communicating compensation: gaining executive support
DESCRIPTION
The best way to gain executive support for your compensation design is to develop a comp strategy that is aligned with the business goals of the organization, and then communicate that clearly with your executives.TRANSCRIPT
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Communicating Compensation: Gaining Executive Support
Jennifer Ferris, CCPCompensation Professional
Mykkah Herner, MA, CCPManager of Professional Services
www.payscale.com
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www.payscale.com
14,000 Positions 3000 Customers 13 Countries
250 Compensable Factors40 Million Salary Profiles
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COMMUNICATING COMPENSATION
Part I: Gaining Executive Support
Part II: Equipping Managers
Part III: Talking with Employees
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www.payscale.com
Agenda• Communication Basics• Compensation Basics
Communicating Compensation to Executives
• Understanding the Executive Audience• Align compensation to business goals• Incorporate leading edge practices• Keep executives up-to-date with quick snapshots
Next in series: Equipping Managers
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Communication Basics
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Communication Basics
KNOW YOUR AUDIENCE!
WATCH THE JARGON
PRESENT A WAY FORWARD
FOCUS ON RESULTS
BE DIRECT AND EMPATHETIC
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Managing Conflict
Prevent
Resolve
ContainPower
Struggle
Overt Conflict
Latent Tensions
Stages of Conflict
The Bridge-Builder
The Teacher
The Provider
10 Roles in Managing Conflict
The Healer
The Equalizer
The Arbiter
The Mediator
The Peacekeeper
The Referee
The Witness
Source: www.thirdside.org
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Levels of Transparency
Employees know…o Only their own salaryo Their range and where it caps outo All grade assignments for jobs up to a
certain levelo All grade assignments for all jobso The ranges associated with grade
assignments to a certain levelo The ranges for all jobso Everyone’s pay
Managers know… Only their own salary The salary of their direct reports The salary of all those on their team The grade assignments & ranges of their direct
reports The grade assignments & ranges of all those
on their team The grade assignments of all positions up to
their level or up to a certain level The ranges of all positions up to their level or a
certain level All grade assignments for all jobs The ranges for all jobs Everyone’s pay
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Communication Roles
• Approve program• Communicate program to org at a high level• Perform manager/supervisor role
Executives’ Role
• Get program ready• Ongoing communication to Execs• Train managers
HR’s Role
• Understand the program• Communicate with employees• Get support from HR
Managers’ & Supervisors’
Role• Agree to the program• Communicate with manager/supervisor
Employees’ Role
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Compensation Basics
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Compensation is a keystone
Good compensation design ensures organizational success
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The Compensation “Mix”
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Start with the right questions
Why do you want to have a good comp plan?To pay people well
Why do you want to pay people well?To attract and retain top talent
Why do you want to have top talent?To accomplish our business objectives
What are your business objectives?
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COMP DESIGN ELEMENTS
PHILOSOPHYSTRATEGY/IES
STRUCTUREPOLICY
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GLOSSARY OF COMP TERMSTALENT MARKET(S) o Industry, Size, LocationoMarket-Ratio
PAY GRADES & PAY RANGES oRange WidthoRange PenetrationoCompa-RatiooRed-Circled | Green-Circled
PAY FOR PERFORMANCE
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Schedules + Differentials
Purpose
Preserve both competitive pay and internal equity.
Support simplicity of structure.
Implementation
Schedule = set of ranges + grades
Markets are grouped in 5% increments; schedules are adjusted to reflect markets.
TAMPASchedule C:
-5%
NEW YORKSchedule G:
+15%
PORTLANDSchedule D:
Main
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Advantages of Pay Structures
Provide alignment to business strategy
Clarify relative worth of the position internally & externally
Ensure fair pay (legally defensible)
Define a pay range for a position
Create clear career paths
Room to reward your employees based on performance, tenure, etc.
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Understanding the Executive Audience
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Executive Audience
o Leaders don’t want to be told what to do
o Leaders can be distrustful of change
o Leaders are decision-makers
o Many leaders have access to
information
o What matters to your leaders?
