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In the final installment of the Compensation Budgeting webinar series you will learn about the software and data you need to formalize your compensation strategy.
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Mykkah Herner, MA, CCP Head of Professional Services Ian Englund, CCP Sr Compensation Professional PayScale, Inc. www.payscale.com
www.payscale.com
14,000 Positions 3000 Customers 11 Countries
250 Compensable Factors 40 Million Salary Profiles
www.payscale.com
Three-part Series on Compensation Budgeting
Part I: Managing Pay Inequities
Part II: Determining Raises
Part III: Putting it all together with PayScale Insight
www.payscale.com
Agenda
Recap of Parts I & II
Part III
• Identifying Pay Inequities – Org Level
• Identifying Pay Inequities – Position Level
• Identifying Pay Inequities – Employee Level
• Calculating Pay Increases
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Start with a plan
• Know your comp Philosophy, Strategy, and Policy
• Get reliable market Data
Identify comp inequities at Org, Dept, Position, and Individual levels
• Org/Plan level: fair pay to market
• Dept level: fair pay across departments
• Position level: have some positions move faster than others?
• Employee level: are you paying according to your policy? Fairly based on EEO status?
Develop solutions
Recap of Part I
http://resources.payscale.com/hr-webinar-recorded-compensation-budgeting-three-part-series.html
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Know what you want to reward
Streamline the increase process
Calculate pay increases
• Market-based
• Merit-based
Develop budget recommendations
• Range Adjustments (Org level)
• Market Adjustments (Position level)
• Equity Adjustments (Individual level)
• Pay Increase Adjustments
Recap of Part Il
http://resources.payscale.com/hr-webinar-recorded-compensation-budgeting-three-part-series.html
Organizational Level Pay Inequities
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Identifying Org Level Inequities
Ranges to Market
o Examine Ranges to Market on the whole – do most move up? Most move down? What’s the average?
o Do you want to move ranges at this time?
o Budget
o Organizational demands
Position-Level Pay Inequities
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Identifying Position Level Inequities
Ranges to market by position
o Does the market suggest moving the position to a new grade?
o What are the EE compa-ratios for those positions?
o Decide which to move – examine where other positions are in the job family
o How to identify what type of market premium could be applied to a position (vs moving the grade)
Employee-Level Pay Inequities
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Identifying Employee Level Inequities
o Paying according to policy:
• green-circled, red-circled
• compression
o EEO Concerns
• resolve critical issues asap
Calculating Pay Increases
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Using a Matrix (Merit or Proficiency)
Tier increases by position in range & performance
o Start with a budget increase %
o Allocate increases to EEs based on range penetration and performance
o Create spreadsheet o Note: Proficiency, or another factor, can work like
performance in this example
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Increase Spreadsheet
Name Job Title Current Annual Base
Range Min
Range Mid
Range Max
Compa-Ratio
Range Penetration
Increase %
Annualized Increase
New Annual Base
New Compa-ratio
New Range Penetration
Alexander, Maria Account Manager $45,900 $46,300 $57,100 $67,900 0.804 -2% 3.80% $1,744 $47,644 0.83 6%
Arnold, Alexandra Driver I $29,600 $29,300 $35,700 $42,100 0.829 2% 3.80% $1,125 $30,725 0.86 11%
Baker, Nicholas Account Executive $46,500 $40,400 $49,800 $59,200 0.934 32% 3.80% $1,767 $48,267 0.97 42%
Allen, Ryan Program Manager $86,700 $73,600 $93,300 $113,000 0.929 33% 3.80% $3,295 $89,995 0.96 42%
Bailey, Sara Senior Account Executive $64,000 $54,700 $68,400 $82,100 0.936 34% 2.80% $1,792 $65,792 0.96 40%
Anderson, James Customer Service Rep $45,500 $34,900 $42,500 $50,100 1.071 70% 1.90% $865 $46,365 1.09 75%
Andrews, Vincent Senior Account Executive $76,700 $54,700 $68,400 $82,100 1.121 80% 1.90% $1,457 $78,157 1.14 86%
Adams, Christina Account Manager $63,800 $46,300 $57,100 $67,900 1.117 81% 1.90% $1,212 $65,012 1.14 87%
Total/Average $458,700 0.967625 41% 2.96% $13,257 $471,957 1.00 49%
SUM AVG AVG AVG SUM SUM AVG AVG
• Compa-Ratio = Current Annual Base / Range Mid • Range Penetration = (Current Annual Base – Range Min) / (Range Max – Range Min) • Annualized Increase = Increase % * Current Annual Base • New Annual Base = Annualized Increase + Current Annual Base • New Compa-Ratio = New Annual Base / Range Mid • New Range Penetration = (New Annual Base – Range Min) / (Range Max – Range Min)
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
Mykkah Herner, MA, CCP Manager of Professional Services, PayScale, Inc.
www.payscale.com
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