Creating a Compensation Calendar Everyone Loves

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Mykkah Herner, MA, CCP

Head of Expert Services

Ian Englund, CCP

Senior Compensation Professional

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14,000 Positions 3000 Customers 11 Countries

250 Compensable Factors40 Million Salary Profiles

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AgendaWhy do you need a compensation calendar?

Developing your compensation calendar

o Market Analysis

o Handling Ad-hoc questions

o Budgeting

o Determining Increases & Calculating Increases

o Developing Incentive or Variable Program & Calculating Payouts

o Putting it all together

Communicating your compensation calendar

Immediate Actions

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Why do you need a

Compensation Calendar?

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Claim all available opportunities for

success!

• Be pro-active

• Be strategic

• Have an inclusive process

• Avoid clustered deadlines

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Some questions before we get started

• Do you have a comp plan in place?

• How inclusive is your org? Will managers…– Have input?

– Make recommendations?

– Have partial discretion?

– Full discretion?

• How transparent?

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Developing your Compensation Calendar

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Market Analysis

• Identify current data

• Develop or update comp plan

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Market Analysis

Timing depends on:• Data sources• How current comp plan is• Organization Complexity• Budget deadline• Increase deadline

30-90+ days

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Handling Ad-hoc questions

• Addressing comp questions year-round

• Training managers

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Handling Ad-Hoc Questions

Timing depends on:• Manager priorities• Organizational priorities and peak

periods of work• HR/comp capacity to develop training

and/or handle questions

15+ days

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Budgeting• Research typical increase budget• Identify pay inequities• Budget for inequities• Inclusive process: manager training

and/or instructions

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o Org Level Inequities– Range Adjustments• Cost of changing ranges (adjusting green outliers)

o Position Level Inequities– Market Adjustments• Cost of adjusting positions or adding temporary

position premiums

o Employee Level Inequities– Equity Adjustments• Cost of correcting individual pay inequities

Identifying and budgeting inequities

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Summary Comp Budget Request2015 Compensation Budget Request

Total Salary Budget: $15,000,000

Percent Dollar Amount2015 Range Adjustments 0.06% $9,200

2015 Market Adjustments 0.14% $21,500 2015 Equity Adjustments 0.02% $3,700

2015 Pay Increase Adjustments 3% $450,000 Total Increase $484,400

2015 Salary Budget $15,484,400

Detail for comp budget request is in the following attachmentsCosting for Range AdjustmentsCosting for Market AdjustmentsCosting for Equity Adjustments2015 Pay Increases

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Budgeting

Timing depends on:• Fiscal Year• Approvals (Board?)• Inclusive process• Transparency • Market study & current plan

30-60+ days

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Calculating Pay Increases• Base Pay Adjustments

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Using a Matrix (Merit or Proficiency)

Tier increases by position in range & performance

o Start with a budget increase %

o Allocate increases to EEs based on range penetration and performance

o Create spreadsheeto Note: Proficiency, or another factor, can work like

performance in this example

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Increase Spreadsheet

Name Job Title

Current Annual Base

Performance Rating

Range Min

Range Mid

Range Max

Range Penetration

Increase %

Annualized Increase

New Annual Base

New Range Penetration

Adams, Christina Account Manager $63,800Meets $46,300 $57,100 $67,900 81% 1.70% $1,085 $64,885 86%

Alexander, Maria Account Manager $45,900Meets $46,300 $57,100 $67,900 -2% 3.90% $1,790 $47,690 6%

Allen, Ryan Program Manager $86,700Meets $73,600 $93,300 $113,000 33% 3.90% $3,381 $90,081 42%

Anderson, James Customer Service Rep $45,500Meets $34,900 $42,500 $50,100 70% 1.70% $774 $46,274 75%

Andrews, Vincent Senior Account Executive $76,700Meets $54,700 $68,400 $82,100 80% 1.70% $1,304 $78,004 85%

Arnold, Alexandra Driver I $29,600Meets $29,300 $35,700 $42,100 2% 3.90% $1,154 $30,754 11%

Bailey, Sara Senior Account Executive $64,000Does not meet $54,700 $68,400 $82,100 34% 0% $0 $64,000 34%

Baker, Nicholas Account Executive $46,500Does not meet $40,400 $49,800 $59,200 32% 0.90% $419 $46,919 35%

Barnes, Paul Customer Service Rep $38,600Exceeds $34,900 $42,500 $50,100 24% 7% $2,702 $41,302 42%

Totals/Averages $497,300 39% 2.74% $12,608 $509,908 46%

• Range Penetration = (Current Annual Base – Range Min) / (Range Max – Range Min)• Annualized Increase = Increase % * Current Annual Base• New Annual Base = Annualized Increase + Current Annual Base• New Range Penetration = (New Annual Base – Range Min) / (Range Max – Range Min)

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Calculating Pay Increases

Timing depends on:• Market study & current plan• Basis for increases

• Performance (process)• Position in range / pay to market• COLA / Step

• Inclusive process – Manager Training• Systems• Payroll Date• Transparency – Manager Training

7-30+ days

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Calculating Incentive or Variable Program Payouts

Determining appropriate • Bonus• Incentive• Commissions• Profit Sharing

OrganizationTeam

IndividualSales

Other

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Calculating Incentive or Variable Program Payouts

Timing depends on:• Complexity of Program• Timing of payouts @month @qtr @year• Inclusive process, manager input• Transparency • Available budget and budget process• Market study & current plan

1-14+ days

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Putting it all together

• What comp elements do you need to include in your planning?

• When does your fiscal year start?

• How inclusive is your process?

• What training do you need in place?

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Q1:

• Enter/audit adjustments

• Ad-hoc comp questions

Q2:

• Market Study

• Develop Trainings

• Ad-hoc comp questions

Q3:

• Budgeting

• Performance Evaluation

• Ad-hoc comp questions

Q4:

• Calculating Increases

• Annual Incentive Payout

• Goal-setting for next FY

• Ad-hoc comp questions

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Communicating Your

Compensation Calendar

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Communication and Training

• Board

• Executives

• Functional Heads

• Managers

• Employees

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Immediate Actions• Assess any existing comp calendar

• Draft the rest of your comp calendar

• Identify market resources

• Familiarize yourself with the budget cycle

• Review performance management process for effectiveness

• Assess organizational readiness for transparency & inclusiveness

• Include appropriate parties in setting an org-wide comp calendar

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Mykkah Herner, MA, CCP

Head of Expert Services

Ian Englund, CCP

Senior Compensation Professional

www.payscale.com