Employees have strong feelings about their pay.

Each of us wants to feel valued and appreciated. We want to be compensated fairly for our time, effort, skills, and results.

We compare ourselves to our peers and that impacts how we feel about our pay.  

If you believe that you are being paid less than your peers for similar work, it can lead to frustration, resentment, and even demotivation.

With more employers publishing their salary ranges on job postings, employees have more information on what competitive pay rates are.

Employees are asking more questions about their pay. They are asking for increases if they feel they are underpaid.

You are spending more time on pay related communications and training. Some of you are being more proactive instead of reactive.

I predict that as more U.S. states and non-U.S. countries have laws requiring pay disclosure there will be a trend toward less complex pay policies and guidelines. With the need for more pay transparency, the overly complicated pay structures and decision-making processes some employers have will be changed.

Is it a realistic goal?

• Achieving full gender equality could take close to 300 years if the current rate of progress continues. (Source: UN Women and the UN Department of Economic and Social Affairs)

• Gallup defines equity as fair treatment, access and advancement for each person in an organization.

• Fair means impartial and just. It is without favoritism or discrimination.

Open communication around pay is one of the most important aspects of employee engagement.

I’m writing a custom salary survey proposal and asked my team members if they had developed this type of survey. I want someone else to review what I’ve written before I send it to the potential client.

A custom or bespoke survey is a questionnaire sent to employers that gathers data on jobs. Data points like base salary, short-term and long-term incentives are provided by employers and then a third party like Prosper Consulting summarizes the results.

Typically, there is a need for this to be done because data does not currently exist for this niche of employers (industry) and/or jobs in other salary survey products.  

A compa-ratio calculation is an employee’s base salary as a percentage of the base salary range midpoint.

·       To calculate compa ratio, you divide the employee’s salary by the salary range midpoint, which will give you a decimal figure. For a percentage figure, you can multiply this number by 100.

·       If the compa-ratio is 100% then the employee is paid the midpoint of the base salary range.

If the average compa-ratio of a group of employees is 90% to 110%, that is good news.

It starts with confidence. Confidence is that feeling of being able to rely on yourself. You’re sure of yourself and your abilities.

Next is commitment. Confidence leads to commitment. Not the up and down commitment but the kind that is unwavering. Commitment means you do what it takes no matter what. It is that dedication to get from Point A to Point B, so you build the necessary habits and never give up.

And finally, there is the competence or skills that you develop because of your commitment. Competence is when you get better at something. It is the ability to do something successfully or efficiently.

Fix the data in the “system of record.” By data I mean job data and employee data.

If you are using an Excel file and fixing the grade, job family, job title, and/or target incentives before you can start an analysis, you have a problem.

Go into your HR system of record (Workday, Paycom, Paycor, ADP, SAP, etc.) and fix it there so the next time you pull a report you have clean data.

And please add grades with their minimum, midpoint and maximum to your HR system.

One of the things we don’t talk about as much as we should is the opportunities gap.  The pay equity gap exists. Part of why it exists has to do with the fact that women don’t have the same access to opportunities as men. 

Women are underrepresented in higher paying leadership roles.  And promotion gaps are also a part of the problem.

So, when I hear that an employer has a plan for how they find, and fix pay equity gaps I am thrilled.  But then I ask about how they are going to find and fix the opportunity gap that exists, I often get asked, “What do you mean?”

One of the fundamental activities of HR is to ensure that competitive base salary ranges and incentives are assigned to jobs.

The range from minimum to maximum provides a boundary within which base pay decisions are made.  They tell the hiring manager, employees, and candidates what the employer is willing to pay.

However, I have had several C-suite leaders lately who what to avoid conflict in relation to pay decisions. They want everyone to feel good. They don’t say no when pushed by their direct reports to pay above the pay range assigned to a job that is based on external market data.

Communication has changed in many ways over the last 100 years, including the speed and methods of communication, and how people perceive things.

1900s: People communicated primarily by talking, writing letters, and reading printed material.

1950s: The telephone became a common way to talk with friends and family. Four in ten households owned a radio.

1970s: Americans spent their time watching TV and listening to the radio.

Effective job titling is essential for maintaining organizational clarity, facilitating employee development, and ensuring market competitiveness. Properly constructed job titles help in attracting the right talent, aligning jobs with company objectives, and promoting internal equity. These principles are designed to help you create, evaluate, and manage job titles.