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Align Compensation to Organizational Objectives
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THE COST OFGETTING
COMPWRONGPayroll is by far your biggest expense; the cost of getting it wrong is tremendous.
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Align comp plan with business goals
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THE REASONSYOU’RE
CREATING A COMP PLAN
1. IT MAKES GOOD BUSINESS SENSE
2. IT HELPS ATTRACT AND RETAIN TALENT
3. IT SUPPORTS THE MISSION, STRATEGY AND CULTURE OF THE ORGANIZATION
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Incorporate Leading Edge Practices
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Return on Comp Investment
Leading edge practice: Pay for Performance
o Exceeds expectationso Meets expectationso Does not meet expectations
Comp trend of yesterday: COLA
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Pay Ranges
Leading edge practice: Pay Grades & Rangeso Ensures competitive pay to market & internallyo More control over costs
Comp trend of yesterday: Broadbands
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Compensation Strategy
Leading edge practice: Targeted Strategyo Target segments of your organization differently based on value to the
organization
Comp trend of yesterday: Singular Strategy
Market Definitions:Location:All positions have been targeted to their local metro area of Dallas, TX.
Organizational size: Key Contributor positions have been targeted to organizations of 10,000 employees
Core positions have been targeted to organizations of 1,000 employees
All other positions have been targeted to organizations of 150 employees
Industry:All positions have been targeted to the IT Services industry.
Competitive Positioning:Key Contributor positions target the 75th percentile.
Core positions target the 65th percentile.
All other positions target the 55th percentile.
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STAY NIMB
LE!
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Keep Executives Up-to-Date
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Report High Level Info
o Get them familiar with a dashboard (Compa Ratio, Market Ratio, etc)o Report these on a regular basis
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Report Relevant Info
Execs are also Managers
Give them tools for success:
o Flight Risk report & the inverse report
o Disparate Pay report
Give them insight into what employees care about
o Am I making enough money to cover my basic needs (entry level)
o Am I being paid fairly (professional level)
o Am I being paid enough to deal with managing people (Mgrs/Dirs)
Give them talking points for comp conversations with employees
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Immediate Actions•Determine Transparency•Understand Business Goals•Know Your Audience•Review Current Pay Practices•Share Key Reports•Stay Nimble!
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EQUIP MANAGERS
Set expectations
Educate them
Give them the big
picture
Give them tools
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PayScale Delivers Where Other Compensation Providers Fall ShortPayScale leads the world in compensation knowledge with the freshest and most detailed data from over 40 million salary profiles. More than 3000 organizations use PayScale’s software and intelligence to get the greatest return on their talent. Smart businesses use PayScale Insight to recruit, retain and motivate their people.
Visit our blog: www.payscale.com/compensation-todayJoin our Group on LinkedIn: Compensation Today: HR Best Practices
Jennifer Ferris, CCPCompensation Professional
Mykkah Herner, MA, CCPManager of Professional Services, PayScale, Inc.
www.payscale.com
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Appendix
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www.payscale.com
Basic Comp Language: Understanding Ranges
o Range Width [=(max-min)/min] o How much flexibility do we give our managers in setting pay?
o Midpoint Differential [=(midpoint grade2-midpoint grade1)/midpoint grade1)] o Do we have a more or less hierarchical org structure? Positions with multiple
levels?
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www.payscale.com
Basic Comp Language: Using Ranges
o Range Penetration [=(EE Pay-min)/(max-min)] o How well are employees moving through their ranges – do the ones at
the top deserve it?
o Green-Circled Employees [Below bottom of range]o We may be untruthful and/or paying un”fair”ly.
o Red-Circled Employees [Above top of range]o These are employees we decide to pay more, even though the data
doesn’t support it.
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www.payscale.com
Basic Comp Language: Measuring Plan Performance
o Compa-Ratio [=EE Pay/Mid]o Are we on track with our pay philosophy?
o Market Ratio [=EE Pay/Market] o How are we doing vs our competitors?
o Midpoint to Market Delta [=(Mid-Market)/Market]o Are our ranges current to market?