Finance and HR should be collaborating on a regular basis on employee compensation programs and budget. 

The largest expense in most organizations is for their employees’ cash compensation, benefits, and other rewards.

HR/Compensation regularly benchmark jobs to salary survey data and update the pay grade structures and incentive targets. Then they analyze employee total compensation to determine what budget may be needed for the next fiscal year.

What’s the difference between a workload increase and significantly changed job responsibilities?

 Answer: The changes to the current job description are critical to HR’s analysis of this difference and so is the conversation they will have with the manager overseeing the work being performed and the employees doing the work. 

 ·        When a job’s responsibilities change, if the change is additional work that is substantially similar in complexity, knowledge, problem solving, accountability, and impact as the current work, then this is a workload increase.  A higher pay grade is not assigned, and a higher base salary range is not warranted.

Too often I see employers try to use compensation to manage employees when they have managers who aren’t good at providing feedback.

An employee is paid low in the base salary range. When the employee asks why they are paid low in the range, the manager doesn’t say it is because you have these two behaviors that need to improve.

·        Examples: “You need to assume less and ask more questions. You need to delegate more to your team members and follow up to ensure that the work is done in a way that meets your expectations.”

·        Instead, the manager says, “Let me talk to HR about that.”

Compensation project success depends on many factors.  But the top three that I think about are quality, time, and money. 

My team is working with an employer to market price about 1,200 jobs within 6 weeks. Crazy, right?!  This is the last week, and everyone is tired of doing this tedious work.

The timeline is tight, and the resources (people and processes) have been deployed. But the quality is going to be mid (aka average or mediocre).

We’ve warned the key stakeholders and those using the market pricing data to develop salary ranges. We couldn’t get more time. We couldn’t get more money/resources.

I talked with someone working in the pest control industry for the last 25 years. He said that the Technicians used to get a low base with commissions that were much higher than they are today.

This led to Technicians thinking of themselves as running a business of their own. The faster the service was delivered and with high quality, the better their commissions. Quality led to repeat customers.

The commission percentage was often around 20% of revenue for a service. But today, that is not the case. They get a much lower commission and a low hourly base rate.  

This has led to less pay for Technicians, and it is not as easy to find qualified candidates today. Once they start the job and realize the true total compensation level, they don’t stay long.

I just finished writing a proposal for a potential new employer client. I like the process of learning about what an employer is trying to accomplish.

Usually, a compensation project is related to attracting and retaining the talent needed to meet the organization’s goals.

It may also include the need to comply with pay transparency and equity related laws .So, a roadmap that takes them from where they are today to where they want to be in 1 – 3 years is a deliverable.

When an employer is preparing for a pay equity analysis, one of the steps is to group comparable jobs.

Pay equity isn’t paying the employees doing the same job the same pay. It is about analyzing the pay of employees doing comparable jobs.

So, “comparable jobs” refer to the positions where the skills and work are similar. You need to identify jobs that have similar responsibilities and value to the employer.

This means that accurate job descriptions are the foundation. The content of jobs within an organization includes:

When an HR leader is considering hiring a compensation consultant to help with their project, they may be asked why they need external help to get this work done.

Here is my answer.

Planning and creating the deliverables for a compensation project like one global job architecture is a big ask. And the implementation of the job/career framework and resources is critical to get right for this to have the expected impact.

There are certain things that internal HR/Compensation employees can focus on like:

Geographical discrimination is the unfair treatment of employees or job candidates based on their geographic location.

This can show up in hiring practices, compensation, promotion opportunities, and access to training or benefits.

You have employees that are dispersed across the U.S. and other countries.  Employers don’t always review their practices to understand if they are discriminating based on geographic location.

Geographical discrimination can occur intentionally or unintentionally when policies/practices disadvantage individuals in certain locations.

I’ve watched company after company announce layoffs. I have read the posts from the employees impacted.

It can be devastating news if you liked your job, manager, coworkers, or employer. It can be happy news if you were ready to leave anyway.

