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TOP 10 COMPENSATION
MISTAKES MADE BY
SMALL BUSINESSES
Lena Bottos CCP, GRP – Kenexa
Catherine Dovey CCP, SPHR – Compensation Works
To us, business is personal
Copyright Kenexa®, 2011 2 Copyright Kenexa®, 2012 2
ABOUT US
Lena Bottos CCP, GRP Vice President , Compensation
Kenexa
Catherine Dovey CCP, SPHR Principal, Compensation Works
Copyright Kenexa®, 2011 3 Copyright Kenexa®, 2012 3
WHY THIS IS
SO
IMPORTANT
Labor Costs
Other costs
Copyright Kenexa®, 2011 4 Copyright Kenexa®, 2012 4
HOW SOME
COMP PLANS
WORK…
Poll Question:
What is your company size?
•<50 Employees
•50-100
•100-200
•200-500
•500+
Copyright Kenexa®, 2011 6 Copyright Kenexa®, 2012 6
MISTAKE #10
Shh! Telling
managers and
employees not to
talk about pay.
Copyright Kenexa®, 2011 7 Copyright Kenexa®, 2012 7
TIP #10
Work on what you can control –
your communication about how
pay decisions are made.
Copyright Kenexa®, 2011 8 Copyright Kenexa®, 2012 8
PAY
TRANSPARENCY
CONTINUUM
Complete Transparency
(Public Sector)
Complete Transparency
(Closely held)
Copyright Kenexa®, 2011 9 Copyright Kenexa®, 2012 9
What
How
Why
Copyright Kenexa®, 2011 10 Copyright Kenexa®, 2012 10
MISTAKE #9
Adjusting pay
structures without
looking at pay levels
for each job.
Copyright Kenexa®, 2011 11 Copyright Kenexa®, 2012 11
TIP #9
Pay attention to the market
movement of individual jobs
Copyright Kenexa®, 2011 12 Copyright Kenexa®, 2012 12
IT’S MORE THAN
JUST THE
AVERAGES
Making assumptions based on 3% averages
can cause you to miss the market for specific
jobs.
Job Change
Head of Anesthesiology 24%
Banking Operations Manager 22%
Materials Control Manager 14%
Private Label Manager -9%
Health and Safety Manager -10%
Program Manager -13%
Copyright Kenexa®, 2011 13 Copyright Kenexa®, 2012 13
MISTAKE #8
Living by exception.
Creating and
enabling internal
inequity.
Copyright Kenexa®, 2011 14 Copyright Kenexa®, 2012 14
TIP #8
Fix the problem, don’t just move
it around.
Copyright Kenexa®, 2011 15 Copyright Kenexa®, 2012 15
MISTAKE #7
Going it alone.
Copyright Kenexa®, 2011 16 Copyright Kenexa®, 2012 16
TIP #7
Learning how to do it right will
help you expand your skills.
Poll Question:
I am confident I know all the
technology and software
available to me to help me do
my job best.
•True
•False
Copyright Kenexa®, 2011 18 Copyright Kenexa®, 2012 18
MISTAKE #6
Not using the proper
tools and assuming
you are paying at
market.
Copyright Kenexa®, 2011 19 Copyright Kenexa®, 2012 19
TIP #6
Ask for a price appropriate for
your company size.
Copyright Kenexa®, 2011 20 Copyright Kenexa®, 2012 20
MISTAKE #5
Being cheap –
saving money on
survey data.
Copyright Kenexa®, 2011 21 Copyright Kenexa®, 2012 21
RELATIVE
SURVEY
COSTS
Example:
for every $10,000,000 in salary
you spent $10,000 survey costs
= .1% of salary costs
Copyright Kenexa®, 2011 22 Copyright Kenexa®, 2012 22
What companies use free or very
inexpensive survey data?
Copyright Kenexa®, 2011 23 Copyright Kenexa®, 2012 23
TIP #5
Saving dollars on compensation
data or design is an expensive
way to save money.
Copyright Kenexa®, 2011 24 Copyright Kenexa®, 2012 24
MISTAKE #4
Diva syndrome.
Copyright Kenexa®, 2011 25 Copyright Kenexa®, 2012 25
TIP #4
Focus on what your people do,
not what your product or
service is.
Copyright Kenexa®, 2011 26 Copyright Kenexa®, 2012 26
MISTAKE #3
Thinking small – not
understanding the
competition.
Copyright Kenexa®, 2011 27 Copyright Kenexa®, 2012 27
TIP #3
Know your relevant recruiting
market.
Copyright Kenexa®, 2011 28 Copyright Kenexa®, 2012 28
MISTAKE #2
Assuming a 3%
merit budget is too
small to use for
differentiating pay.
Copyright Kenexa®, 2011 29 Copyright Kenexa®, 2012 29
VARIABLE
TIMING
INCREASES
Copyright Kenexa®, 2011 30 Copyright Kenexa®, 2012 30
TIP #2
Focus on the behaviors you
want to reward and think
outside the box.
Poll Question:
We have a training program to
train existing and future
managers on the necessary
skills to be good managers.
•True
•True, but not enough
•False
Copyright Kenexa®, 2011 32 Copyright Kenexa®, 2012 32
MISTAKE #1
Communication.
Communication.
Communication.
Not teaching
managers and
employees how the
system works.
Copyright Kenexa®, 2011 33 Copyright Kenexa®, 2012 33
TIP #1
All your work hinges on
managers being able to
communicate the message.
Copyright Kenexa®, 2011 35 Copyright Kenexa®, 2012 35
DON’T BUILD
THIS COMP
PLAN!
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