Communicating Compensation: Gaining Executive Support

Transcription

1 Communicating Compensation: Gaining Executive Support Jennifer Ferris, CCP Compensation Professional Mykkah Herner, MA, CCP Manager of Professional Services

2 14,000 Positions 3000 Customers 13 Countries 40 Million Salary Profiles 250 Compensable Factors

3 COMMUNICATING COMPENSATION Part I: Gaining Executive Support Part II: Equipping Managers Part III: Talking with Employees

4 Agenda Communication Basics Compensation Basics Communicating Compensation to Executives Understanding the Executive Audience Align compensation to business goals Incorporate leading edge practices Keep executives up-to-date with quick snapshots Next in series: Equipping Managers

5 Communication Basics

6 KNOW YOUR AUDIENCE! WATCH THE JARGON PRESENT A WAY FORWARD Communication Basics FOCUS ON RESULTS BE DIRECT AND EMPATHETIC

7 Managing Conflict Stages of Conflict 10 Roles in Managing Conflict Power Struggle Overt Conflict Latent Tensions Source: Contain Resolve Prevent The Peacekeeper The Referee The Witness The Healer The Equalizer The Arbiter The Mediator The Bridge-Builder The Teacher The Provider

8 Levels of Transparency Employees know o Only their own salary o Their range and where it caps out o All grade assignments for jobs up to a certain level o All grade assignments for all jobs o The ranges associated with grade assignments to a certain level o The ranges for all jobs o Everyone s pay Managers know Only their own salary The salary of their direct reports The salary of all those on their team The grade assignments & ranges of their direct reports The grade assignments & ranges of all those on their team The grade assignments of all positions up to their level or up to a certain level The ranges of all positions up to their level or a certain level All grade assignments for all jobs The ranges for all jobs Everyone s pay

9 Communication Roles Executives Role Approve program Communicate program to org at a high level Perform manager/supervisor role HR s Role Managers & Supervisors Role Get program ready Ongoing communication to Execs Train managers Understand the program Communicate with employees Get support from HR Employees Role Agree to the program Communicate with manager/supervisor

10 Compensation Basics

11 Good compensation design ensures organizational success Compensation is a keystone

12 The Compensation Mix

13 Start with the right questions Why do you want to have a good comp plan? To pay people well Why do you want to pay people well? To attract and retain top talent Why do you want to have top talent? To accomplish our business objectives What are your business objectives?

14 COMP DESIGN ELEMENTS PHILOSOPHY STRATEGY/IES STRUCTURE POLICY

15 GLOSSARY OF COMP TERMS TALENT MARKET(S) o Industry, Size, Location o Market-Ratio PAY GRADES & PAY RANGES o Range Width o Range Penetration o Compa-Ratio o Red-Circled Green-Circled PAY FOR PERFORMANCE

16 Schedules + Differentials Purpose Preserve both competitive pay and internal equity. Support simplicity of structure. PORTLAND Schedule D: Main NEW YORK Schedule G: +15% Implementation Schedule = set of ranges + grades Markets are grouped in 5% increments; schedules are adjusted to reflect markets. TAMPA Schedule C: -5%

17 Advantages of Pay Structures Provide alignment to business strategy Clarify relative worth of the position internally & externally Ensure fair pay (legally defensible) Define a pay range for a position Create clear career paths Room to reward your employees based on performance, tenure, etc.

18 Understanding the Executive Audience

19 Executive Audience o Leaders don t want to be told what to do o Leaders can be distrustful of change o Leaders are decision-makers o Many leaders have access to information o What matters to your leaders?

20 Align Compensation to Organizational Objectives

21 THE COST OF GETTING COMP WRONG Payroll is by far your biggest expense; the cost of getting it wrong is tremendous.

22 Align comp plan with business goals

23 THE REASONS YOU RE CREATING A COMP PLAN 1. IT MAKES GOOD BUSINESS SENSE 2. IT HELPS ATTRACT AND RETAIN TALENT 3. IT SUPPORTS THE MISSION, STRATEGY AND CULTURE OF THE ORGANIZATION

24 Incorporate Leading Edge Practices

25 Return on Comp Investment Leading edge practice: Pay for Performance o Exceeds expectations o Meets expectations o Does not meet expectations Comp trend of yesterday: COLA

26 Pay Ranges Leading edge practice: Pay Grades & Ranges o Ensures competitive pay to market & internally o More control over costs Comp trend of yesterday: Broadbands

27 Compensation Strategy Leading edge practice: Targeted Strategy o Target segments of your organization differently based on value to the organization Market Definitions: Location: All positions have been targeted to their local metro area of Dallas, TX. Organizational size: Key Contributor positions have been targeted to organizations of 10,000 employees Core positions have been targeted to organizations of 1,000 employees All other positions have been targeted to organizations of 150 employees Industry: All positions have been targeted to the IT Services industry. Competitive Positioning: Key Contributor positions target the 75th percentile. Core positions target the 65 th percentile. All other positions target the 55 th percentile. Comp trend of yesterday: Singular Strategy

28 S T A Y N I M B L E!

29 Keep Executives Up-to-Date

30 Report High Level Info o Get them familiar with a dashboard (Compa Ratio, Market Ratio, etc) o Report these on a regular basis

31 Report Relevant Info Execs are also Managers Give them tools for success: o Flight Risk report & the inverse report o Disparate Pay report Give them insight into what employees care about o Am I making enough money to cover my basic needs (entry level) o Am I being paid fairly (professional level) o Am I being paid enough to deal with managing people (Mgrs/Dirs) Give them talking points for comp conversations with employees

32 Immediate Actions Determine Transparency Understand Business Goals Know Your Audience Review Current Pay Practices Share Key Reports Stay Nimble!

33 EQUIP MANAGERS Set expectations Educate them Give them the big picture Give them tools

34 PayScale Delivers Where Other Compensation Providers Fall Short PayScale leads the world in compensation knowledge with the freshest and most detailed data from over 40 million salary profiles. More than 3000 organizations use PayScale s software and intelligence to get the greatest return on their talent. Smart businesses use PayScale Insight to recruit, retain and motivate their people. Visit our blog: Join our Group on LinkedIn: Compensation Today: HR Best Practices Jennifer Ferris, CCP Compensation Professional Mykkah Herner, MA, CCP Manager of Professional Services, PayScale, Inc.

35 Appendix

36 Basic Comp Language: Understanding Ranges o Range Width [=(max-min)/min] o How much flexibility do we give our managers in setting pay? o Midpoint Differential [=(midpoint grade2-midpoint grade1)/midpoint grade1)] o Do we have a more or less hierarchical org structure? Positions with multiple levels?

37 Basic Comp Language: Using Ranges o Range Penetration [=(EE Pay-min)/(max-min)] o How well are employees moving through their ranges do the ones at the top deserve it? o Green-Circled Employees [Below bottom of range] o We may be untruthful and/or paying un fair ly. o Red-Circled Employees [Above top of range] o These are employees we decide to pay more, even though the data doesn t support it.

38 Basic Comp Language: Measuring Plan Performance o Compa-Ratio [=EE Pay/Mid] o Are we on track with our pay philosophy? o Market Ratio [=EE Pay/Market] o How are we doing vs our competitors? o Midpoint to Market Delta [=(Mid-Market)/Market] o Are our ranges current to market?