PowerPoint PresentationNew Year, New Pay Ranges: Modernizing Your Strategy in 2019
Guest Presenter: Sam Reeve CompTeam
TalentTakeaways webinar & podcast series
AGENDA Webinar Info
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HRCI & SHRM Credits
AGENDAAbout the Presenter
Talent Takeaways Series
Sam Reeve is the President of CompTeam, a management consulting firm that focuses on improving the relationship
between employee motivation, happiness and
performance. He is a recognized thought leader in human
capital talent strategies with over 15 years of experience in
leading companies through transformational change by
optimizing talent initiatives with reward programs to achieve
long-term strategic objectives. Sam’s diverse experience
includes the design and optimization of performance-driven
variable compensation plans for executive, sales and core
employee populations of growing companies.
Prior to joining CompTeam, Sam worked in compensation
functions at notable firms such as BlackRock, Barclays,
McKesson, and Automatic Data Processing (ADP).
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STRATEGIC CONSIDERATIONS
Poll Questions
1) How many employees are in your company? • Less than 500 employees • 501 to 3,000 employees • 3,001 to 7,000 employees • 7,001 or more employees
2) How many locations with more than 30 employees? • None • 1 to 5 locations • 5 or more locations
EXAMPLE 8
Common Terminology FUNCTION The major functional areas of a business that represent groups of job families. Typical functional areas are Strategy, Product, Marketing, Finance, Human Resources, Technology and Operations. (Not to be confused with business departments)
FAMILY A group of related job specialties that are focused on common goals related to the function. Typical Job Families in HR are Rewards, Recruiting, and Administration.
HUMAN RESOURCES
Recruiting Manager Mobility Manager
Comp Analyst Benefits Analyst Trainer 2 Recruiter 2 Mobility Specialist
Comp Support Benefits Support Trainer 1 Recruiter 1
SPECIALTY A sub-group of job family that further define roles of similar job function that are common in large and medium sized companies. Typical Job Specialties in HR Rewards are Compensation, Benefits, Work/Life practitioners.
JOB A series of related job titles with progressively higher levels of impact, knowledge, skills, abilities (competencies), and other factors, providing for promotional opportunities over time. Typical Job Families in HR are Rewards, Recruiting, and Administration.
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different levels of pay for jobs in reference to:
their relative internal value
Or negotiated rates (CBA agreements)
A pay structures should: include pay rates for jobs within the company
define the range of pay
be easy to understand and communicate
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Framework to offer fair/consistent pay for the workforce
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Framework to offer fair/consistent pay for the workforce
Allows effective budgeting and forecasting for the company
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Framework to offer fair/consistent pay for the workforce
Allows effective budgeting and forecasting for the company
Supports recruiting and promotional decisions
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Framework to offer fair/consistent pay for the workforce
Allows effective budgeting and forecasting for the company
Supports recruiting and promotional decisions
Communicates and sets pay expectations for the workforce
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Framework to offer fair/consistent pay for the workforce
Allows effective budgeting and forecasting for the company
Supports recruiting and promotional decisions
Communicates and sets pay expectations for the workforce
Can be used to enhance and support overall talent strategy
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Framework to offer fair/consistent pay for the workforce
Allows effective budgeting and forecasting for the company
Supports recruiting and promotional decisions
Communicates and sets pay expectations for the workforce
Can be used to enhance and support overall talent strategy
| PAY STRUCTURE |
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Compensation Strategy
Customizing the pay mix
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Choosing the Right Pay Structure
How accurate should our pay policy be in relation to market rates?
We are the industry leader.
Other companies follow our pay
practices.
is poor quality
Our workforce value
proposition far exceeds
more important to focus pay on
internal fairness
Choosing the Right Pay Structure
How accurate should our pay policy be in relation to market rates?
How fast is market pay
moving?
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Choosing the Right Pay Structure
How accurate should our pay policy be in relation to market rates?
How much pay variation is tolerable
o for jobs of the same level?
o for jobs in the same family?
