The Top Three Reasons to Create Pay Grades

What Pay Grades Can Do For Your Organization

By Stacey Carroll, PayScale.com

We talk about pay grades all the time here at PayScale, but not everyone understands why they are so important. So, without further ado, here are our top three reasons to adopt pay grades.

3.      Easier to Administer Than Individual Ranges

While this is not the primary reason for developing pay ranges, it is important. In job-based ranges, each job has a different pay range.  In some cases, the difference in one range and another may be quite small, even insignificant. 

What’s the Difference Between Performance & Proficiency?

Just Rewards For Your Employees

By Mykkah Herner, MA, CCP, Compensation Consultant at PayScale.com

Here at PayScale, we often talk about compensation philosophies answering 3 main questions:

• How do you define your market?
• How competitive do you want to be relative to the market?
• What do you want to reward?

In working with clients, I find they know the answers to the first two questions within a heartbeat. The third question, however, often leads them to stumble and to look to me for guidance. What are the options? What should we reward? At that point, I have to dig in deeper to their organization.

In the Talent Wars, Compensation Matters. So Does Communication.

Real Life Lessons From VerticalResponse

By Tim Low, PayScale.com

The PayScale Talent Wars event series hit San Francisco last week. Among other speakers, Kate Aughenbaugh, Director of HR at VerticalResponse, a Bay Area marketing and social media platform company, spoke about her experiences working with PayScale to implement a compensation strategy. 

Managing Employee Pay with Ranges

Options For Handling Outliers

By Mykkah Herner, MA, CCP, Compensation Consultant at PayScale

You've just finished benchmarking all your jobs. You’ve established some ranges for your positions. Maybe you even have a structure, with grades, to which you’ve assigned each position. You’re ahead of the game, with most of your work is behind you, right? Well, yes and no. Inevitably some employees will fall below your range, and some may fall above. Now it's time to manage employee pay based on the ranges you’ve developed.

Building a Better Incentive Plan

Blending the World at Work and Brad Hams Approaches

By Mykkah Herner, PayScale.com

Last month, I read and reviewed Brad Hams’ Ownership Thinking, and promised to write more on his sense of having the right incentives. While I thought he has some useful suggestions, I found his incentive plan to be both too prescriptive and too detailed.

Ultimately, I find that World at Work, the experts in the compensation field, explain incentives best. So, rather than spend a lot of time on a plan that can use a little more cohesion and a little more variability, I’ll focus on World at Work’s explanation of incentive plans, and weave in some gems from Hams. World at Work focuses on three stages: pre-design, design, and implementation.

Setting Merit Budgets This Year

Is Three Percent the Right Merit Budget for Your Organization?

By Stacey Carroll, PayScale.com

I get the phone call a lot. It goes something like this, “Stacey, my CFO wants to know what the average increase other companies are giving this year so we can determine our merit budget. Can you tell me?”. I can. The short answer is from everything I’ve seen and read recently, most organizations are planning on giving anywhere between a two to three and a half percent increase in 2012. But, the better way to answer the question is: “Why is ‘what everyone else is doing’ our approach to compensation”? In reality, what your organization should pay as a merit increase for 2012 is going to depend on many factors – but here are just three.

Listen Up, Mr. Scrooge! PayScale Compensation Plan Advice

What We Would Teach Ebeneezer Scrooge About Compensation

“Bah, humbug! Why should I pay my people another dime?”

Beware, Managers, don't follow Scrooge’s miserly ways when it comes to compensation. As the classic tale goes, through various ghostly visits, our friend Mr. Scrooge learns to get into the holiday spirit and finally rewards his hardworking employee, Bob Cratchit, with a raise and a "discussion of his affairs." How would PayScale advise Scrooge to adjust his compensation philosophy for long-term success?

Handle Questions About Your Comp Decisions

Are You Ready to Explain Each Employee’s Pay?

How well can you explain your compensation plan to your employees? What if you were asked detailed questions by a valued employee about their pay? Would you be ready to respond?

Non-Profit Compensation in a Down Economy

Reality Check: Why Non-Profits Need to Evaluate Their Pay Practices in Today’s Economy

The past few years have been tricky for many non-profits. Those that have weathered the recession have done so because they have had great financial advisors or have been really creative. While our private-sector counterparts may be starting to see the light at the end, many non-profits are still struggling.

