A merit matrix is used is a tool that helps managers decide how much of a merit increase to give employees.

It is used by employers to provide guidance to managers about how much of a merit increase to provide to employees. The goal of the employer is to stay within their budget and provide higher performers with a higher increase than lower performers. And in some cases, the position in range or compa-ratio is used as well. 

In the image associated with this post, you will see the first alternative that is only performance based. It doesn’t consider the position in range. And it provides a merit increase range that the manager can choose from. You could also provide a single value for each performance rating instead of a range.

Adam Grant posted the following recently: “2/3 college students say "trying hard" should be a factor in their grades. 1/3 expect at least a B just for showing up.”

I had to read this twice because I was surprised. This isn’t good.  In the real world, you get paid for the results you deliver.  The justification for your role or headcount is primarily based on your results.

Your performance rating in the workplace shouldn’t be based primarily on your effort. Instead, it should be based on you delivering the outcomes your employer needs to be successful now and in the long-term.

When an employer decides to lay off employees, they are often trying to reduce expenses. You are a number on a spreadsheet. It is cold and calculated.

As the leaders decide how to communicate with the employees who are being laid off, they can choose to treat you like a number or a person.

If you are a number, you can’t login to your email. You are left wondering what happened.

In one of my first compensation jobs, I was handed a pager on the first day. I remember looking at it and thinking, “What comp emergencies are going to cause someone to page me?”

The culture at this workplace was to page co-workers if they didn’t pick up the phone when you called. Email wasn’t used heavily. And everything was an emergency.

Thankfully, I had internal clients that learned that I would respond more quickly if they sent me an email with context and their ask. Yes, I would pick up the phone if they called and I was available. If they left me a message, I would call them back within 24 hours.

How many duplicate job titles does your organization have—different titles for the same job? If that question made you cringe, you’re not alone.

Standardizing job titles and updating job descriptions might not sound glamorous, but it’s the backbone of an efficient job architecture. Here's why it matters:

If you aren’t spending the time training managers on how to talk about pay with employees, you aren’t getting the maximum value out of your labor expenses.

Employees have more information than ever before. They see salary ranges within job postings from your competitors. They can look at a variety of websites and find free pay data.  They talk to each other about what they are paid.

And then they ask your managers about their pay. Have you given your managers the tools and resources to talk confidently about how pay decisions are made?

We are quickly moving toward the end of the year. Your work-related performance will be evaluated and discussed by your manager, your manager’s peers, and your manager’s boss. 

While some employers have implemented continuous feedback processes, many others continue to use an annual performance evaluation approach.

Let’s shift to your personal life.

You are probably thinking about upcoming holidays.

WorldatWork announced they updated their CCP and GRP designations this week.  The number of exams went from ten to eight. The price is less. A couple of the courses were consolidated.

I have both designations, but when people ask me if they are necessary to be good at doing compensation work, my response is always, “No.”

What makes you good at compensation is having the experience of doing the work.  That means you need to work with a manager and peers who will teach you not only how to do the analysis work and research, but will also teach you the other essential skills like:

What if you aren’t creating a job architecture from scratch? Instead, you inherited one as a newly hired compensation leader. Now you must figure out if it needs to change and how to go about that. 

1st – Do a job architecture inventory. What is in place today for job families, career levels, pay grade structures, base pay ranges, target incentives, job titles, job descriptions, compensation philosophy, governance processes, comp guidelines, etc.?

2nd – How do each of these elements align to the business goals?

Employers are benchmarking jobs right now and establishing their 2025 base pay ranges and incentive targets for bonuses and sales commissions.

The salary survey data for the bonuses and commissions need to be reviewed carefully. Is the reported number in the salary survey an Actual incentive payout or is it the Target? What is the difference?

·        The Target is the number that the employer will typically pay when the employee achieves the metrics at 100% in the incentive plan.

In the incumbent weighted pay data, each employee is treated with equal weight. All employees and their pay contribute to the calculation of the job’s median, average, and other percentiles.

