How Compensation Discussions Make Or Kill Culture

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How Compensation Discussions Make or Kill Your Culture



Rusty Lindquist

VP Strategic HR Insights

BambooHR

Mykkah Herner

Head of Professional Services

PayScale


How Compensation Discussions Make or Kill Your Culturev

How Compensation Discussions

Make or Kill Your Culture:

Organizational Impact

Determining compensation

Communicating with executives

Communicating with managers

Communicating with employees

Your seat at the strategic table



How Compensation Discussions

Impact Your Organization

CulturePerformance

Engagement Retention



Performance

Loyalty

Satisfaction Engagement

RetentionCULTURE

Greater Business Output



CULTURE

Impact?



Everything you do

becomes part of that story…

The story of what you value



Compensation:

The story of

how much you are valued



Compensation:

The keystone

of culture



Making the Compensation

Conversation a Culture Builder

Don’t be offended

Be open

Take it seriously Be objective

Be proactive

Be Positive



Using objectives and values to

determine compensation

v



Compensation is about

an exchange of value,

not money.



Value Exchange

Experience in industry

Experience in market vertical

Experience in adjacent markets

Experience in field of discipline

Experience in adjacent disciplines

Experience with competitors

Product knowledge

Competitor knowledge

Time and experience in company

Education

Discipline training and certification

Supply and demand

Employee Value Drivers



Value Exchange

Experience in industry

Experience in market vertical

Experience in adjacent markets

Experience in field of discipline

Experience in adjacent disciplines

Experience with competitors

Product knowledge

Competitor knowledge

Time and experience in company

Education

Discipline training and certification

Supply and demand

Employer Value DriversEmployee Value Drivers

Base pay

Performance Pay

Paid time off

Benefits

Travel

Culture and environment

Work flexibility

Work/Life balance

Meaningful work

Who you work with

Challenging work

Opportunity to impact

Job security

Shared purpose / mission

Career advancement opportunities

Autonomy

Senior leadership



THE COST OF GETTING

Payroll is by far your biggest expense; the cost

of getting it wrong is tremendous.



Align compensation plan

with business goals



1. Drop in engagement.

2. Drop in performance.

3. Distancing.

4. Sudden increase in negativity.

Early Indicators of

Compensation Misalignment



Communicating with

executives

v



Executive Audience

• Leaders don’t want to be told what to do

• Leaders can be distrustful of change

• Leaders are decision-makers

• Many leaders have access to

information

• What matters to your leaders?



Execs are also Managers

Give them tools for success:

• Flight Risk report & the inverse report

• Disparate Pay report

Give them insight into what employees care about

• Am I making enough money to cover my basic needs (entry level)

• Am I being paid fairly (professional level)

• Am I being paid enough to deal with managing people (Mgrs/Dirs)

Give them talking points for comp conversations with employees

Report Relevant Info



Communicating with

managers

v



Agents of the Organization



• Sell the organization and the full package on the table

• Sell the benefits of the offer (initial or increase)

• Listen to the ask behind the ask

• Meet them and then move

Negotiation Skills



Listening Skills



Manager Training

Compensation Plan Overview

Putting It Into Practice

• Compensation 101

• Philosophy & Strategy

• Structure

• Policies

• Linking Performance to Pay

• Calculating Increases

• Talking with Employees



Communicating with

employees

v



Develop a

Communication Plan



Lead The Conversation

Finding out where you stack up vs.

peers can dramatically change:

• Desire to stay/leave

• Overall job satisfaction

• Exert more/less effort

I was approached by an employee who was very upset that

her base pay was being frozen. After going through our

philosophy, the employees pay compared to the grade and

range she was in the employee left the meeting with a smile

on her face, feeling positive about the conversation.

Monarch Landing, 300 employees

Source: Card, D., et al., (2011); “Inequality at Work: The Effect of Peer Salaries on Job Satisfaction.”

“Wow! This is what our employees need to see!

They only ever talk about what they see in their

paycheck, so this would really drive home our total

investment!”

Alberta Motor Association - 2,000 employees

of employees will

compare pay



Anticipate Employee

Questions & Concerns



Employee Pay is LowConsider

• Should the employee pay be low?

• Is the organization able to adjust

employee pay?

Talking Points

• Start by appreciating accomplishments

• Mention market movement of the position if applicable

• Explain position in range

• Remind of last year’s adjustment amount if appropriate

• Discuss what you will or won’t do for increase or bonus depending on skillset,

performance, etc.

• Open the door



Employee Given No

Performance-based Increase

Consider

• What does the employee need to be eligible for the next round of increases?

• What potential does the employee have to move up in the organization?

Talking Points

• Start by appreciating contributions

• Remind of performance issues

• Explain position in range

• Discuss what you will or won’t do for increase or bonus depending on

skillset, performance, etc.

• Explain what they need to do to be eligible next go round



“I FOUND A

SALARY REPORT

ON THE

INTERNET”

• Conflicting information

• The “independent study”

• Position pricing vs. people

pricing

• The conversation



Compensation: Your seat at the

strategic table



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