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Compensation 201


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Now that you've got Comp basics down, and it's time to level up! Taking the foundational skills of 101 into consideration, 201 builds on the concepts of creating a structure by digging deeper into each necessary piece needed in order to understand how to build and maintain a compensation structure.

-Ranges & Grades – what are they and which is the best scenario for you? Geo differentials–best practices, managing grade schedules
-Midpoints & widths – what does this mean and what does it determine?
-Structure Scenario – using a common customer scenario, we will build a structure live on the call
-Job levels/Job familiars – how to make adjustments to alignment and slot jobs

Published in: Recruiting & HR
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Compensation 201

  1. 1. Compensation 201
  2. 2. Krystal Praast Compensation Professional Michaela Ayers Customer Training Specialist
  3. 3. • Introduction • Foundations of Market Analysis • Ranges VS Grades • Structure build scenario Agenda
  4. 4. PayScale Collects and Analyzes the Largest Database of Salary Profiles in the World
  5. 5. Compensation Foundations
  6. 6. Pay Philosophy Jobs matched Labor markets defined Pay Philosophy Executive buy in
  7. 7. How competitively do you want to pay? What’s your target market percentile? 50TH PERCENTILE LAG THE MARKET MEET THE MARKET LEAD THE MARKET 90TH PERCENTILE 10TH PERCENTILE
  8. 8. Workforce Segmentation Industry: IT Services Size: 400 EEs Location: Seattle, WA ONE-STRATEGY-FITS-ALL SEGMENTED WORKFORCE HR IT SALESOPS Industry: IT Services Size: 400 EEs Location: Seattle, WA HR OPS SALES Industry: IT Services Size: 10,000 EEs Location: Seattle, WA IT
  9. 9. Components of a Base Pay Structure STRATEGY Labor Market + Target Market Percentile = Compensation Strategy Benchmark Job + Compensation Strategy = Market Data STRUCTURE Market Data + Internal Alignment = Base Pay Structure
  10. 10. Ranges & Grades
  11. 11. Using Pay Ranges Range MidpointMinimum Maximum $50,300 $74,400$62,400 Range Midpoint:Range Minimum: Range Maximum: • Employees new to the role • Employees with lower performance or proficiency • Employees proficient in their role • Employees with good performance • Aligns with the market • Employees with high performance • Employees with demonstrated high proficiency and experience
  12. 12. Definition: Job-Based Ranges Ranges are built around the market value for the job, at the targeted percentile
  13. 13. Definition: Grade-Based Ranges Jobs with similar level of responsibility and value to the organization are grouped together in a grade
  14. 14. Assigning Grades Match market value with nearest midpoint Adjust for internal alignment
  15. 15. Grade Assignments Example
  16. 16. Geographically-Based Schedules TAMPA Schedule A: -5% PHILADELPHI A Schedule C: +5% PORTLAND Schedule B: (Main) Purpose: Preserve both competitive pay to the local market and internal equity
  17. 17. How do we use Pay Schedules? Grade assignment is the same across all locations Range is different based on the pay schedule JOB GRADE ASSIGNMEN T SCHEDULE A Tampa, FL -5% SCHEDULE B Portland, OR Main SCHEDULE C Philadelphia, PA +5% Receptionist 1 $10.25 - $13.25 $10.75 - $14.00 $11.25 - $14.75 Admin Assistant 2 $11.50 - $15.00 $12.00 - $16.00 $12.75 - $16.75 Order Coordinator 3 $12.75 - $17.00 $13.50 - $18.00 $14.25 - $19.00
  18. 18. How many jobs do you have? Which scenario will work best for you? Do you have positions in multiple locations?
  19. 19. Structure Scenario Clinical Jobs o Dentist’s Office o 3,000 Employees o Local Markets Corporate Jobs o All industries average o 3,000 Employees o Local Markets Competitive Positioning: 75th Percentile
  20. 20. Comp Plan Benefits Business Alignment: • Business goals guide compensation strategy decisions Internal/External Equity: • Clarifies market and internal value for each job • Provides a way to manage EE pay effectively Communication: • Creates a tool for managers to talk with EEs about development • Provides room to reward EEs based on performance, experience, etc. Confidence: • Quantifies compensation costs and helps with budgeting • Gives all EEs confidence that pay decisions are fact-based
  21. 21. Rita Patterson, CCP Manager, Customer Education Mykkah Herner, MA, CCP Modern Comp Evangelist First thing1 2 Second thing 3 Third thing Questions?