Key Principles

1. Clarity and Precision: Job titles should clearly reflect the primary responsibilities and scope of the job. Avoid ambiguous or overly broad titles.

2. Consistency: Maintain uniformity in job titles across similar jobs and career levels within the organization to ensure fairness and equity.

Trust is the cornerstone of any successful organization. When employees feel confident in the fairness of their compensation, trust in the organization strengthens, leading to higher engagement, improved morale, and increased productivity.

Pay transparency means openly sharing information about how compensation decisions are made. Pay equity ensures fair compensation without discrimination. Together, they create an environment where employees feel valued and respected, fostering trust and motivating employees to contribute to the organization’s success.

Here are four essential steps to implementing pay transparency and equity:

A fundamental human need is learning and growth. If your employer can't show you what jobs would be a natural next step in your career, it means they haven't invested in developing career paths.

Career paths are not difficult to define.

Step 1 - Group jobs by their functional focus. Example: Accounting, Finance, Legal, Sales, Operations, HR, IT, Marketing, Communications, Government Relations, etc.

Step 2 - Define career levels. Many employers have an individual contributor career path and a management or supervisory career path.

Employers typically benchmark their jobs to determine if they are competitively paying their employees every year or every other year.

Most of the time my team and I find that 70% or more of the employees are paid within the market-based salary range. 

But I really get to understand the leadership capabilities of HR and the executive team when it comes to their reaction to seeing the employees who are under or over paid.

Sometimes, there is an immediate agreement to provide increases for those who are underpaid.  There is often concern expressed about how this happened and how they can prevent it from happening in the future.

In a recent meeting with a client’s executive leadership team, I facilitated a discussion about Compensation Guiding Principles. A principle is a kind of rule, belief, or idea that guides you. They are basic truths that help you with your life and decisions.

And in the case of compensation decisions, there is often tension and a balancing of priorities that needs to happen to arrive at an outcome you can communicate with transparency and that builds trust.

It’s a good idea as an employer to write your own guiding principles so you have a compass to reference if you find yourself debating what action to take and how best to communicate the decision and why behind it.

Compensation Guiding Principles:

Shifting your HR/Compensation team from rules-based policing to a business partner (internal consulting) is a daunting task. 

Here is my advice to CHROs and CEOs who need to make this happen to better align their people impacting decisions to business realities.

Become a Business Partner: The 5 Guiding Principles:

1.        Business Acumen and Context – Know how your business drives revenue and manages expenses. It’s all about money and profitability. How do employees and financial capital get deployed to achieve these goals?

I was talking with an employer client recently about the pay grades and base salary ranges my team developed for their organization.

There were a few employees paid above the maximum of the salary range. We were discussing what to do about that and here is a list of my recommendations:

1)        Don’t continue to give them base pay increases until the ranges allow for base pay growth in the future. This assumes you will update the pay grades and ranges annually.

2)        Consider providing a lump sum payment in lieu of a base pay increase during your merit planning process.

Most people who do compensation work end up there by accident. I don’t know any 5-year-old that says they want to be a Compensation Analyst when they grow up.

Compensation is a profession that requires many skills and competencies. Things like data analysis, Excel skills, storytelling, effective communication, influence (sales) skills, critical thinking, problem solving, business acumen, and empathy are on the list of competencies I look for when adding people to my team.

Most people start off doing broad-based compensation work. Then there are the specialties within the profession that they sometimes go toward as their career progresses.

It usually starts when you are under resourced.  

You don’t have enough time to do all the work that is expected of you, so you do something quick to answer a question. And then you never go back and do the full analysis and implement final decisions made with intention and integrity.

·        Instead of assigning the grade to the job, you market price it and then calculate a base pay range around the 50th percentile. Then you share that specific range with the hiring manager or on the job posting.

·        Instead of updating the pay grade structure for the next year by doing the external market analysis, you just age it by 3%.

In the last 24 hours, I’ve listened to two podcasts on this topic:

a)        The Modern People Leader, hosted by Stephen Huerta, Episode 186 with Hebba Youssef

b)       Josh Bersin, The Ever-Expanding Role of the CHRO

To summarize, they point out that the CHRO role has grown in responsibilities and impact over the last few years. Not only do these leaders need to understand the multiple disciplines within HR but they also must know about: