This is an excerpt from our new ebook “Comp 101: A Beginner’s Guide to Compensation Management.” Download the full guide here.
With your compensation plan in hand, it’s now time to take all your preparations and begin to utilize it.
Analyze Employee Pay
Start by comparing your employees’ pay against their salary ranges. Most importantly, you will want to determine if you have any employees who fall below the minimum of the salary range (green-circled) or over the maximum of the salary range (red-circled). If you do have this situation, it’s time to apply your policy for handling outliers. You may find that the amount it will take to resolve the outliers is more than you can do at one time. In this case, consider a multi-year plan to resolve the pay issues.
(Tip: Check out these great blogs on what to do if you’re overpaying or underpaying.)
Communicate, Communicate, Communicate!
Ultimately, you’ll want a clear communication plan for each level of your organization:
- Update your executives with the status of pay at your organization.
- Bring your managers into the know so they can help share compensation information with the employees they supervise.
- Give your employees high-level information about your compensation and talent goals.
Here are a few interesting facts that, when combined, tell a pretty good story about the importance of communicating well about compensation:
- From a 2015 PayScale study:
- Perception of pay impacts employee satisfaction and intent to leave
- Most employees don’t know if they’re paid fairly
- 82% of employees are okay with lower pay as long as the rationale is explained, highlighting the importance of explaining the WHY of pay
- When it comes to communication …
- 75% of conversations about pay happen between managers and employees (CEB)
- Only 19% of companies say they are “very confident” in their managers’ abilities to have tough conversations about compensation with employees (PayScale’s 2017 CBPR)
You may have to train managers and provide them with some context and information about your compensation plan. Draft some talking points for your executives and managers to ensure consistency of message as you roll out your plan changes, in line with your transparency level.
Before you move on to the next step…
Analyze your workforce. How many outliers are you finding? Create a plan for bringing pay current to market and/or resolving any inequities you may find. Also, draft your communication plan. Who needs to know what, when?
The final step in the Comp 101 series is establishing processes for keeping your plan updated — coming tomorrow. For all the steps and takeaways, grab your copy of the full Comp 101 guide today!
Tell Us What You Think
What’s the toughest part of the implementation process for your team? We want to hear from you. Share your thoughts in the comments.