"Stupid" Things in Compensation


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Too often organizations make bad decisions about important compensation challenges. In this webinar, we'll talk about some of the "stupid things" organizations do, why they do them and, most importantly, how to correct them going forward.

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"Stupid" Things in Compensation

  1. 1. “Stupid Things” in CompensationStacey Carroll, SPHR, CCPDirector of Professional Services & EducationPayScale, Inc.
  2. 2. PayScale is a market leader in global online compensation data. With the worlds largest database of individual employee compensation profiles, PayScale provides an immediate and precise snapshot of the job market.7,000 Positions. Our patent-pending, real-time profiling system indexes custom employee attributes (such as industry-specific certifications) and50 Major Industries. specific job titles for every industry.11 Countries. Our secure, on-demand business solutions, PayScale MarketRate and PayScale Insight, provide employers with accurate, reliable compensation detail never before available.
  3. 3. Agenda Why we do “stupid things” The most common “stupid things” Doing the smart thing Q&A
  4. 4. Why we do “stupid things”• It’s what we’ve always done• It’s what everyone else is doing• It’s can be difficult to get buy-in from senior leaders• Change is hard• The unknown could be worse than what we are doing now
  5. 5. #1 – Across the board increases Why it doesn’t work What you can do to fix it It encourages mediocrity  Create salary ranges (from employees and managers)  Build a merit matrix to reward other factors It’s not “fair” It’s expensive  Engage leadership in budgeting exercises It sends your top performers running out the  Utilize incentive door compensation
  6. 6. #2 – Leveling for people not position requirements Why it doesn’t work What you can do to fix it It’s hard to justify with  Document job duties, market data. requirements and expectations. It’s difficult to mange internal expectations.  Validate job criteria against department/business It’s expensive – without goals. additional benefit.  Validate pay ranges against Confusion can lead to market data and/or retention issues. company philosophy.
  7. 7. Example What the data suggests: Typical Range Width: 40% Typical Midpoint Differential: 15% IQR: 25% Maturity Range: 55% Result: This may be two levels – but hard to justify more. interquartile range (IQR), also called the midspread or middle fifty, is a measure of statistical dispersion, being equal to the difference between the upper and lower quartiles. In the example above it’s the percent spread between the 75th and 25th percentiles of the market data.
  8. 8. #3 – Solving management problems with compensation Why it doesn’t work What you can do about it People don’t leave or stay  Isolate the issue to because of money alone. compensation. Most financial corrections  Fix compensation problems don’t last long. as a whole when possible. There is no guarantee that the  Find ways to incorporate remedy will keep the variable or other incentives employees that you want to into the overall rewards keep. package. It creates a squeaky wheel  Measure, track and respond problem. to management issues.
  9. 9. Doing the smart thing Get access to reliable data. Use it to have smart conversations about compensation in the organization. As much as possible to proactive with compensation instead of reactive. Show the organization a better way.
  10. 10. 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