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Webinar-Budgeting Part 1: Managing Internal Pay Inequities
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Transcript of Webinar-Budgeting Part 1: Managing Internal Pay Inequities
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Mykkah Herner, MA, CCPDirector of Professional Services
Jenni Marquez, CCPSr. Compensation Professionalwww.payscale.com
Compensation Budgeting Part I:
Managing Pay Inequities
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www.payscale.com
14,000 Positions 3000 Customers 11 Countries
250 Compensable Factors40 Million Salary Profiles
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Compensation Budgeting
Part I: Managing Pay Inequities
Part II: Determining Increases
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AgendaStart with a Plan
Identify Compensation Inequities
o Organizational Levelo Department Levelo Position Levelo Individual Level
Develop solutions
Next month: determining increases
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Start with a (comp) plan
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Comp Design ElementsPhilosophyHigh-level view on the aims of the organization with regard to compensation
Strategyo Define your talent market(s)
o Determine level of competitiveness
o What do you want to reward?
StructureMathematically sound way of aligning your positions to market and internally
PolicyEnsures that the comp plan is carried out
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Get Reliable Market Data
Compensable factors for benchmarking jobs
Defining your competitive set
Accurate and current market data
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Build Compensation StructureDefine Grades & Ranges
Assign Jobs to Grades
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Test for Pay Inequities
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Types of Pay Inequities
Plan Level
Department level
Position level
Employee level
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Plan-wide Pay Inequities
• Pay Fairly to Market–Determine your target market percentile
• Budget
• Competitiveness and impact on retention/attraction
• Stay competitive relative to market–Annually, keep ranges current
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Analyze Ranges to Market
Create a report: range midpoints, market values, and delta
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Identify Solutions: Plan LevelPlan Level Options
Do nothing
Make small incremental
change
Update comp strategy
Adjust all ranges at once
Plan Level Costing
Increase plan
$ impact of green outliers
Former red outlier
eligibility for increase
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Cross-Department Pay Inequities Target / Strategy
Determine appropriate target(s) by department
Build ranges around targets
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Position-specific Pay Inequities
Market movement & critical positions
Listen to your employees
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Identify Solutions: Position Level
Position Level Options
Keep position static
Move position to new
grade
Offer market premium
Position Level Costing
Cost to move to new
grade
Cost to market premium
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Employee-specific Pay Inequities Pay according to your comp plan
Compression issues
Examine compa-ratio (.8-1.2)
Look at range outliers
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Disparate Pay & EEO ConcernsCreate a Disparate Pay Report
o High disparity is a flag for litigation
o Low disparity may indicate not following your comp plan
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Identify Solutions: Employee Level
Employee Level Options
Identify critical issues
Compression
Disparate pay
Green outliers
Employee Level Costing
$ for critical issues
$ for compression
$ for market adjustments
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Identify options
Determine cost to remedy
Examine budget allowance
Consider multi-year strategy
How critical to resolve?
Develop multiple scenarios
Create communication plan
Identify Solutions
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Communicate Pay InequitiesDevelop Budget Request
Ask for what the organization needs
Help the organization manage the budget once approved
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Next MonthCalculating Increases to Base Pay
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Mykkah Herner, MA, CCPHead of Professional Services
Jenni Marquez, CCPSr. Compensation Professional
www.payscale.com