Kenexa top 10 compensation mistakes made by small businesses

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  • 1. TOP 10 COMPENSATION MISTAKES MADE BY SMALL BUSINESSES Lena Bottos CCP, GRP – Kenexa Catherine Dovey CCP, SPHR – Compensation Works To us, business is personal
  • 2. ABOUT US Lena Bottos CCP, GRP Catherine Dovey CCP, SPHR Vice President , Compensation Principal, Compensation Works Kenexa Copyright Kenexa®, 2011 2Copyright Kenexa®, 2012 2
  • 3. WHY THIS IS SO IMPORTANT Other costs Labor CostsCopyright Kenexa®, 2011 2012 3
  • 4. HOW SOME COMP PLANS WORK…Copyright Kenexa®, 2011 2012 4
  • 5. Poll Question:What is your company size?•<50 Employees•50-100•100-200•200-500•500+
  • 6. MISTAKE #10 Shh! Telling managers and employees not to talk about pay. Copyright Kenexa®, 2011 6Copyright Kenexa®, 2012 6
  • 7. TIP #10 Work on what you can control – your communication about how pay decisions are made.Copyright Kenexa®, 2011 2012 7
  • 8. PAY TRANSPARENCY CONTINUUM Complete Transparency Complete Transparency (Public Sector) (Closely held)Copyright Kenexa®, 2011 2012 8
  • 9. What How WhyCopyright Kenexa®, 2011 2012 9
  • 10. MISTAKE #9 Adjusting pay structures without looking at pay levels for each job. Copyright Kenexa®, 2011 10Copyright Kenexa®, 2012 10
  • 11. TIP #9 Pay attention to the market movement of individual jobsCopyright Kenexa®, 2011 2012 11
  • 12. IT’S MORE THAN JUST THE AVERAGES Making assumptions based on 3% averages can cause you to miss the market for specific jobs. Job Change Head of Anesthesiology 24% Banking Operations Manager 22% Materials Control Manager 14% Private Label Manager -9% Health and Safety Manager -10% Program Manager -13%Copyright Kenexa®, 2011 2012 12
  • 13. MISTAKE #8 Living by exception. Creating and enabling internal inequity. Copyright Kenexa®, 2011 13Copyright Kenexa®, 2012 13
  • 14. TIP #8 Fix the problem, don’t just move it around.Copyright Kenexa®, 2011 2012 14
  • 15. MISTAKE #7 Going it alone. Copyright Kenexa®, 2011 15Copyright Kenexa®, 2012 15
  • 16. TIP #7 Learning how to do it right will help you expand your skills.Copyright Kenexa®, 2011 2012 16
  • 17. Poll Question:I am confident I know all thetechnology and softwareavailable to me to help me domy job best.•True•False
  • 18. MISTAKE #6 Not using the proper tools and assuming you are paying at market. Copyright Kenexa®, 2011 18Copyright Kenexa®, 2012 18
  • 19. TIP #6 Ask for a price appropriate for your company size.Copyright Kenexa®, 2011 2012 19
  • 20. MISTAKE #5 Being cheap – saving money on survey data. Copyright Kenexa®, 2011 20Copyright Kenexa®, 2012 20
  • 21. RELATIVE SURVEY COSTS Example: for every $10,000,000 in salary you spent $10,000 survey costs = .1% of salary costsCopyright Kenexa®, 2011 2012 21
  • 22. What companies use free or very inexpensive survey data?Copyright Kenexa®, 2011 2012 22
  • 23. TIP #5 Saving dollars on compensation data or design is an expensive way to save money.Copyright Kenexa®, 2011 2012 23
  • 24. MISTAKE #4 Diva syndrome. Copyright Kenexa®, 2011 24Copyright Kenexa®, 2012 24
  • 25. TIP #4 Focus on what your people do, not what your product or service is.Copyright Kenexa®, 2011 2012 25
  • 26. MISTAKE #3 Thinking small – not understanding the competition. Copyright Kenexa®, 2011 26Copyright Kenexa®, 2012 26
  • 27. TIP #3 Know your relevant recruiting market.Copyright Kenexa®, 2011 2012 27
  • 28. MISTAKE #2 Assuming a 3% merit budget is too small to use for differentiating pay. Copyright Kenexa®, 2011 28Copyright Kenexa®, 2012 28
  • 29. VARIABLE TIMING INCREASESCopyright Kenexa®, 2011 2012 29
  • 30. TIP #2 Focus on the behaviors you want to reward and think outside the box.Copyright Kenexa®, 2011 2012 30
  • 31. Poll Question:We have a training program totrain existing and futuremanagers on the necessaryskills to be good managers.•True•True, but not enough•False
  • 32. MISTAKE #1 Communication. Communication. Communication. Not teaching managers and employees how the system works. Copyright Kenexa®, 2011 32Copyright Kenexa®, 2012 32
  • 33. TIP #1 All your work hinges on managers being able to communicate the message.Copyright Kenexa®, 2011 2012 33
  • 34. DON’T BUILD THIS COMP PLAN!Copyright Kenexa®, 2011 2012 35