There are several ways for employers to do a pay equity audit. 

Platinum – Hire a law firm who has statisticians on staff to do the regression analysis on your job comparator groups. This is a point in time analysis.

Gold – Buy software that is primarily focused on pay equity.  This software will help you ensure that your pay equity audit is not a point in time summary. Instead, demonstrates a commitment to makin sure your day-to-day pay decisions are equitable. On any day, you can run reports to understand your pay equity risk, determine which employees who need a equity based pay change, and make pay decisions that won’t cause additional pay equity problems that need to be fixed later.

To every woman who is feeling unseen and unheard. I see you.

To women who feel misunderstood and not recognized. I see you.

To women who aren't paid equitably or provided the opportunities they deserve. I see you.

My team and I are working with a large global employer right now and we need to market price more than 1,000 jobs very quickly. 

The employer’s compensation team members are smart, good at process documentation, and great at aligning their priorities to the needs of the business. (Can you tell I love working with them?!)

Because many of us will be using several global salary survey sources, a Market Pricing Guidelines document has been written.  The following topics are covered:

I have several employer clients right now who are revising and writing new job descriptions to ensure they accurately reflect the work employees are doing. 

Then, once the job descriptions are finalized my team and I do the market pricing.

I keep having the same conversation with each employer client.

What is your definition of a “manager”? 

When a manager says Employee A is a retention risk, how do you respond? 

I ask a lot of questions to try to determine if it is the employee, the job, or both are causing them to believe the person is a retention risk.

1.        Is this a difficult to fill job? How many days did it take to fill the job the last time it was open?

2.        Is this job critical to the success of the organization?

There are talent management considerations that are used in the decision-making process when you ask for a pay increase. 

Be one or more of the following and you increase the probability of being viewed as difficult to replace or indispensable.  And that in turn increases your chance of getting a pay increase.

·        High Performers – They stand out in any organization. They consistently exceed expectations and are management’s go-to people. Difficult projects are given to these people because they have a track record of getting the job done regardless of the challenges.

When an employer has an open job, the job description describes the work that needs to be performed as well as the skills needed to perform that work successfully.

Employers must decide if they want to buy the talent with the right skills from outside of their organization or build it by training someone who is already an employee. 

Once you have someone performing a job with the right skills and capabilities, you also must ensure they have the motivation or will to perform the job. 

Each morning, I wake up and start my day by washing my face and brushing my teeth. While I’m brushing my teeth, I also think about what I am grateful for.  The internal dialogue goes something like this.

·        “I am grateful for waking up today, for the people I get to interact with, and for the sun shining outside.”

This simple thought process causes me to look for what I have instead of focusing on what is not there or missing.

Job architecture projects typically include a Career Level document that defines what each level requires related to:

·        Scope

·        Complexity

·        Problem Solving

·        Accountability

Job descriptions are the foundation of compensation programs. The document needs to accurately describe the work responsibilities and expected impact of the job.

I’ve read thousands of job descriptions over the 30 plus years I have done compensation work.

And many have the documents have been overwritten. What does it mean to be overwritten?

I worked with a mining company, and they had purchased salary survey data to benchmark their jobs. 

Once the jobs were market priced and pay grades were assigned, the response from the mining company HR team was that’s not market. 

After asking more questions, it turns out that the market for the operations mining jobs was the union rates offered by other mining companies nearby. 

Imagine being the CEO of a company that has provided the same base pay increase (X%) to all U.S. employees each year for the past three years.  What talking points would you use at the All-Employee Meeting to communicate this decision?

********* Example Talking Points *********

I know it is disappointing to hear that we are not providing a base pay increase for all employees this year.  I want to share more about how we arrived at this decision, so you understand what we considered.

Many of you are getting pay raises this time of year. You are hoping it will be high enough to cover what inflation did to your budget last year. Here in the U.S. we are paying higher prices for things like housing and food.

But smart employers do not match merit increase budgets to the inflation rate. They know the difference between the Cost of Living and the Cost of Labor.

Cost of Living and Cost of Labor can often cause confusion when referencing compensation and total rewards.

What do employees want from their employer?

·        Financial stability

·        To be paid competitively and equitably (fairly)

·        To know how to increase their earnings and how pay decisions are made

·        To be recognized for the value and results they create

·        Growth and learning opportunities for career progression

Job evaluation is a systematic process of assessing the value of jobs to determine the compensation to be paid to employees performing those jobs.

The purpose of a job evaluation is to ensure that employees are paid fairly, equitably, and competitively. And a key aspect of any employee pay decision is to also consider the employer’s budget.

The job evaluation is based on the job description and the organization chart that provides details on the reporting relationships as well as the number and type of direct reports and their jobs. 

When I am working with an employer, one of the outcomes in most compensation projects is a communication plan and the supporting presentations, training materials, guidelines, and other resources.

That means we are planning the audience, key messages, owner, delivery method, and delivery date. 

Communication Frequency:

·       The Marketing Rule of 7 states that a prospect needs to “hear” the advertiser’s message at least 7 times before they will take action to buy that product or service. This rule was developed by the movie industry in the 1930s.   

What should be included in a Job Architecture project?

1 – written and approved compensation philosophy

2 - updated job descriptions

3 – career level definitions and assignment of career levels to jobs (internal equity categories)

Pay compression happens when the pay of an employee is very close to the pay of more experienced and higher performing employees in the same job or those in higher-level jobs like manager jobs.

How do you solve it?

1) You look for it. You do a pay compression analysis at least once a year and look for these scenarios. (Do not forget to consider overtime earnings in your analysis of the direct reports to managers.)

2) You budget for it. Recognize this happens when you have a short-term focus on getting candidates to say “yes” to job offers without also looking at current employees and their pay with an internal equity lens.

When I work with employers that have a few unique jobs, I don’t typically recommend a pay grade structure.

Why?

It is easy to market price each job and then calculate a competitive base pay range around the “market” number.  That base pay range is then used in the pay decision making process for new hires and current employees performing the job. 

I’ve been doing compensation work for more than 30 years.  And in that time, I have noticed that some compensation professionals make the shift to business partner/consultant, and some don’t. 

What do I mean?

When you start doing compensation work, you typically learn how to do the technical stuff.