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New England Compensation Trends & Pay Practices
The document outlines compensation trends and best practices in New England, based on a survey of over 4,000 respondents, highlighting key themes such as financial performance, wage growth, and retention concerns. It emphasizes the importance of understanding the labor market and job specifics to create competitive compensation strategies, while also advocating for performance-based pay structures. Additionally, Payscale offers insights into effective talent management, underscoring their role as a leading compensation data provider.
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New England Compensation Trends & Pay Practices
- 1. New England Compensation Trends& Pay Practices Cami DeFoor, CCP Manager, East Coast PayScale, Inc. Karaka Leslie Partnership Manager PayScale, Inc. www.payscale.com
- 2. 14,000 Positions 3000 Customers 11Countries 40 Million Salary Profiles 250 Compensable Factors
- 3. Agenda o 5 CompensationBest Practices & Trends o Immediate Action o Special! Trends Data For You oQ & A
- 4. • Surveyed over4,000 respondents • Themes: – – – – – Financial Performance Wage Growth Hiring Practices Retention Concerns Managing Increases • Company size breakdown: – Small: < 100 employees - 45% – Medium: 100 - 1,000 employees - 34% – Large: >1,000 employees – 21% Source: http://www.payscale.com/hr/compensation-practices-survey
- 5. General Market Trends Source:http://www.payscale.com/hr/compensation-practices-survey
- 6. New England vs.National Trends 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 next quarter 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
- 7. Five 1) Understand YourLabor Market Compensation 2) Understand Your Jobs Best Practices 3) Create a Competitive Strategy 4) Build a Structure 5) Pay for Performance
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- 9. Understand Your LaborMarket • Who do you compete with? • Size, Location, Revenue, Industry • Who can you compete with?
- 10. Understand Your LaborMarket YOU THE COMPETITION
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- 13. Understanding Your Jobs •Work Gets More Specialized • Hot Skills in New England • Not All Jobs Are Created Equal • Hot Jobs in New England
- 16. Hot Skills inNew England Tech Other Information Technology Infrastructure Library (ITIL) Network Security Management Storage Area Networking (SAN) Data Mining/Data Warehouse Perl Security Intrusion Detection Software Architecture Consulting Management Performance Management Change Management Clinical Education Medical Credentialing Financial Credit Control Compliance (Financial) Financial Modeling Statistical Analysis
- 17. Skills Can Playa Role Without Skill With Skill
- 18. Hot Jobs inNew England Sales/Marketing/Operations Other Marketing Director - 8.08% Production Supervisor - 6.90% VP Operations – 5.93% General/Operations Manager – 4.49% Retail Store Manager - 6.86% Attorney/Lawyer – 4.66% Project Engineer – 4.23% Licensed Practical Nurse – 4.00% Tech Software Development Engineer, Test (SDET) – 7.12% Software Developer – 3.74% Finance/HR HR Manager – 6.22% Financial Controller – 5.42%
- 19. “The market” changesfor each job Software Developer Median Pay Across Time for New England 112.0 Social Worker Median Pay Across Time for New England 110.0 110.0 108.0 108.0 106.0 106.0 104.0 104.0 102.0 102.0 100.0 100.0 98.0 96.0 98.0 94.0 96.0 92.0 90.0 94.0 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Software Developer United States 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Social Worker United States
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- 21. Why Have aComp 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. Source: http://www.payscale.com/hr/compensation-practices-survey
- 22. Competitive Strategy • Understandbusiness goals • Who is your market? • How competitive do you want to be? • What do you want to reward?
- 23. Competitive Strategy • Varystrategy by department • Base your decisions on key roles
- 24. Retaining Key Talent Source:http://www.payscale.com/gen-y-on-the-job See methodology: http://www.payscale.com/gen-y-methodology
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- 26. Build a Structure •Let the structure guide your business forward • Keep it current • Decide what’s important for you
- 27. Advantages of PayStructures 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.
- 28. Building a Structure Source:http://www.payscale.com/hr/compensation-practices-survey
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- 30. Performance Top people concernsamong senior business executives are: o Creating a high-performance culture o Leadership development o Talent Management o Training
- 31. Market Trend: Ongoing Shift Toward P4P When craftingnext 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
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- 34. Immediate Action Elementary • Know yourjobs • Have an understanding of the market Intermediate • 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 Advanced • 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
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- 37. Special Offer for NewEngland HR Professionals
- 38. PayScale Delivers WhereOther 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 Cami DeFoor, CCP Manager, East Coast PayScale, Inc. Karaka Leslie Partnership Manager PayScale, Inc. www.payscale.com
Editor's Notes
- #2 Bio- Cami Over 5 years with PayScale Working with the east coast clients, Past 2 years NE Held CCP designation past 3 yearsHousekeepingYou are all on mutePlease type in Q&APollsSurvey at the end
- #3 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.
- #4 KarakaPOLL #1-Are you currently working on making updates to your compensation plan?54% conduct market & compensation analysis in Q4 & Q1—time is now!
- #5 KarakaWhat is the CBPR?
- #6 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…
- #7 Let’s look at some of the compensation trends PayScale tracks specifically how Boston compares to the National trend.What is the PayScale Index?
- #8 KarakaWe will weave in trends as we go, from the CBPR
- #9 CAMI
- #10 Cami-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 competePriceline story-ConnecticutBoston
- #11 Cami-talk about competing with Financial ServicesUnderstand who you are competing for talent withThis will not be the same for all jobsEXAMPLE: You provide cloud based financial services software You compete in software development You compete in Financial Services You pull talent from other areas and you hire remote workersUnderstand what different industries/locations in the NortheastA lot of assumptions that don’t always apply
- #12 CamiSupply and demand for laborCOLA doesn’t cut it anymorein CA
- #13 Karaka
- #14 Karaka
- #15 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
- #16 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
- #17 KarakaThese are the skills that tend to cause median pay to increase the most in New England.For those of you that are hiring for positions right now, any of the skills on this list ring a bell? Speaking for PayScale, I can say that this does for us. In a big data company like ours, Hadoop is a very important skill that we are on the look out for. And, it is difficult to find folks with these skills. 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.
- #18 UPDATE Retaining talent-Telecommunications. CCIE Network EngineerCan’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.
- #19 These are the jobs that have experienced the highest relative median pay growth in the New England 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.
- #20 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.
- #21 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
- #22 This is what business leaders care about. Don’t just talk about building a structure for your compensation plan. Talk about the strategy first. Cami-KarakaTo Begin, lets look at the top challenges an organization faces as they relate to compensation(Read Slide)
- #23 CamiWhat’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.?)
- #24 Cami*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*
- #25 Karaka –And, a final thought to keep in mind. Also important to think about your workforce. What does that look like? This is a hot topic.If your positions are those with new skills, or new emerging technology, chances are your workforce may be younger. How do you plan to keep them around?
- #27 CamiDon’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
- #28 Karaka-discuss importance of structure
- #29 Karaka-trends Most companies have some sort of structure
- #30 POLL #2
- #31 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%).
- #32 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%
- #33 KarakaUse one more screenshot
- #34 Cami
- #35 CamiEvery 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
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- #38 Karaka