Potatoes aren’t pretty. They are weirdly shaped and inconsistent. They are brown and bumpy. They sprout if left unused long enough. They are dirty when you dig them up. BUT they have lots of potential.
Diamonds are pretty. They sparkle and are expensive. They are also one of the hardest gems. The only thing that can scratch a diamond is another diamond. And while they can have inclusions and blemishes you may not be able to see them with the naked eye.
When I look at an employer’s pay structures, I can tell within a few minutes if I am looking at a potato or a diamond.
“Potatoes” are inconsistent when you review the list of job titles and calculations behind the base pay ranges.
· When you ask for the market pricing details, you see that it is ad hoc without alignment between employer career levels and salary survey job levels.
· And the incentives are all over the place. They are assigned to employees individually and not by job. And the rationale behind setting the target short-term incentive isn’t based on something you can repeat year over year.
· There is no formal compensation philosophy and no documented compensation guidelines or processes.
“Diamonds” are beautiful. There are standard job titles and the calculations used for the base salary ranges are aligned to normal midpoint progression and range spread percentages.
· You see that there is consistency in the market pricing and how the salary survey job levels are used in matching.
· The job descriptions are well written, robust, and accurate.
· The compensation philosophy is aligned to the employer’s human capital and strategic business goals.
· The job families are maintained in the HR system and so are pay grades, career levels, and short-term incentive targets.
· There are well written career level definitions (for use with internal equity categorization).
· The job architecture supports the employer’s goals of competitive total compensation opportunity as well as fair and equitable employee pay decisions.
My team and I like taking potatoes and turning them into diamonds.
If you have this type of compensation project on your list of goals for the year, we should talk.
#compensation #rewards #payequity #paytransparency #hr #humanresources #compensationphilosophy #jobdescriptions #jobarchitecture #STI #LTI #bonus #commissions #incentives