5 Steps To A Smart Compensation Plan
Transcript of 5 Steps To A Smart Compensation Plan
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5 Steps to a Smart Compensation Plan
bamboohr.com payscale.com
5 Steps to a Smart Compensation Plan
Rusty Lindquist
VP S TRATEG I C H R I N S I G HTS
BambooHR
Rita Paterson, CCP
M AN AG E R O F CUSTO M E R EDU CATI O N
Payscale
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5 Steps to a Smart Compensation Plan
5 steps to set up your compensation plan
Gain executive support.
Define your compensation strategy.
Develop a market-based pay structure.
Build pay ranges.
Implement a total rewards plan.
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5 Steps to a Smart Compensation Plan
Step 1: Gain Executive Support
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5 Steps to a Smart Compensation Plan
Payroll is, by far, a company’s biggest expense; the cost of
getting it wrong is tremendous.
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5 Steps to a Smart Compensation Plan
Pay is the number 3 reason people quit jobs [BambooHR study]. If employees aren’t being paid what they’re worth, they will find it somewhere else.
Executives must care about compensation if they care about retention.
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5 Steps to a Smart Compensation Plan
Top Compensation Mistakes• Not updating compensation regularly
• Not empowering managers to fix problems
• Not being transparent
• Giving across-the-board raises
• Not having a structured plan
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5 Steps to a Smart Compensation Plan
Compensation plans help the bottom line.
1. They make good business sense.
2. They help attract and retain talent.
3. They support your company’s mission,
strategy and culture.
– Ram Charan Best-selling Author, World-renowned Business Advisor
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5 Steps to a Smart Compensation Plan
“If you pick the right people and give them the opportunity to spread their wings and put compensation as a carrier behind it, you almost don’t have to manage them.”
—Jack Welch
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5 Steps to a Smart Compensation Plan
Step 2: Define Your Compensation Strategy
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5 Steps to a Smart Compensation Plan
Questions to ask:• What is your market?
• What are your goals?
• How competitive do you need to be?
• What should you reward?
• Is your current strategy working?
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5 Steps to a Smart Compensation Plan
What is the right compensation mix for your company?
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5 Steps to a Smart Compensation Plan
—Harvard Business Review
“Keep the plan simple. It should be extraordinarily clear which
outcomes you are rewarding.”
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5 Steps to a Smart Compensation Plan
Step 3: Develop a Market-Based Pay Structure
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5 Steps to a Smart Compensation Plan
Decide on the correct job evaluation method.
Market Pricing v. Point Factoring
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5 Steps to a Smart Compensation Plan
Choose the right data source
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5 Steps to a Smart Compensation Plan
Step 4: Build Pay Ranges
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5 Steps to a Smart Compensation Plan
Identify Market DifferentialsSchedules preserve both competitive pay to local
markets and internal equity.
Baltimore+5%
DallasMain
Minneapolis+5%
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5 Steps to a Smart Compensation Plan
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.
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5 Steps to a Smart Compensation Plan
Some considerations include• How wide should my ranges be?
• How much overlap between pay ranges is good?
Build Pay Ranges
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5 Steps to a Smart Compensation Plan
Evaluating employee placement in range. Developing guidelines or policies for movement.
Using Pay Ranges
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5 Steps to a Smart Compensation Plan
Use market dataVerify internal alignment
Assign Jobs to Grades
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5 Steps to a Smart Compensation Plan
Basic Function & Key Differentiators
• Administrative Accounting Functions to support AP & AR
• Update General Ledger• AP / Vendor Relations• AR
• Maintain General Ledger
• Prepare financial reports
• Interpret financial reports and statements for management
• Analyze financial data• Prepare budgets
Degree & Certification Requirements
None Bachelor’s DegreeNo certification required
Bachelor’s DegreeCPA required at proficiency
Bachelor’s DegreeCPA required at start
Critical Skills at proficiency
• Attention to Detail• Excel• Data Entry• Quickbooks
• Attention to Detail• Quickbooks
• GAAP • General Ledger• Monthly Reconciliation• Financial Reporting
• GAAP• Financial Reporting• Financial Analysis• Budgeting
Years of Experience
• 1-2 at proficiency • 3-5 at proficiency • 5-7 at proficiency • 8-10 at proficiency
Accounting Assistant
Senior Accountant
Accountant I
Accountant II
Grade C Grade E Grade 5 Grade 7
Build Career Path
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5 Steps to a Smart Compensation Plan
Step 5: Implement Total Rewards Plan
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5 Steps to a Smart Compensation Plan
Compensation Plan Element
• Philosophy
• Strategy
• Ranges
• Policies
• Processes
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5 Steps to a Smart Compensation Plan
Budgeting for Increases
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5 Steps to a Smart Compensation Plan
Deal with Outliers
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5 Steps to a Smart Compensation Plan
Strategies: Equip Managers• Educate them• Give them the big picture• Give them tools
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5 Steps to a Smart Compensation Plan
What can we do now?
1. Talk with executives about the need for an updated compensation plan.
2. Research market data for your employees’ jobs.
3. Create a pay structure to ensure internal equity.4. Review your current compensation policies and
decide where updates are needed.
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5 Steps to a Smart Compensation Plan
COMP & CULTURE
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5 Steps to a Smart Compensation Plan
Everything you dobecomes part of that story…
The story of what you value
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5 Steps to a Smart Compensation Plan
Compensation:
The story of how much you are valued
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5 Steps to a Smart Compensation Plan
Compensation:
The keystoneof culture
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5 Steps to a Smart Compensation Plan
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Thank you!
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5 Steps to a Smart Compensation Plan
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