“Stupid Things” in Compensation

Stacey Carroll, SPHR, CCP

Director of Professional Services & Education

PayScale, Inc.

7,000 Positions. 50 Major Industries. 11 Countries.

PayScale is a market leader in global online compensation data. With the world's largest database of individual employee compensation profiles, PayScale provides an immediate and precise snapshot of the job market.

Our patent-pending, real-time profiling system indexes custom employee attributes (such as industry-specific certifications) and specific job titles for every industry.

Our secure, on-demand business solutions, PayScale MarketRate and PayScale Insight, provide employers with accurate, reliable compensation detail never before available.

Agenda

Why we do “stupid things”

The most common “stupid things”

Doing the smart thing

Q&A

Why we do “stupid things”

• It’s what we’ve always done

• It’s what everyone else is doing

• It’s can be difficult to get buy-in from senior leaders

• Change is hard

• The unknown could be worse than what we are doing now

Why it doesn’t work What you can do to fix it

It encourages mediocrity (from employees and managers)

It’s not “fair”

It’s expensive

It sends your top performers running out the door

Create salary ranges

Build a merit matrix to reward other factors

Engage leadership in budgeting exercises

Utilize incentive compensation

#1 – Across the board increases

Why it doesn’t work What you can do to fix it

It’s hard to justify with market data.

It’s difficult to mange internal expectations.

It’s expensive – without additional benefit.

Confusion can lead to retention issues.

Document job duties, requirements and expectations.

Validate job criteria against department/business goals.

Validate pay ranges against market data and/or company philosophy.

#2 – Leveling for people not position requirements

Example

What the data suggests: Typical Range Width: 40% Typical Midpoint Differential: 15% IQR: 25% Maturity Range: 55% Result: This may be two levels – but hard to justify more.

interquartile range (IQR), also called the midspread or middle fifty, is a measure of statistical dispersion, being equal to the difference between the upper and lower quartiles. In the example above it’s the percent spread between the 75th and 25th percentiles of the market data.

Why it doesn’t work What you can do about it

People don’t leave or stay because of money alone.

Most financial corrections

don’t last long.

There is no guarantee that the remedy will keep the employees that you want to keep.

It creates a squeaky wheel problem.

Isolate the issue to compensation.

Fix compensation problems as a whole when possible.

Find ways to incorporate variable or other incentives into the overall rewards package.

Measure, track and respond to management issues.

#3 – Solving management problems with compensation

Doing the smart thing

Get access to reliable data.

Use it to have smart conversations about compensation in the organization.

As much as possible to proactive with compensation instead of reactive.

Show the organization a better way.

PayScale Delivers Where Other Compensation Providers Fall Short

PayScale operates the largest online salary database in the world. We allow organizations to price their jobs according to their industry, location, and the employee skill sets which make their workforce unique. PayScale goes beyond supplying the accurate data you need - we also give you the tools to efficiently manage your compensation projects, and the knowledge to stay up-to-date.

Visit our blog: http://blogs.payscale.com/compensation/

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Stacey Carroll, M.B.A, SPHR, CCP Director of Professional Services & Education PayScale, Inc. Connect with me on LinkedIN: http://www.linkedin.com/in/hrstacey