Everyone makes mistakes. We’re human and that is part of life. But we can learn from our mistakes and from each other.
Common Compensation Mistakes:
1. You choose the match from the salary survey with the compensation number you want instead of using the job description and choosing based on the job’s responsibilities.
2. You choose the salary surveys to use based on the results (low/high numbers) and not on an assessment of whether the participating employers are your competition for talent.
3. You say “yes” to exceptions readily. Yes, we can pay above/below the base salary range. Yes, we can give that leader a higher bonus than their peers. Yes, that salesperson can have a different commission rate than others doing a substantially similar job. Yes, we can give them a Director title even though their job responsibilities don’t support that title.
4. You find that in a team of five employees one (the only woman) hasn’t had a market adjustment to their base salary and the other four have within the last year. Employees who are overlooked are a problem to solve.
5. You do a pay equity audit and don’t partner with Legal and have it under attorney client privilege. Or you do a pay equity audit, and you don’t ensure you have enough of a budget to fix the problems you may find. Or you don’t have the executive leadership team’s buy in on the need to do the audit.
6. Your CEO says they have a new approach to the bonus calculation (or metrics) while you are in the middle of the annual compensation planning process. You change the calculation for the bonus payout you are planning. You do this instead of waiting until the next performance period to implement the new bonus calculation/metrics the CEO wants to use.
7. You do not comply with the pay transparency and equity laws. Example #1 - You don’t share the pay range and incentive opportunity on your job postings. Example #2 – Per the Colorado law: ”All promotional opportunities must be posted to the entire workforce before a hiring or promotion decision is made.”
8. You are still asking candidates for their salary history.
9. You do not document thoroughly the way you determine the market value for a job. You slot the job and don’t document what factors were considered. You discount or add a premium to market data and don’t document why you did that.
10. You have not yet completed a FLSA overtime review of your jobs and employees given the change that happened in July. And you aren’t ready for the change that is happening on January 1, 2025.
I could go on and on. What would you add to this list?
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