overlook benefits like these you'll short-change your recruiting efforts. Instead enrich your compensation offer with culture-based perks and opportunities.  Remember, good jobs with great companies are rarely only about the money. Marla Tabaka--The Successful Soloist

Want to read more from Marla? Click here.

3. Let the Market Dictate

The U.S. Department of Labor determines the compensation floor with minimum wage. After that, worker compensation is directly correlated with perceived market value for that job.  That's why nearly every company pegs compensation to the market average (plus or minus depending on their philosophy). The labor market tends to respond fairly quickly to changes in job or skill supply and demand, and compensation rates flex accordingly.  So, regardless of your company philosophy, keep your finger on the pulse of your local labor market to gauge of competitive compensation. That said, remember that compensation is only one reason people choose to come to and stay with your company. Lee Colan--Leadership Matters

Want to read more from Lee? Click here.

4. Use Creative Compensation

The perfect compensation structure will 1) Pay employees enough so they aren't easily lured away; 2) Be affordable enough that your company can stay afloat; and 3) Keep people engaged and motivated. Finding the balance between 1) and 2) can be difficult and probably doesn't leave you much wiggle room. But 3) is your chance to be creative. Find ways to share so that when the company does well everyone benefits. One entrepreneur I knew promised to take his whole company on a cruise if it reached $38 million in sales by his 38th birthday. It did, and they went. Minda Zetlin--Start Me Up

Want to read more from Minda? Click here.

5. Invest for the Best

There's an old saying--you get what you pay for. If your business model allows you to pay only the barest minimum wage, then you'll get employees who have the barest minimum qualifications--or worse. If your business model allows you to pay more, then you can expect to get better-quality employees. Does it make a difference? Of course it does! Better quality, happier employees provide your customers with better service, and they are more efficient, effective and loyal in their jobs. This all adds up to a better bottom line, which is an investment worth making for the future of your company--and you. Peter Economy--The Management Guy

Want to read more from Peter? Click here.

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