Spring Ahead: Plan Your Approach to Comp in 2012
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Transcript of Spring Ahead: Plan Your Approach to Comp in 2012
Spring Ahead: Plan your Approach to Compensation in
2012
Stacey Carroll, M.B.A, SPHR, CCP
Director of Professional Services & Education
PayScale, Inc.
13,000 Positions. 50 Major Industries. 11 Countries.
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 skillsets 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/
Agenda
Start at the end
What will the increase be based on?
Planning for Market Adjustments
Sample Range Recommendations
Sample Merit Matrix
What do you want to change?
General Timeframes
Start At The End
The MOST important event on your compensation calendar is about giving out salary increases to employees. So, this is the end of your process but the beginning of your planning. Align timing with your company philosophy?
Annual review process for all employees Choose a date that aligns with your company’s budgeting process
Anniversary review process Choose a focal point for making decisions about your guidelines and
compensation matrix
Decide if you will stay status quo or make changes to your process.
What are the increases based on?
HOW will you determine how much of an increase the employee with receive?
Aligning increase amounts with your company philosophy
Will all employees be eligible for a cost of living increase?
If you have salary ranges, will you adjust the ranges?
Will you differentiate the increase amount based on merit vs. market?
Will these two pieces be aligned into the same process or different?
Do you give rewards based on longevity with the company or in the position?
What Do You Want to Change About Your Current Process?
Giving out across the board increase (cost of living)
Basing rewards on performance vs. longevity
Differentiating between market adjustments and movement within the range
Moving ranges every year
Planning For Market Adjustments
Benchmark your entire organization – define your baseline
Define your compensation philosophy and goals for 2012
Determine what changes (if any) you want to make to your current process
Provide budget recommendations based on company goals
Sample Recommendations for Range Adjustments
Summary of Midpoints to Market
Structure Employee Base to Mid
2011 Midpoint to Market
2012 Midpoint compared to Market Difference
Denver A -0.26% -5.50% -7.96% -2.46%
Miami A -1.97% -4.36% -8.53% -4.17%
Philadelphia B -4.09% -4.85% -5.96% -1.11%
Baltimore B -6.24% -8.87% -18.77% -9.90%
Costa Mesa C -11.94% -4.31% 3.02% 7.33%
Remote A 14.53% -3.96% -0.12% 3.84%
Remote B -7.89% -5.63% -5.36% 0.27%
Remote C -10.09% -6.49% 13.28% 19.77%
Exec Exec 0.00% 1.94% 1.94%
Reccomendations:
Move A & B structures up by 2%
Keep Structure C the same
Move Baltimore to B
Move Programming Team Lead to 7
Keep Developer II at 6 - but market adjustments may be warranted
Move Sr. Developer to 7
Move Network Engineer to 4
Director Product Management to a grade 10
Job Descriptions Needed:
Customer Advocate Manager
Programming Services Support
Sample Merit Increase Matrix
General Timeframes
Start from the effective date of salary increases
Input payroll changes: 2-4 weeks
HR/Company approval: 1-2 weeks
Managers allocating salary increases: 1-2 weeks
Managers conducting performance reviews: 2-4 weeks
HR preparing instructions, guidelines and recommendations for increases based on budget: 1-2 weeks
HR getting budget support for organizational goals: 2-4 weeks
HR benchmarking the organization: 4-8 weeks
Sample Organization
My company wants to benchmark the organization this year (it’s been 2 years since it was last done). We’ve been losing too many of our top performers, so the Executive team wants to look at rewarding performance this year. Our budgets remain tight due to market conditions, and the executive team wants to know how to invest wisely without “breaking the bank”.
Changes we’ll make to our compensation program for 2012.
Continue to use annual review process for allocating increases to employees at the same time, but break out market adjustments from performance increases
Benchmark the organization Get buy-in on company’s compensation philosophy Provide a compensation matrix that allows managers to reward based on
performance – with consideration for employee’s placement against the market (compa-ratio)
Create a policy for red-circling employees over the top of the max
Sample Timeline
Market adjustments will be effective 10/1/2012
1. Invest in tools/data: 4/1 2. Benchmarking complete: 5/15 3. Decision from leadership team
about compensation philosophy: 6/1
4. HR Analysis on proposed increases: 7/1
5. Leadership sign-off: 8/1 6. Notification to Managers: 8/10 7. Exceptions Finalized: 8/25 8. Communication to employees:
9/1 9. HR final approval date: 9/15 10. HR’s recommendations to finance
for merit increase budget: 10/15
Merit increases will be effective 1/1/2013
1. Manager performance review training: 9/15-10/1
2. Performance Reviews: 10/1-11/1 3. Merit budget approved: 11/1 4. HR sends guidelines, employee
data and communication to managers: 11/15
5. Manager’s allocate salary increases: 11/30
6. HR final review: 12/5 7. Employees are notified: 12/10 8. Data finalized for input: 12/15
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/
Join our Group on LinkedIN: Compensation Today: HR Best Practices
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