I’ve been writing a lot of Compensation Guidelines documents for clients recently.  The document’s audience varies but includes candidates, employees, and managers of employees. And sometimes there are sections that are reserved for HR only or managers of employees only.

It includes the following sections:

·        Compensation Philosophy Statement

·        Guiding Principles

·        Your Total Rewards Consists Of

ONE – Pay PROCESS Transparency

Giving employees more information about how decision makers determine levels of base pay, benefits, pay raises, and incentive pay.

TWO – Pay COMMUNICATION Transparency

The extent to which employers refrain from imposing restrictions on employees’ freedom to discuss pay-related matters.

Many of you in HR or Compensation roles are preparing for the annual compensation planning cycle. This is the time of year when the annual merit budgets are decided and the progress on goals in your bonus plans are reviewed.

The communications you used last year are found in your files and you start your project planning. You touch base with Payroll and the HR Systems group, so they know what to expect when.

And you think about how much involvement managers have in the decision-making process. Do they have discretion on how to spend the merit budget or is it a formula?

When someone asks me what the steps are in the market pricing process, I share the following:

1. Review job descriptions.

2. Research, choose, and purchase compensation survey data.

3. Match employer jobs to survey data based on job responsibilities and not job title. Document decisions and determine job value.

And then typically, if the employer is big enough, the following is done.

Most of us have two places. The first is our home and includes the people we live with. The second is our workplace.  And this is typically where we spend most of our time connecting with others and delivering something our employers value.

The third place is separate from the first two. It is where we socialize and is an anchor of community life. It is a place that facilitates more creative interactions and where you relax in public.  It is where you find familiar faces and connect. You often make new friends or acquaintances here.

What is an example of a third place?

This is what I hear from most employers right now.  “We can’t find good people to fill our jobs and when we do, they aren’t staying.”

And everyone is looking for the secret to fixing this problem.

·        The good people are out there. But maybe your attraction strategy isn’t aligned to where they are.  Where are their eyeballs? Go there.

·        Maybe there aren’t qualified candidates, and you need to redesign the job to attract entry level people and then train them.

I often have recruiters reach out to me asking if I know of someone who would be a good candidate for an open compensation job. I usually share the job opening with my network and wish the recruiter luck.

It is difficult to get great compensation professionals to move from their current job to a new company.

Why? Because once you have created a systemic and successful job architecture, built your personal brand that includes trust and competence, and can influence key stakeholders to positively impact big goals, you just don’t want to move on from that.

My father died last week. He was 90 years old and farmed his entire life.

I have been reflecting on what it means to be a farmer and their impact on all of us. And the memories were bright and fresh as I wrote the following.

Using published salary survey data from sources like ERI, WTW, Mercer, AON Radford, Culpepper, Payfactors, CompAnalyst, Western Management Group, Croner, Pearl Meyer, Empsight, etc. is the norm. 

And because of pay transparency and pay equity laws we also have job posting pay range data from sources like Squirrel and WageScape. Or you can manually track what your competitors for talent are sharing in their job postings.

Some employers have their talent acquisition team keep track of what candidate pay expectations are by open job title and then use that as a reference.

I have been using ChatGPT for a variety of compensation related deliverables.  For example, it has helped me write job descriptions, career level definitions, as well as competency definitions and proficiency levels. 

I have found it is awful for blog and social media posts.  It also didn’t work well when I was trying to write unique communications for a variety of stakeholders.

Most of us will say "good" and then move on in the conversation to another topic.

But I'm willing to bet, you aren't "good" or even "okay."

Many years ago, I had a co-worker ask me in the hallway at work, "How are you?" When I answered honestly with, "Well, my daughter was up all night because she is teething, and my husband is back in the hospital..." the co-worker interrupted me and said, "Just say okay. I don't really care to know the truth. No one does." I was shocked. I was embarassed. And I swallowed the truth and said "okay."

You’re an HR leader talking to the executive team about pay transparency and the need to comply with the laws in the U.S.

There are BIG feelings about the need to post the base pay range on job postings now.

1.      “Our competitors will find out what we are paying.”

2.      “Employees will know if they are paid low in the range. Managers will have to answer a lot of questions.”

3.      “Do we have employees paid below the range minimum?”

Do you remember the last time you felt like you mattered?

Was it personal interaction or one in the workplace?

You felt like someone noticed you. They noticed what you did or said and pointed it out.

They said something about how your unique strengths made a difference.

Don’t call a Manager a Director if the job responsibilities aren’t those of a Director.  Inflating titles is not doing your employee any favors.

Yes,  it may be easier to give the job title than a pay raise, but it will only cause confusion when the employee looks for their next job opportunity.  Their new employer will have the expectation that they can successfully perform a Director job and they may not be able to.

1.      Pay transparency happens when employers post the wage range that they reasonably expect to pay for a position.

2.      Pay transparency happens when employers make reasonable efforts to announce, post or otherwise make known all opportunities for promotion to all current employees on the same calendar day and prior to making a promotion decision.

3.      Pay transparency happens when one employee shares with another employee what they are earning in base pay, bonus, sales commission, and/or equity.

My son is 15 years old, and he is learning how to drive.  Yes, I bought those car magnets that say, “Student Driver Please Be Patient.”

He was driving in a parking lot and said that what he learned in his driver’s education class was a good start but didn’t fully prepare him to be behind the wheel and driving. 

I agree that learning in a classroom or from a book is very different from doing something in real life.

There is an increased need to explain the following: 

$ Competitive pay (external market focus)

$ Equitable pay (internal equity focus)

$ Fair pay (based on an individual employee’s perception)

There are two components that employers decide: 

1 – What percentile of the external market do you want to target?  

Example: “We target our total compensation opportunity at the 50th percentile.” This means that the employer is ensuring that their pay ranges are aligned to what their competition for talent is paying at the middle of the market.

I’ve been thinking a lot recently about whether employees are receiving a living wage these days.

AND from an employer’s perspective, can you provide a living wage to all your employees and make a reasonable profit?

A living wage is enough to provide for all an employee’s basic needs, and some discretionary income for emergencies.  A living wage is often higher than the minimum wage that a government mandates.

I reviewed HR.com's State of Pay Equity Report today and found the findings interesting.  For instance, what factors are considered for pay decisions when making hiring offers?

1 – the compensation of others holding the same job in the organization

2 – years of relevant experience