Bio- ZachBio-Karaka HousekeepingYou are all on mutePlease type in Q&APollsSurvey at the end
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.
KarakaPOLL #1-Are you currently working on making updates to your compensation plan?54% conduct market & compensation analysis in Q4 & Q1—time is now!
KarakaWhat is the CBPR?
KarakaReturn of raises:57% say they will give raises to at leasthalf of their workforce.Hiring:Companies plan to continue expanding in 2013.• Over 50% of organizations expect to increase in size in 2013. In last year’s survey, only 38% saidthey expected their workforce to increase in 2012.Only 5% of small companies, 9% of medium companies and 14% of large companies expect their organization to decreaseGreat sign of optimism returning…
KarakaWhat is the PayScale Index? Measures the change in wages of employed US workers revealing trends in compensation over time. Breaks it down by 20 largest metros, 15 industries, 19 job categories and small, medium and large company sizes. ZachLet’s look at some of the compensation trends PayScale tracks specifically how Dallas & Houston compares to the National trend.
KarakaWe will weave in trends as we go, from the CBPR
Zach-Compensation plan is only as good as the foundation it was created ondetermining your strategy for how to align yourself to the market-understanding your labor markets where you compete for talent- Not a question of what industry you are in, but where you compete
Zach-talk about story (shouldn’t we use TX jobs?)Understand who you are competing for talent withThis will not be the same for all jobsEXAMPLE: Chemical Engineer Understand what different industries/locations in the TX Market pay for Chemical EngineersA lot of assumptions that don’t always apply. Turns out Galveston with 350 EE’s pays the most.
ZachSupply and demand for laborCOLA doesn’t cut it anymorein TexasIs it ok to use Seattle Story here too?
KarakaWork gets more specialized…starting to see routine and manual tasks decrease and abstract tasks increase. This makes jobs more difficult to price and to understand their value in the market and to an organization. “Just as people in the early days of industrialization saw single jobs (such as a pin maker’s) transformed into many jobs (Adam Smith observed 18 separate steps in a pin factory), we will now see knowledge-worker jobs—salesperson, secretary, engineer—atomize into complex networks of people all over the world performing highly specialized tasks. Even job titles of recent vintage will soon strike us as quaint. “Software developer,” for example, already obscures the reality that often in a software project, different specialists are responsible for design, coding, and testing. And that is the simplest scenario.” The Big Idea: The Age of Hyperspecialization, Harvard Business Review, July 2011
Karaka--know the job and the market for those jobs --know what drives pay and what doesn’t-Skills, experience, certifications do matter for certain positions
KarakaThese are the skills that tend to cause median pay to increase the most in TexasFor those of you that are hiring for positions right now, any of the skills on this list ring a bell? If these skills are in such high demand for your positions, once you find the right candidate with those skills, you don’t want to pass them up. Making the right compensation offer is extremely important.
UPDATE Retaining talent-Telecommunications. Chemical Engineer—not just oil and gasCan’t put a finite $$ amount around skills. Must take into account other compensable factors. Some that we just mentioned, re: labor market factors and also the value that this position/employee brings to your organization.
These are the jobs that have experienced the highest relative median pay growth in the Texas area over the past two years.Constantly changing These are the type of positions that can significantly impact the business. What if finding that particular developer helps you develop new software that revolutionizes your business. Or, what if you find that sales manager who increases your revenue by 10% or more.Bill Gates is famous for saying that one great programmer is worth a 1,000 average programmers. These are the hot positions we are noting in our database now.
KarakaMicro at two different positions.3% doesn’t work.Luckily you don’t have deal in generalities anymore. There are data and tools out there to support you getting a solid understanding on your jobs and helping you be strategic when it comes to compensation.
Karaka-intro with trends on comp strategyOver 80% of respondents either have or are working on a formal compensation strategy.• The likelihood of having or working on a formal compensation strategy increases with company size.oo Small Companies: 74%oo Medium Companies: 85%oo Large Companies: 93%POLL #2-What is your top challenge as it relates to compensation:-Getting executive support-Attracting/hiring employees-Retaining employees/managing turnover-Communicating compensation plan to managers and employees
This is what business leaders care about. Don’t just talk about building a structure for your compensation plan. Talk about the strategy first. Zach-KarakaTo Begin, lets look at the top challenges an organization faces as they relate to compensation(Read Slide)
ZachWhat’s most important is building our a strategy that is right for your company and right for your areaThis starts with understanding your business and the competitive landscape for talent*Who is our marketNumbers vary widelyNot always who “you” are—might be a start but think about where you get the people you put into your organization, and who is hiring for those same peopleWhen and where in the organization do we need to choose different labor marketsKnow your competitive market and how you want to position yourselfWhat are you rewarding? (Performance, Tenure, etc.?)
In my experience, when working with HR professionals to help them understand and relate to other stakeholders in the organization the value of a compensation plan, it is important first to think of the benefit a smart compensation plan has on the overall business.Compensation spend in employee salaries tends to be one of, if not the single largest costs of doing business for most organizations (30-50% of revenues)With that large of an expense to the business, it is extremely important that it is managed appropriately.The results of managing compensation appropriately can be two fold: it can help you to avoid overpayment but it can also help you to grow and help recruit the best talent into your org. that might allow you to tap into a new market, resulting in new revenue to your business. Not having a compensation plan is like going out and buying a yacht or a house and not insuring that large personal expense.