Q1 Q2 Q3 Q4
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Choosing the Right Pay Structure
How accurate should our pay policy be in relation to market rates?
How much pay variation is tolerable
o for jobs of the same level?
o for jobs in the same family? Director
Manager
Choosing the Right Pay Structure
How accurate should our pay policy be in relation to market rates?
How much pay variation is tolerable
o for jobs of the same level?
o for jobs in the same family?
Should the pay structure support career paths?
o Traditional Internal Career Mobility (Hierarchal, Lateral)
o Project Management
Project
Manager
Project
Admin
Entry
Developing
Career
Senior
Expert
Contractor
Consultant
Director
Senior
Manager
Manager
Supervisor
Choosing the Right Pay Structure
How accurate should our pay policy be in relation to market rates?
How much pay variation is tolerable
o for jobs of the same level?
o for jobs in the same family?
Should the pay structure support career paths?
o Traditional Internal Career Mobility (Hierarchal, Lateral)
o Project Management
How does the company recognize performance and competency growth?
Q1 Q2 Q3 Q4
MINIMUM MAXIMUMMIDPOINT
Pay Range
Choosing the Right Pay Structure
How accurate should our pay policy be in relation to market rates?
How much pay variation is tolerable
o for jobs of the same level?
o for jobs in the same family?
Should the pay structure support career paths?
o Traditional Internal Career Mobility (Hierarchal, Lateral)
o Project Management
How does the company recognize performance and competency growth?
Costs and administration to maintain Number of Pay
Surveys
Choosing the Right Pay Structure
How accurate should our pay policy be in relation to market rates?
How much pay variation is tolerable
o for jobs of the same level?
o for jobs in the same family?
Should the pay structure support career paths?
o Traditional Internal Career Mobility (Hierarchal, Lateral)
o Project Management
How does the company recognize performance and competency growth?
Costs and administration to maintain
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Broadband Job Function Job Family
Types, Characteristics and Uses of Pay Structures
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METHOD
Rates are reviewed regularly based on market
pay pressures Q1 Q2 Q3 Q4
80% OF PAY TARGET 120% OF PAY TARGET PAY TARGET
BEST APPLICATION
Small, start-up companies or select single incumbent /
leadership level individuals that are not included in other pay
structures
EXAMPLE
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EXAMPLE DISADVANTAGES
Survey data needs to be used correctly to accurately capture
market rates. Should use 3 surveys for the best result
High administration and may be difficult to communicate
without confusion due to volatility.
| RAW SURVEY DATA |
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METHOD
A base pay policy line is created by regressing job
evaluation points with external market rates
Each job is evaluated using a point factor methodology and
is assigned a pay range
BEST APPLICATION
competitive rates
leadership level individuals that are not included in other pay
structures
Ideal for companies who wish to remove subjectivity from the
pay process
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DISADVANTAGES
A formulaic approach is not flexible and can cause frustration
in managers and staff
factors in various disciplines
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Single Rate Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
Rates are review regularly based on:
o Market pay movement, and/or
o Collective bargaining agreements (CBA)
Job Pay Rate per Hour
Senior Mechanic $30.00
High administration but easy to communicate
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Single Rate Pay Structure Types, Characteristics and Uses of Pay Structures
DISADVANTAGES
wages and be prone to leave for a higher paying
competitor.
Market pay rates jobs in the same family may have
large pay differences from level to level.
