5 Steps to Building Your Comp Plan - BLR · Compensation Terms Defined 5 Steps to Building Your...
Transcript of 5 Steps to Building Your Comp Plan - BLR · Compensation Terms Defined 5 Steps to Building Your...
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5 Steps to Building Your Comp Plan
Karaka Leslie
Partnership Manager
PayScale, Inc.
www.payscale.com
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14,000 Positions 3000 Customers 11 Countries
250 Compensable Factors40 Million Salary Profiles
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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)
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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
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Gain Executive Support
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THE COST OF
GETTING
COMP
WRONG
Payroll is by far your biggest
expense; the cost of getting it wrong
is tremendous.
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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.
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Define YourComp Strategy
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FACTORS TO
CONSIDER…
WHAT IS MY
MARKET?
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WHAT DO
YOU WANT
TO REWARD?
HOW
COMPETITIVE
DO YOU WANT
TO BE?
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WHAT IS THE
RIGHT
COMPENSATION
MIX FOR MY
ORG?
www.payscale.com
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Develop A Market-based Pay Structure
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Decide on the correct job evaluation method.
MARKET PRICING
VS.
POINT FACTORING
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Aging is
great…
For wine
and
cheese.
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Build Pay Ranges
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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%
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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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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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www.payscale.com
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
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ASSIGN JOBS
TO GRADES
Use market
data
Verify internal
alignment
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Career Path (Designer Example)
Associate Designer
Senior Associate Designer
Designer
Senior Designer
Design Director
Grade 8Grade 9 Grade 11
Grade 14Grade 15
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Implement
Total Rewards Plan
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COMP DESIGN ELEMENTS
PHILOSOPHY
STRATEGY/IES
STRUCTURE
POLICY
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BUDGET INCREASES
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DEAL
WITH OUTLIERS
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STRATEGIES:
EQUIP MANAGERS
Educate Them
Give them the big picture
Give them tools
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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
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Visit our blog: www.payscale.com/compensation-today
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Karaka Leslie
Partnership Manager
PayScale, Inc.
www.payscale.com