Spring Ahead: Plan Your Approach to Comp in 2012


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In this free webinar, we’ll tell you how to set an appropriate compensation calendar, so when it's time for fall budgeting, your organization is prepared to make smart compensation decisions.

Register for this presentation and prepare to set an effective 2012 compensation calendar that aligns you for success.

You'll learn how to:

•Design a compensation calendar that achieves your organization’s goals.
•Develop a project plan to meet the timelines established by the organization.
•Get buy-in for the process from senior management.

Don’t wait until the last minute and then scramble to add value to the process – set an agenda to address compensation in a timely, thoughtful way, starting today.

Published in: Business, Technology
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Spring Ahead: Plan Your Approach to Comp in 2012

  1. 1. Spring Ahead:Plan your Approachto Compensation in 2012Stacey Carroll, M.B.A, SPHR, CCPDirector of Professional Services & EducationPayScale, Inc.
  2. 2. PayScale Delivers Where Other Compensation Providers Fall Short PayScale operates the largest online salary database in the world. We allow organizations to price their jobs according to13,000 Positions. their industry, location, and the employee skillsets which make50 Major Industries. their workforce unique. PayScale goes beyond supplying the11 Countries. accurate data you need - we also give you the tools to efficiently manage your compensation projects, and the knowledge to stay up-to-date. Visit our blog: http://blogs.payscale.com/compensation/
  3. 3. Agenda Start at the end What will the increase be based on?  Planning for Market Adjustments  Sample Range Recommendations  Sample Merit Matrix  What do you want to change? General Timeframes
  4. 4. Start At The EndThe MOST important event on your compensationcalendar is about giving out salary increases toemployees. So, this is the end of your process butthe beginning of your planning.  Align timing with your company philosophy?  Annual review process for all employees  Choose a date that aligns with your company’s budgeting process  Anniversary review process  Choose a focal point for making decisions about your guidelines and compensation matrix  Decide if you will stay status quo or make changes to your process.
  5. 5. What are the increases based on? HOW will you determine how much of an increase the employee with receive?  Aligning increase amounts with your company philosophy  Will all employees be eligible for a cost of living increase?  If you have salary ranges, will you adjust the ranges?  Will you differentiate the increase amount based on merit vs. market?  Will these two pieces be aligned into the same process or different?  Do you give rewards based on longevity with the company or in the position?
  6. 6. What Do You Want to Change About Your Current Process? Giving out across the board increase (cost of living) Basing rewards on performance vs. longevity Differentiating between market adjustments and movement within the range Moving ranges every year
  7. 7. Planning For Market Adjustments Benchmark your entire organization – define your baseline Define your compensation philosophy and goals for 2012 Determine what changes (if any) you want to make to your current process Provide budget recommendations based on company goals
  8. 8. Sample Recommendations for Range Adjustments Summary of Midpoints to Market 2012 2011 Midpoint Employee Midpoint to compared to Structure Base to Mid Market Market Difference Denver A -0.26% -5.50% -7.96% -2.46% Miami A -1.97% -4.36% -8.53% -4.17% Philadelphia B -4.09% -4.85% -5.96% -1.11% Baltimore B -6.24% -8.87% -18.77% -9.90% Costa Mesa C -11.94% -4.31% 3.02% 7.33% Remote A 14.53% -3.96% -0.12% 3.84% Remote B -7.89% -5.63% -5.36% 0.27% Remote C -10.09% -6.49% 13.28% 19.77% Exec Exec 0.00% 1.94% 1.94% Reccomendations: Move A & B structures up by 2% Keep Structure C the same Move Baltimore to B Move Programming Team Lead to 7 Keep Developer II at 6 - but market adjustments may be warranted Move Sr. Developer to 7 Move Network Engineer to 4 Director Product Management to a grade 10 Job Descriptions Needed: Customer Advocate Manager Programming Services Support
  9. 9. Sample Merit Increase Matrix
  10. 10. General TimeframesStart from the effective date of salary increases Input payroll changes: 2-4 weeks HR/Company approval: 1-2 weeks Managers allocating salary increases: 1-2 weeks Managers conducting performance reviews: 2-4 weeks HR preparing instructions, guidelines and recommendations for increases based on budget: 1-2 weeks HR getting budget support for organizational goals: 2-4 weeks HR benchmarking the organization: 4-8 weeks
  11. 11. Sample OrganizationMy company wants to benchmark the organization this year (it’s been 2 years since it was last done). We’ve been losing too many of our top performers, so the Executive team wants to look at rewarding performance this year. Our budgets remain tight due to market conditions, and the executive team wants to know how to invest wisely without “breaking the bank”.Changes we’ll make to our compensation program for 2012.  Continue to use annual review process for allocating increases to employees at the same time, but break out market adjustments from performance increases  Benchmark the organization  Get buy-in on company’s compensation philosophy  Provide a compensation matrix that allows managers to reward based on performance – with consideration for employee’s placement against the market (compa-ratio)  Create a policy for red-circling employees over the top of the max
  12. 12. Sample TimelineMarket adjustments will be Merit increases will be effective effective 10/1/2012 1/1/20131. Invest in tools/data: 4/1 1. Manager performance review2. Benchmarking complete: 5/15 training: 9/15-10/13. Decision from leadership team 2. Performance Reviews: 10/1-11/1 about compensation philosophy: 3. Merit budget approved: 11/1 6/1 4. HR sends guidelines, employee4. HR Analysis on proposed data and communication to increases: 7/1 managers: 11/155. Leadership sign-off: 8/1 5. Manager’s allocate salary6. Notification to Managers: 8/10 increases: 11/307. Exceptions Finalized: 8/25 6. HR final review: 12/58. Communication to employees: 7. Employees are notified: 12/10 9/1 8. Data finalized for input: 12/159. HR final approval date: 9/1510. HR’s recommendations to finance for merit increase budget: 10/15
  13. 13. PayScale Delivers Where Other Compensation Providers Fall ShortPayScale operates the largest online salary database in the world. We allow organizations to price their jobs according totheir industry, location, and the employee skill sets which make their workforce unique. PayScale goes beyond supplyingthe accurate data you need - we also give you the tools to efficiently manage your compensation projects, and theknowledge to stay up-to-date.Visit our blog: http://blogs.payscale.com/compensation/Join our Group on LinkedIN: Compensation Today: HR Best PracticesStacey Carroll, M.B.A, SPHR, CCPDirector of Professional Services & EducationPayScale, Inc.Connect with me on LinkedIN: http://www.linkedin.com/in/hrstacey