Zach*Vary the strategy by dept*Talk with Sr. Leadership *Base this on the positions that are driving your business forward*Limited budget—need to focus on where we can let go and where we can be restricted*What challenges are you truly trying to solveKnow who/what you can compete with---(IPO, Stock offerings, PTO, Location, etc.)Set yourself apart- You have to be differentPrioritization 12 names in the drawer*
KarakaDon’t risk losing your top performer for internal equityKnow who you can pay less so you can afford to overpay your top employees and crucial rolesRemember- EE’s will be unlikely to leave if they are already overpaidWhat are the fundamental issues you are trying to solve?What do you overall need--- Simple? More complex? Why?—Equity? Turnover? Growth?Building a structure is more complex than it used to be-Alright—you have a strategy…but what about…Unique peopleUnique skillsSpans of control changing
Karaka-discuss importance of structure
Karaka-trends Most companies have some sort of structure
Karaka-read slide and say…Why? Because of the business need for“a relentless focus on innovation, productivity, growth and customer service.”Reasons:The main reason why most companies adjusted compensationwas “Performance-Based Pay Increases” (48%) and second was“Cost of Living Adjustments” (20%).
KarakaWhen crafting next years budget vs. this year the use of Across the board increases down by 50%Use of Variable Pay has increased 300%
ZachEvery organization is in a different place Don’t let the absence of a (or outdated) plan, stall you from putting the building blocks in place to create a structureTO BEGIN-Understand your jobs and your market Who are your 12 names in the drawer? Where do you see turnover? Where do “ideal” candidates come from? Where do you lose candidates to?INTERMEDIATE- Use this information to form a structure and present ideas to leadership Reward what managers and executives value in employeesADVANCED- Tie pay and performance together Communicate that strategy with mgmt in a way they can communicate with employees Transparency is key
Texas Compensation Trends and Pay Practices
Texas Compensation Trends
& Pay Practices
40 Million Salary Profiles
250 Compensable Factors
o General Market Trends
o Discuss 5 Compensation Best Practices
o Immediate Action
oQ & A
General Market Trends
Dallas & Houston vs.
What is the PayScale Index?
• The PayScale Index measures the change in pay of employed workers over
time, and makes predictions about how national wages might change for the
What specifically does the PayScale Index measure?
• The PayScale Index specifically measures the quarterly change in total cash
compensation of full time private industry employees
1) Understand Your Labor Market
2) Understand Your Jobs
3) Create a Competitive Strategy
4) Build a Structure
5) Pay for Performance
Understanding Your Jobs
• Work Gets More Specialized
• Hot Skills in Texas
• Not All Jobs Are Created Equal
• Hot Jobs in Texas
Hot Skills in Texas
Well Production Engineering
Oil and Gas Formation Evaluation
Chemical Process Engineering
Distributed Control Systems (DCS)
Tungsten Inert Gas (TIG) Welding
Skills Can Play a Role
Hot Jobs in Texas
Process Technician- 16.01%
Technical Advisor- 13.96%
Chemical Operator– 13.62%
Quality Assurance (QA)/Quality Control (QC)
Occupational Therapy Assistant (OTA)– 12.52%
Pharmacy Technician, Lead– 12.02%
Project Control Specialist–10.93%
Health & Safety Engineer–10.79%
Physical Therapy Assistant–10.75%
“The market” changes for each job
Software Developer Median Pay
Across Time for Texas
Sales Director Median Pay
Across Time for Texas
2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013
2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013
Why Have a Comp Strategy?
We asked thousands of HR and business leaders*
about their top challenges in compensation. They said:
1. Retain. They don’t want to risk losing employees by underpaying
them, or losing money by overpaying them
2. Attract. To compete for talent, job offers must match the market
and the unique factors driving pay for their jobs.
3. Motivate. Drive performance with strategies that reward top
performers while aligning with company goals.
4. Confidence. Having the science to back up decisions and
conversations with executives and employees.
• Understand business goals
• Who is your market?
• How competitive do you want to be?
• What do you want to reward?
• Vary strategy by department
• Base your decisions on key roles
Build a Structure
• Let the structure guide your business forward
• Keep it current
• Decide what’s important for you
Advantages of Pay Structures
Provide alignment to business strategy
Clarify relative worth of the position internally & externally
Ensure fair pay (legally defensible)
Define a pay range for a position
Create clear career paths
Room to reward your employees based on
performance, tenure, etc.
Building a Structure
Top people concerns among senior business
o Creating a high-performance culture
o Leadership development
o Talent Management
When crafting next years budget vs. this year the use of
Across the board increases down by 50%
Use of Variable Pay has increased 300%
Source: Hewitt Survey – U.S. Salary Increases 2009/2010 and Impact on Org Spend for 2010
Know your jobs
Have an understanding of the market
Discuss a compensation strategy with leadership
Know what you want to reward and what you value
Build guidelines that reflect a compensation strategy that works for your business
Find new and creative ways to incorporate performance pay
Know how your pay practices stack up against your exact competition for talent
Communicate you pay strategy with management
Develop a strong compensation structure
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: www.payscale.com/compensation-today
Join our Group on LinkedIN: Compensation Today: HR Best Practices