webinar-exploring variable pay
TRANSCRIPT
Exploring Variable PayFair isn’t equal
Mykkah Herner, MA, CCPModern Compensation Evangelist
Paige Hanley, CCPManager, Customer Operations
A copy of the presentation and recertification credit will be sent out within a couple of business days
15,000 Positions 3,500 Customers 11 Countries
250 Compensable Factors54 Million Salary Profiles
www.payscale.com
Paige Hanley, CCPManager, Customer Operations
https://www.linkedin.com/in/paige-hanley-ccp-26599716
Mykkah Herner, MA, CCPModern Comp Evangelist
https://www.linkedin.com/in/mykkahherner
www.payscale.com
Protections for equal pay
Fair pay isn’t equal
Linking Fair Pay and Variable Pay• Variable pay basics• Creative variable pay
Where to start
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Less than 100 Employees100 - 1,000 EmployeesMore than 1,000 Employees
Nearly 7600 Respondents
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73% of employers consider employees fairly paid
36% of employees feel they are paid fairly
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Protections for Equal Pay
Legal Disclaimer: this is intended to be informational, not to serve as legal advice. If you think you have a potential pay discrimination issue, seek out a lawyer.
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Definition what counts
as a job?
Secrecynon-retaliation
for talking about pay
Burden of Proof 100% of difference demonstrated from
1 of 4 reasons
California Fair Pay ActWHAT’S THE BIG DEAL?
As California Goes…
…so goes the nation.
48/50 States have some version of a pay equity law on the books
x x
9/10 Provinces* have some version of a pay equity law on the books
x
xxx
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Other legal protections
Federal, State, and Local laws
Minimum WageFair Labor Standards Act
Other laws
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Fair isn’t equal
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Fair doesn’t
necessarily mean
equalEqualFair
https://hbr.org/2016/03/when-unequal-pay-is-actually-fair
There are some
really good reasons
to differentiate pay
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Appropriate differentiation byPerformance
ResultsExperience
SkillsEducation
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Linking Fair and Variable Pay
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Prevalence of bonuses has steadily increased over the past 4 years
2013 2014 2015 Current50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
68.5% 69.3%73.4% 74.3%
Do You Give Bonuses?
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Is your bonus budget bigger in 2016 than 2015?
41% of all companies, 50% of top performing companies
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Variable Pay Basics
Linking Pay to Performance
Culture and perks that reward high performers
Higher increases for top performers
Results-based variable pay
Performance-based rewards & recognition
The variable pay umbrella
Incentive Project Bonus Retention Bonus Signing Bonus Perks
So you need to put together a variable pay plan
Hint: keep it simple
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Mix of pay
What ratio of base to variable?
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Aligned goals
Company goalsTeam goals
Individual goals
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Incentive Plan Incentive Level Mix of Base to Variable
Mix of Company to Individual
Overall, it may look like this…
Bonus Level Possible Org Level(s) Bonus Payout as % of Base
Bonus Percentage(Individual)
Bonus Percentage
(Organization)
Level 1 Individual Contributor 5% 75% 25%
Level 2 Lead, Supervisor 10% 60% 40%
Level 3 Manager 15% 40% 60%
Level 4 Director 20% 25% 75%
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Consider budget
org culturejob level
job functioncompany life cycle
…
Overall pay structure may differ based on pay goals
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Mix of pay by life cycle
High Rewards & Recognition
High Rewards & Recognition
Moderate Rewards &
Recognition
Moderate Rewards &
Recognition
Moderate Variable High Variable Moderate
Variable Low Variable
Low Base Low Base High Base Moderate Base
High Equity Moderate Equity
Moderate Equity Low Equity
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What other kinds of variable pay should we consider?
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What type of bonus?
15.8% 18.1%
61.8%
25.7%40.0%
14.4%
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Who gets bonuses?69.0% 75.2% 69.3%
47.0%
12.6%
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How frequently?
Monthly Quarterly Biannual Annual Ad-hoc4.9%
12.6%6.4%
66.6%
9.4%
Get CreativePasses to sporting eventsCatered lunches for winning teamsDays off after big deadlinesChoice of work assignmentDevelopment opportunities Lunch with the CEORemote work
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Need help getting started?
• If you don’t already have one, find an affordable legal resource in your state
• Get to know the makeup of your workforce
• Survey employees, formally or informally, to identify what motivates them
• What is your current mix of pay? Do you offer something in all four tiers?
• Evaluate your readiness for variable pay – what training is necessary?
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Visit our blog: www.payscale.com/compensation-todayJoin our Group on LinkedIn: Compensation Today: HR Best Practices
Paige Hanley, CCPManager, Customer Operations
Mykkah Herner, MA, CCPModern Compensation Evangelist
www.payscale.com