Job Pay Rate per Hour
Senior Mechanic $30.00
Traditional Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
Each job is assigned to a grade and range of pay
Multiple job functions assigned to the structure
Can have wide or narrow range spreads based
upon number of grades (20% to 50%)
EXAMPLE
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Traditional Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
Each job is assigned to a grade and range of pay
Multiple job functions assigned to the structure
Rates are review regularly based on:
o Market pay movement, and/or
o Internal job valuation
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Traditional Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
Each job is assigned to a grade and range of pay
Multiple job functions assigned to the structure
Rates are review regularly based on:
o Market pay movement, and/or
o Internal job valuation
EXAMPLE
Support and paraprofessional 30% to 40%
Service, production and maintenance 20% to 30%
Typical Range Spreads
Traditional Pay Structure Types, Characteristics and Uses of Pay Structures
EXAMPLE – Higher market variance when assigning to a grade
BEST APPLICATION
tracking market competitive pay
Q1 Q2 Q3 Q4
Traditional Pay Structure Types, Characteristics and Uses of Pay Structures
EXAMPLEBEST APPLICATION
tracking market competitive pay
Point Value
400 – 499 $xx - $xx Financial Analyst 3
HR Business Partner
HR Analyst Legal Analyst
100 – 199 $xx - $xx
Traditional Pay Structure Types, Characteristics and Uses of Pay Structures
BEST APPLICATION
tracking market competitive pay
Emphasis on promotions / career advancement
if ranges are narrow (20% to 50%)
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Traditional Pay Structure Types, Characteristics and Uses of Pay Structures
DISADVANTAGES
Focused on the job versus the individual. May not be the best
fit for talent based companies.
Not an ideal fit for companies with many single incumbent
positions or hybrid roles.
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Broadband Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
are fewer grades (3 – 6 grades)
Ranges are very wide (100% to 300%)
BEST APPLICATION
Companies that desire pay flexibility based individual
competency development
promote a flatter organization
significant amount of lateral movement in the career
path
Broadband Pay Structure Types, Characteristics and Uses of Pay Structures
DISADVANTAGES
Broadband structures require strong managers that are able
to recognize, reward and communicate with talent effectively.
There needs to be a high level of trust between managers and
employees
Overuse of control points can begin to mimic aspects of a
traditional pay structure
positions
There is low administration in maintaining the structure but it
puts a much greater burden on a manager’s pay decisions
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Job Function Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
consistently
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Job Function Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
jobs are leveled consistently
across the job function
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Job Function Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
jobs are leveled consistently
across the job function
different structure $xx - $xx
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Job Function Pay Structure Types, Characteristics and Uses of Pay Structures
BEST APPLICATION
of tracking market competitive pay
Companies that want to promote career
mobility and lateral movement in the job
function.
that perform similar scope of work.
This is an ideal pay structure for locations
where pay survey market data is limited or
non-existent.
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Job Function Pay Structure Types, Characteristics and Uses of Pay Structures
DISADVANTAGES
Pay ranges are broader than traditional or job family
structures and may not track the market as closely.
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Job Family Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
TECHNOLOGY CAREER MATRIX
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Job Family Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
consistently
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Job Family Pay Structure Types, Characteristics and Uses of Pay Structures
METHOD
consistently
be on a different structure
SW Engineer Mgr 1
SW Engineer Mgr 2
SW Engineer Mgr 3
M3
M2
M1
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Job Family Pay Structure Types, Characteristics and Uses of Pay Structures
BEST APPLICATION
with a desire to target pay accurately
Companies that want to promote career
mobility in the job family.
TECHNOLOGY CAREER MATRIX
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Job Family Pay Structure Types, Characteristics and Uses of Pay Structures
DISADVANTAGES
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Market Ranges
How Pay Structures Can Be Used Strategically
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What Should You Do Now?
Review your current pay structure methods and determine if they fit the company’s strategy. Analyze the cost savings of switching to a better method.
Coordinate with other talent initiatives such as career planning and mobility. Use the new structure to drive performance
Obtain the appropriate pay surveys and job analysis software to support and maintain the new pay structures.
Bring pay into alignment each cycle by tightening the pay ranges where applicable. Improving pay accuracy and fairness will save the company millions.
Monitor the pay structures each year or sooner to ensure success.
DIAGNOS
E
COORDINATE
PLAN
EVOLVE
ADAPT
Office 1 925 596 0147 Mobile 1 970 403 5775
sam@compteam.net LinkedIn: SamReeve Twitter: @SamReeve3
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"Your people come first, and if you treat them right, they'll treat the customers right." Herb Kelleher, founder of Southwest Airlines