·        The downside to these calculations is that employers with a large portion of the employees in the data set influence the job’s reported statistics. And this heavy influence of the large employers may inflate the final statistics. Smaller employers are also not going to pay as much as large employers so you can see how incumbent weight data can be “off.”

·        Also, individual employee pay rates are impacted by what each employee brings to the job. Some employees have more skills, experience, or education than others. Employees also have different performance levels and that influences their pay. And constraints like internal pay policies/guidelines and internal equity are factors in individual employee pay decisions.

The French Fry Theory is the idea that you always have room to eat one more fry. It is easy to say yes to one more thing at work or to delegate something more to a team member.

In a world that moves fast and in workplaces that expect a lot from us, we can sometimes forget to slow down and pause. How much is a serving of French fries? How much work is beyond my capacity? What is nice to have vs. absolutely necessary?

As we get closer to the end of the year, pause, and list out the things you and your team are working on. What is reasonable? What can you eliminate?

Geographic differentials are used by employers to recognize that there are differences in the cost of labor in different work locations.

Typically, the employer will establish a pay grade structure based on the national pay data for a country. Or they will use the headquarters location if that is where most employees are working.

Then they will compare the compensation data for all work locations in relation to that baseline (national or headquarters location). The baseline is labeled 100% and the other work locations are above, below, or near that 100%.

For instance, the list may look something like this:

An unfortunate reality of being human is being disappointed. 

·        Disappointed you didn’t get the pay raise you asked for so you could be paid more competitively.

·        Disappointed you didn’t get the promotion. An external candidate was selected to fill the job instead of you.

·        Disappointed you are a Director Analyst (see my previous post) and can’t have the strategic impact you expected to have in your role.

We have high moments and low moments in our days. The dog greets us with love when we wake up and when we come home. Your toddler tells you they love you. You find twenty dollars in your winter coat pocket.

Every time I go to a conference, I wear layers because the rooms are either too cold or too hot. I’m sure I am not the only one mentioning this on the feedback form that the organizer receives after the conference.

It is one of the reasons why I like working from home. I can make my office as warm or cool as I want without impacting anyone else except my dog. And Cody’s good at getting up and leaving the room if he’s not comfortable.

Pay should be “just right.” Not too much and not too little. Just like the temperature in a room.

Everyone makes mistakes.  We’re human and that is part of life. But we can learn from our mistakes and from each other. 

Common Compensation Mistakes:

1.      You choose the match from the salary survey with the compensation number you want instead of using the job description and choosing based on the job’s responsibilities.

2.      You choose the salary surveys to use based on the results (low/high numbers) and not on an assessment of whether the participating employers are your competition for talent.

The process used to market price a job should be written and consistently followed.  Here is an example. 

1.        Read, review, and compare job descriptions.

2.        Choose compensation survey data. Two to three salary survey data sources are typically used.

3.        Match jobs to survey data based on job responsibilities and not job title. Document decisions and determine market reference point for each benchmark job.

If you are thinking about what it takes to get promoted, don’t forget to focus on soft skills along with your technical skills.

Getting noticed and paid what you deserve is the goal. As I coach employees, we often spend time on potential career derailers like:

1 – effective communication: speaking, presenting, writing, and connecting with others

2 – emotional intelligence

3 – the quality of their ideas and thinking

Smaller companies need the compensation basics developed and implemented:

·        A compensation philosophy

·        Written job descriptions

·        Benchmarking jobs with market data

·        Pay grade structures with base pay ranges

·        Offering target incentives (STI and/or LTI) aligned to the external market

·        Written compensation processes and guidelines

When the company grows and is larger, then you need to add things like:

Job architecture projects are challenging and complex for any organization. They have the potential to improve employee attraction, engagement, and retention.

Employees don’t just want to be paid what they are worth. They also want a clear understanding of how they can grow and develop their career.

Pitfall #1 is governance. Without it, the decision-making process around jobs and their standard titling and categorization may be inconsistent. Governance also helps to ensure that what you pay is competitive, equitable, or fair.