In yesterday’s Advisor, Amy Letke, SPHR, GPHR of Integrity HR, Inc., walked readers through the ins and outs of market data aging factors: Lead, lag, or lead/lag—each has its own merits depending on the needs of your organization. Today, Letke looks at additional considerations as you set out your compensation philosophy and strategy.
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Documenting Job Content Through Job Descriptions
How often are you reviewing your job descriptions? Remember that the needs may change, depending on your business goals.
Selecting, Collecting, and Using Data
- Choose several salary sources (industry-specific when possible).
- Make sure you compare “apples to apples.”
- Make sure you are getting the most bang for your buck!
- Use job descriptions for comparisons to benchmark jobs.
- Attempt to match jobs to an “objective survey source” with a significant degree of accuracy.
- Slot nonbenchmark jobs into the hierarchy based on comparable positions.
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Designing Your Pay Structure
- Determine relative worth.
- Use pay grades to:
- Group jobs that have the same relative internal worth.
- Set the upper and lower range of compensation for jobs within the pay grade.
Addressing Compression and Budget Issues
Salary compression is very common (and problematic), occurring when the pay rates for two different jobs wind up being too close together.
Limited merit increase budgets can lead to lessening value on lengthy tenure when you increase pay for new employees—something you definitely don’t want if you’re looking to retain great talent.
The solution to both problems? Money. Letke recommends that you consider reserving a portion of your budget for compression elimination, equity increases, and lump-sum increases.
It Can Be Complicated
Letke notes that an independent third party can often help you pave the way to achieving a solid compensation plan that leads to your desired outcome.
If you handle things on your own, she stresses the importance of appropriate training and education to acquire the specialized expertise required to perform the work effectively.
When it comes to deciding which strategy to use when it comes to aging market data for compensation, things can get complicated. You need a go-to resource, and our editors recommend the “everything-HR-in-one” website, HR.BLR.com®. As an example of what you will find, here are some policy recommendations concerning e-mail, excerpted from a sample policy on the website:
- Privacy. The director of information services can override any individual password and, therefore, has access to all e-mail messages in order to ensure compliance with company policy. This means that employees do not have an expectation of privacy in their company e-mail or any other information stored or accessed on company computers.
- E-mail review. All e-mail is subject to review by management. Your use of the e-mail system grants consent to the review of any of the messages to or from you in the system in printed form or in any other medium.
- Solicitation. In line with our general policy, e-mail must not be used to solicit for outside business ventures, personal parties, social meetings, charities, membership in any organization, political causes, religious causes, or other matters not connected to the company’s business.
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