And to those who don’t get laid off, it can be terrible news because you now must do the work of those who are leaving. Unless, of course, you have a manager and company leaders who understand you can’t do the same amount of work with less people.

In today's competitive job market, attracting and retaining top talent has become a key challenge for every organization.

Step 1: Offer competitive salaries and incentives. Offer benefits that meet or exceed the standard provided by other firms.

Step 2: Focus on relationships. Foster a culture of appreciation. Do your employees feel seen and heard? Are they valued and appreciated?

·       Listen in one on one and group settings. 
·       Don’t make assumptions or judge harshly. Ask questions.
·       Demonstrate empathy (it is a skill) and compassion.

Data is the backbone that keeps pay decisions competitive, equitable, and fair.

By data I mean:

1)        The employee, pay, and job data in your HR system is up to date and accurate. I shouldn’t have to say this, but you would be surprised how many employers do not have data they can trust.

2)        The compensation data (think salary surveys) you use to benchmark your jobs is statistically reliable and valid.

Have you ever been asked to do higher-level work to “prove you can do it” before you get the promotion?

Often employers will ask employees to perform a higher-level job as an “acting manager” or as an “interim executive” before they get the official promotion.

It feels like they are just getting more work out of you without paying for it. Yes, that is what they are doing. Of course, you are doing your regular job in addition to this acting role.

So, ask for an acting allowance. That is a reasonable request.

A manager told her team of HR data analysts to stop sending out the weekly and month reports they created.
 
The analysts were worried that their internal customers would be upset because the reports were needed. The manager reassured them that the reports that were critical to decision making would be requested. Someone would say, "Hey, I didn't receive ABC report. What's up?" Then the analyst could send the report.
 
Less than 10% of the reports the analysts created regularly were missed and requested. This freed up the team to refocus their energy and time on making those essential reports better.

Here is what I am seeing in recently published compensation planning (salary budget) surveys.

·        WorldatWork – U.S. Total Salary Budget Increases, Projected 2025: Average = 3.8%; Median = 4.0% 

·        Payscale – U.S. Total Increase Planned for 2025: Average = 3.5%

·        Culpepper – U.S. Projected Base Salary Increases in 2025: Median = 3.5%; Average = 3.65%; Mode = 4.0%

Yes, these reports have data for other countries in addition to the U.S. They also have data by industry, employee category, and other factors.

Nearly 50% of employees in the U.S. will be covered under pay transparency laws by 2026. Where do pay transparency laws exist today in the U.S?

1.        California

2.        Colorado

3.        Connecticut

4.        Hawaii

5.        Illinois

Success means different things to different people.

·        Success should be related to a person's own personal belief system and values.

·        Success can be measured in specific outcomes, as a process, or as a state of mind.

·        Standards for success can be related to personal, social, spiritual, academic, or employment goals.

And when I work with employer clients, I ask them how they will know if the compensation project that we help them with is successful.

Often, they haven’t yet thought about their success metrics or outcomes.  Sometimes that becomes part of the deliverables we help them define upfront as we also develop the project plan together.

Employers: Do you have training materials for your managers, so they know how to talk about pay with their employees?

• 57.8% of organizations do not train managers on pay communications.

• Manager training becomes more likely the larger the organization grows.

• Just over 50% of large organizations (5,000+ employees) train their managers.

• Only 25% of small organizations (< 100 employees) train their managers.

Have you seen an increase in questions from employees about their pay?

Have they shared job posting pay ranges with you for jobs they view as comparable to their own?

Sometimes forget that we need to maintain our people. That means checking in consistently and asking questions.

Ask Jerry what is keeping him up at night? Why? Because he yawned a lot during the staff meeting today and hasn’t interacted like he normally does. He isn’t as energetic or alert. And you know that he is leading a project team that has some major deliverables and deadlines in the next month.

Ask Mia how her baby is doing and how she is doing? Why? Because she came back to work from parental leave last week, and you know that the transition after a leave can be a challenge.

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.