Comp Basic: Mean vs. Median

The Difference Between Mean and Median

Midpoint, market ratio, mean, median, merit bonus - I don’t know what it is with “m” words in compensation, but there are a lot of them and it can get confusing. Let’s try to simplify things by breaking down the difference between two commonly confused words: mean and median.

Bon Voyage, Across-the-Board Increases

Farewell to Across-the-Board Increases

By Bridget Quigg, PayScale.com

Everyday PayScale’s sales team, account managers and executive leadership talk to HR professionals about what is and isn’t working in compensation. We sat down recently with PayScale’s Chief New Business Officer, Dave Smith, to find out what he has learned from our customers and why he’s convinced that across-the-board increases are dead.

Simple Incentive Plan Design

Use “Line of Sight” to Keep Incentive Plans Simple

More and more organizations are bringing incentives down to lower levels within the organization. They want employees to have a piece of their compensation that is variable. But, they often complicate their efforts.

SHRM 2011 – Aligning Comp with Business Goals

SHRM 2011: “Stupid Things” We Do in Compensation

I learned a very important lesson during my first speaking engagement at the SHRM national conference: Be careful what you say. During my conference break-out session titled “Aligning Your Compensation Strategy with Business Priorities” I said, “I’m on a mission to eliminate the stupid things we do in compensation.” A writer from the SHRM newsletter was listening. Guess which quote led his article? Yep, you guessed it.

How to Avoid Pay Compression

Pay Compression: Our Nightmare in the World of Compensation

Compression is the ugliest issue compensation professionals face. It tends to be a no-win, lose-lose situation, and the ways to deal with it are limited.

Becoming a Certified Compensation Professional

Becoming a Certified Compensation Professional (CCP)

By Bridget Quigg, PayScale.com

If you work in HR and want to find a way to advance your career, why not earn a Certified Compensation Professional certificate? This certification, offered by World at Work, requires you to pass nine tests and, as their website states, is a “mark of expertise and excellence in all areas of compensation.” Right now, several staff members at PayScale are working to earn their CCPs. We took a moment to interview one of them about how her process is going.

How to Pay Remote Workers

How to Pay Employees Who Work Remotely

In my current capacity as Director of Professional Services at PayScale, I get the privilege of working with many different companies in many different industries to build their compensation plans. One of the most interesting observations that I’ve made in the recent months is how many companies, both big and small and from all different industries - tech to manufacturing - have employees who work remotely in home offices. And, paying these employees in different locations brings up some tricky compensation questions.

The Advantages of Broadbanding

The Advantages and Disadvantages of Broadbanding

Broadbanding is the term applied to having extremely wide salary bands, much more encompassing than with traditional salary structures. Whereas a typical salary band has a 40 percent difference in pay between its minimum and maximum, broadbanding would typically have a 100 percent difference. Most of the time, creating enormously large bands is done as a measure to support a restructuring. It combines and consolidates the number of levels or job grades. This article will discuss the advantages of broadbanding in an overall compensation strategy, as well as the disadvantages.

Executive Reality – Board Meeting Prep

Help Your CEO Prep for the Board Meeting

By Staff Writer

We continue with our interview series with PayScale’s CEO Mike Metzger (see Helping CEOs with Compensation Planning) by learning what he has to say on the communication between an HR team and a CEO as they do annual compensation reviews and present their plan to the board.

Employee Pay for Multiple Jobs

Pay for Employees Performing More than One Job Q&A

If you have employees who want to work additional jobs for extra pay, you need to make sure you are paying them properly. Nonexempt employees may be owed overtime, while exempt employees generally can be paid the extra compensation without affecting their exempt status.

Helping CEOs with Compensation Planning

How to Help Your CEO with Compensation Decisions

By Staff Writer

Our recent 2011 Compensation Practices Survey revealed some useful facts about how compensation decisions are made at companies of all sizes. We noticed that small companies consistently listed the CEO as the person most responsible for final compensation decisions. So, we decided to interview our CEO, Mike Metzger, about how he approaches and likes to be helped with compensation decisions.

Performance Compensation Plans

Creating Better Performance: Compensation Plans Behind the Scenes

By Staff Writer

Today we hear from Brent Egbert, an account manager at PayScale who works everyday with HR professionals who are improving their organization's compensation structure in order to save their company money and improve employee performance. Compensation Today asked Brent a few questions about what he sees happening on the front lines of compensation planning for better performance.

