5 Steps to Building Your Comp Plan

Karaka Leslie

Partnership Manager

PayScale, Inc.

www.payscale.com

www.payscale.com

14,000 Positions 3000 Customers 11 Countries

250 Compensable Factors40 Million Salary Profiles

www.payscale.com

AgendaCompensation Terms Defined

5 Steps to Building Your Comp Plan

1. Gain executive support

2. Define your comp strategy

3. Develop a market-based pay structure

4. Build pay ranges

5. Implement the total rewards plan

Immediate Action(s)

Compensation Terms Defined

• Benchmark Job• Benchmark Data/Market

Data (same thing)• Labor/Talent Market• Percentile• Ranges• Min/Mid/Max• Outlier• Red Circle/Green Circle

Compensation Terms

Gain Executive Support

THE COST OF

GETTING

COMP

WRONG

Payroll is by far your biggest

expense; the cost of getting it wrong

is tremendous.

THE REASONS

YOU’RE

CREATING A

COMP PLAN

1. IT MAKES GOOD

BUSINESS SENSE.

2. IT HELPS ATTRACT AND

RETAIN TALENT.

3. IT SUPPORTS THE

MISSION, STRATEGY AND

CULTURE OF THE

ORGANIZATION.

Define YourComp Strategy

FACTORS TO

CONSIDER…

WHAT IS MY

MARKET?

WHAT DO

YOU WANT

TO REWARD?

HOW

COMPETITIVE

DO YOU WANT

TO BE?

WHAT IS THE

RIGHT

COMPENSATION

MIX FOR MY

ORG?

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Develop A Market-based Pay Structure

Decide on the correct job evaluation method.

MARKET PRICING

VS.

POINT FACTORING

Aging is

great…

For wine

and

cheese.

Build Pay Ranges

Identify Market Differentials

Schedules preserve both competitive pay to local markets and internal equity.

Group labor markets into Schedules with 5% increments.

McAllenSchedule A:

-10%

BaltimoreSchedule D:

+5%

San Antonio/

BeaumontSchedule B:

-5%

Austin/DallasSchedule C:

Main

MinneapolisSchedule D:

+5%

DETERMINE

YOUR PAY GRADES

The number of pay grades

you use will influence your

midpoint differential and

should sufficiently

distinguish difficulty levels

of different jobs.

Some Considerations

o How wide should my ranges be?

o How much overlap between pay ranges is good?

Build Pay Ranges

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Using pay ranges

Evaluating employee placement in range.

Developing guidelines or policies for movement.

Range MidpointMinimum Maximum

$40,000 $52,000$46,000

Green-Circled Employees Red-Circled Employees

ASSIGN JOBS

TO GRADES

Use market

data

Verify internal

alignment

Career Path (Designer Example)

Associate Designer

Senior Associate Designer

Designer

Senior Designer

Design Director

Grade 8Grade 9 Grade 11

Grade 14Grade 15

Implement

Total Rewards Plan

COMP DESIGN ELEMENTS

PHILOSOPHY

STRATEGY/IES

STRUCTURE

POLICY

BUDGET INCREASES

DEAL

WITH OUTLIERS

STRATEGIES:

EQUIP MANAGERS

Educate Them

Give them the big picture

Give them tools

Immediate Action(s)

1. Talk with your executives about the need for a(n updated) comp plan

2. Acquire market data for your jobs so you know you’re paying top dollar for top talent

3. Build a pay structure for your organization so you can ensure internal equity

4. Review your comp policies to see how you’re compensating people now – know what’s in the mix

PayScale Delivers Where Other Compensation Providers Fall ShortPayScale 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

Karaka Leslie

Partnership Manager

PayScale, Inc.

www.payscale.com