Compensation Budgeting Part 3: Putting it All Together


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In the first two parts of this three-part webinar series, we learned the ins and outs of budgeting around compensation.

In this webinar, Mykkah Herner, M.A., CCP will dive into the PayScale Insight tool to show you how to leverage some of the built-in reports and analytic overviews to help with your budget calculations.

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  • Creator of the largest database of individual compensation profiles in the world, PayScale, Inc. provides an immediate and precise snapshot of current market salaries to employees and employers through its online tools and software. PayScale’s products are powered by innovative search and query algorithms that dynamically acquire, analyze and aggregate compensation information for millions of individuals in real time. Publisher of the quarterly PayScale IndexTM, PayScale's subscription software products for employers include PayScale MarketRateTMand PayScale InsightTM. Among PayScale's 2,500 corporate customers are organizations small and large across industries including Mozilla, Tully’s Coffee, Clemson University and the United States Postal Service.  Kick to Karaka for orientation to Insight.
  • Org/Plan level: fair pay to marketExamine ranges relative to market dataSolution move ranges or notDept level: fair pay across departmentsDecide how you want to target various depts (percentile of mkt) and use market ratio to checkSolution – move pay in alignment with strategyPosition level: have some positions move faster than others?Examinemkt to range mid for each position, examine EE paySolution – potentially move some positions up or down a grade based on market & EE pay practicesEmployee level: are you paying according to your policy? Fairly based on EEO status?PART I:Examinecompa-ratios and range outliersSolution – course correct with increase %PART II/discrimination:Examine disparate pay reportSolution – course correct with increase %
  • What to reward: performance, skillset, tenure, certification, etcIncrease process: how inclusive? What are increases based on – and time it right.How to calc Pay Increases:Market-based (allocate by position in range)Merit-based (allocate by performance and position in range)Did not cover tenure-based – cola and/or stepBudget recs
  • Analytics LaunchpadRanges to Market talk high level-sort by functional areaDrill into Marketing department
  • Ranges to marketGroup by internal title then by gradeSort by midpointExamine anything than 10%Talk about electromechanical tech, both in same grade. Move one up.Employee to ranges reportGroup by internal title and then gradeSort by eecompa ratio-look at folks who are low and highLook specifically at positions you are considering adjusting: VP Marketing, Artistic Director—all safe. Electromechanical tech II prob still would move.
  • Not paying according to policy:Disparate Pay ReportGroup by internal title, then gradeSort by %Highlight low grades with larger than 35%Also look at low spread-Senior marketing manager with 20% pay spread. What’s wrong? You aren’t differentiating on the factors that you value like your policy saysEE pay to ranges:Group by employee, then gradeSort by eecompa ratio- anything above 1.2 and below .8EEOEe pay to rangesGroup by internal job title and custom group 1Convo about what is acceptable-counselEEO:
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  • Compensation Budgeting Part 3: Putting it All Together

    1. 1. Compensation Budgeting Part III: Putting it all together with PayScale Insight Mykkah Herner, MA, CCP Manager of Professional Services Karaka Leslie Product Marketing PayScale, Inc.
    2. 2. Three-part Series on Compensation Budgeting Part I: Managing Pay Inequities Part II: Determining Raises Part III: Putting it all together with PayScale Insight
    3. 3. 14,000 Positions 3000 Customers 11 Countries 40 Million Salary Profiles 250 Compensable Factors
    4. 4. Agenda Recap of Parts I & II Part III Identifying Pay Inequities – Org Level Identifying Pay Inequities – Position Level Identifying Pay Inequities – Employee Level Calculating Pay Increases By Market By Performance & Market
    5. 5. o Start with a plan o Know your comp Philosophy, Strategy, and Policy Recap of Part I o Get reliable market Data o Identify comp inequities at Org, Dept, Position, and Individual levels o Org/Plan level: fair pay to market o Dept level: fair pay across departments o Position level: have some positions move faster than others? o Employee level: are you paying according to your policy? Fairly based on EEO status? o Develop solutions
    6. 6. o Know what you want to reward o Streamline the increase process Recap of Part II o Calculate pay increases o Market-based o Merit-based o Develop budget recommendations o Range Adjustments (Org level) o Market Adjustments (Position level) o Equity Adjustments (Individual level) o Pay Increase Adjustments
    7. 7. Organizational Level Pay Inequities
    8. 8. Identifying Org Level Inequities Ranges to Market o Examine Ranges to Market on the whole – do most move up? Most move down? What’s the average? o Do you want to move ranges at this time? o Budget o Organizational demands
    9. 9. Position-Level Pay Inequities
    10. 10. Identifying Position Level Inequities Ranges to market by position o Does the market suggest moving the position to a new grade? o What are the EE compa-ratios for those positions? o Decide which to move – examine where other positions are in the job family o How to identify what type of market premium could be applied to a position (vs moving the grade)
    11. 11. Employee-Level Pay Inequities
    12. 12. Identifying Employee Level Inequities o Paying according to policy: • green-circled, red-circled • compression o EEO Concerns • resolve critical issues asap
    13. 13. Calculating Pay Increases
    14. 14. Using a Matrix (Merit or Proficiency)  Tier increases by position in range & performance o Start with a budget increase % o Allocate increases to EEs based on range penetration and performance o Create spreadsheet o Note: Proficiency, or another factor, can work like performance in this example
    15. 15. Increase Spreadsheet Name Job Title Alexander, Maria Account Manager Current Range Annual Base Min Range Mid Range Max CompaRatio New Range Increase Annualized Annual Penetration % Increase Base New Compa- New Range ratio Penetration $45,900 $46,300 $57,100 $67,900 0.804 -2% 3.80% $1,744 $47,644 0.83 6% Arnold, Alexandra Driver I $29,600 $29,300 $35,700 $42,100 0.829 2% 3.80% $1,125 $30,725 0.86 11% Baker, Nicholas Account Executive $46,500 $40,400 $49,800 $59,200 0.934 32% 3.80% $1,767 $48,267 0.97 42% Allen, Ryan Program Manager $86,700 $73,600 $93,300 $113,000 0.929 33% 3.80% $3,295 $89,995 0.96 42% Bailey, Sara Senior Account Executive $64,000 $54,700 $68,400 $82,100 0.936 34% 2.80% $1,792 $65,792 0.96 40% Anderson, James Customer Service Rep $45,500 $34,900 $42,500 $50,100 1.071 70% 1.90% $865 $46,365 1.09 75% Andrews, Vincent Senior Account Executive $76,700 $54,700 $68,400 $82,100 1.121 80% 1.90% $1,457 $78,157 1.14 86% Adams, Christina Account Manager $63,800 $46,300 $57,100 $67,900 1.117 81% 1.90% $1,212 $65,012 1.14 87% 0.967625 41% 2.96% $13,257 $471,957 1.00 49% Total/Average $458,700 SUM • • • • • • AVG AVG AVG SUM SUM AVG AVG Compa-Ratio = Current Annual Base / Range Mid Range Penetration = (Current Annual Base – Range Min) / (Range Max – Range Min) Annualized Increase = Increase % * Current Annual Base New Annual Base = Annualized Increase + Current Annual Base New Compa-Ratio = New Annual Base / Range Mid New Range Penetration = (New Annual Base – Range Min) / (Range Max – Range Min)
    16. 16. 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 Mykkah Herner, MA, CCP Manager of Professional Services Karaka Leslie Product Marketing PayScale, Inc.