Creating a Merit Matrix

How to Create a Merit Matrix

When is it time for your organization to allot its merit budget, how do you best support the decision makers? Consider creating a merit matrix. A merit matrix is a great tool that can easily summarize and boil down paragraphs of policy into a simple, quick-to-view and quick-to-use visual to produce better decisions.

Compensation Planning Season

'Tis the Season for Compensation Planning

It’s that time of year again! No, I’m not referring to the mad rush to get Christmas presents wrapped and under the tree, although that can certainly add to our stress level. I’m referring to the time of year when HR and compensation professionals are asked to help with budgeting and compensation planning for the upcoming year.

Competitive Compensation Strategy

Q & A: Focus on Competitive Compensation Strategy

How long has it been since you’ve reviewed your business plan? Likely you did so within the last year. How long has it been since you’ve reviewed your compensation plan? Has it been a year, two years or more? Theses two documents need to be in lock step. As your business grows and shifts its strategies, your pay strategies should shift as well.

Communicating Compensation to Employees & Leadership

Communicating Compensation Plans: How to Present Your Findings and Recommendations

I am a stickler on communication. I think that too often our compensation programs fail not because of the merits of the program but rather the ways in which we communicate or lack communication both with leaders and employees.

4 Tips for Business Paid Time Off Plans

Four Tips for Implementing a Paid Time Off Plan

Paid time off plans, or PTO banks, give employees flexibility in using their paid leave and are generally easy to implement. Use these guidelines to determine if a PTO business plan is right for your organization and find out four tips for putting a PTO plan to work for you.

Unique Employee Reward Systems & Motivation

Incentive Pay & Employee Motivation: Create an Experience

More and more companies are using incentive pay to reward their employees. It is easily linked to pay-for-performance and as one-time events, the costs are contained; making them attractive compared to merit increases that perpetuate expenses into the future. Sometimes during this economic recovery, the amounts of money to spend are, shall we be polite and say, modest? You want to reward performance that stands out, and yet the bucks just are not there to be shared. What can you do?

Pay Incentive Programs

Incentive Pay and Cautions for Non-Exempt Employees

Above and beyond base pay is the option of incentive pay. The critical point to make about any plan for a pay incentive program is to watch your messaging. Your communication should focus on the notion that incentive pay is for results above and beyond normal expectations. You want to avoid any one thinking their incentive pay is an entitlement. Look what that thinking has done in the financial industry.

Refining Employee Compensation Plans

Refining Employee Compensation Plans

Employers and HR professionals alike put a lot of time, research, and energy into developing a strong and attractive employee compensation plan. Stacking benefits like profit–sharing and team-based pay onto basic compensation is commonly done, then that approach is reviewed, researched, and refined over time.

Pay-for-Performance Plans Make a Comeback

Back to Normal: Review Your Pay-for-Peformance Plan Now

Thinking about merit increases again for the first time in a very long time?

The evening news reports that the economic recovery is shaky, with steps forward and steps back, but some companies are doing well again. If the annual pay-for-performance plan at your work was put on hold, but you can now consider starting it up again, here are some back-to-basics steps to follow.

Company-Wide Incentive Programs: Q&A

Designing Bonus Plans That Cut Business Costs

What are some smart approaches to designing company-wide incentive programs? Bonus incentives are powerful tools and can both create success or wreak havoc. Careful planning is key. HR expert Stacey Carroll, director of customer service and marketing at PayScale, recently addressed the following questions during a webinar titled Aligning Your Compensation Strategy with Business Priorities:

How Do I Design a Compensation Plan?

How Do I Design a Compensation Plan That’s Customized to My Organization?

In a previous post "Customize Your Compensation Plan for Your Organization," we shared the first three of six tips from HR expert Stacey Carroll, MBA, SPHR, on how to design a custom compensation plan so that your organization stays lean and competitive. Here are the final three tips, as explained by Ms. Carroll, which deal with merit increases, budgeting and compensation plan design.

Customize Your Compensation Plan for Your Organization

Help Your Company Stay Afloat: Customize Your Compensation Plan

In an era of small budgets and stiff competition how can you, the HR professional, help make sure that your company is thriving, ten and twenty years from now? You need to get very specific and very strategic about your compensation decisions. You can’t just take a cookie cutter approach to your compensation strategy. If you want to beat your competition in business, you need to be different than your competition in your compensation plan. And the best way to do that is to customize your compensation plan to fit your organization.

Developing a Competitive Compensation Strategy

Strategic Compensation and Your Position in the Market

Smart HR leaders regularly ask themselves a key question when planning a human resources compensation strategy, “Have we positioned ourselves well relative to the market?” In order to answer this question, you must first know how competitive you want and need your compensation plan to be. Then, you can build pay ranges in alignment with your competitive compensation strategy.

Integrating General Business Strategy with Compensation

Decided, Defined, Done: Why You Need a Business and Compensation Strategy Right Now

I have written lately about the importance of integrating general business strategy with compensation. The fact is that your business strategy is likely more clearly defined right now than your compensation strategy. You might not even have a compensation strategy at all. Do you know where you want to be in the market as an employer, compared to your competition? Are you hiring in a range that you can afford long-term?

Preparing a Compensation Plan

Catching Up with the Economy: How to Prepare for a Compensation Plan Re-Design

Up, down, emerging and disappearing – these are the movements that most markets are dealing with these days. Is your company keeping up with all of the changes, and addressing the resulting wake of new employee compensation challenges? With the fast pace at which markets and industries are transforming, likely not. How can you get your talent strategy in line with your current business priorities?

Compensation Metrics Defined

A Crash Course in Key Compensation Metrics

While some of us may not be big fans of math and statistics, a crucial part of managing your organization’s compensation plan is understanding compensation metrics. This post will compare and contrast two of the key metrics that are frequently used in compensation today.

Compensation Plan for Business Success

Pop Quiz: Is Your Compensation Philosophy in Line with Your Business Strategy?

In a recent PayScale webinar I led titled, “Aligning Your Compensation Philosophy with Business Priorities,” I began by asking the attendees some questions to assess their commitment to aligning their employee compensation plan with business objectives. The following is the list of questions, as well as advice on how to apply the insights they bring to your current compensation planning efforts.

Sales Incentive Compensation Plan

Does Your Sales Compensation Plan Need a Makeover?

Few topics in compensation cause more debate and confusion than how to create a compensation plan for sales reps. One thing is clear: a sales compensation plan should be re-evaluated regularly, particularly in times of economic uncertainty.

Advantages of an Effective Compensation Strategy

What Is the Advantage of Taking the Time to Develop a Compensation Strategy?

The biggest mistake an organization makes in setting up a compensation program is to rush into getting the answers without carefully considering the issues. Next to your organization’s strategic planning efforts, dovetailing the compensation philosophy to support the organization’s strategic plan is paramount to success. Not sitting down with your senior management team and clearly discussing the basic strategic decisions around pay can be very costly not only in organization success, but can expose the organization to possible law suits. Because of this, it’s essential for your organization to sit down and discuss how to integrate general business strategy with compensation strategy.

Small Business Compensation Plan

Developing a Small Business Compensation Plan

I often get asked, “At what point (how many employees) should a company establish a formal compensation program?” It’s a good question with lots of different answers. Finding the “right” time depends on several factors. Let’s start with a couple of examples.

Strategic Compensation Planning

Coming in June: Strategic Compensation with Sharon Koss

By Staff Writer

How do you push for better compensation planning at your company? How can you analyze your company’s current compensation philosophy, improve it and then communicate those improvements to upper management?

Overpaying Employees

Paying Employees Too Much? How To Deal with an Expensive Employee

I’m actually surprised at how often people ask the question: “What do we do when we find out we are paying people too much?” To answer that question you first need to ask yourself two important questions: 1) Have I properly defined the market for this position? 2) What type of performer is this employee? Paying employees too much is not something that most companies focused on becoming or remaining profitable for a long time can do without merit. Certainly, if the employee is a super star, you probably can afford to pay extra. But if they aren’t, it’s best to reign the spending in. This type of pay practice can actually put you out of business.

How to Use an Employee Performance Matrix

How to Make Bigger Salaries Mean Better Business

When your supervisors determine which employees will get pay increases and how much they deserve, they are making or breaking your business. How? By connecting performance to pay, or not, your managers tell your employees what sort of work ethic and attitude get rewarded at your company. How do you train them to deliver a consistent message across the company?

Articles on Compensation Plans

A How-To Guide: Articles on Compensation Plans

When you think about compensation planning, where could you stand to learn a bit more? Maybe you're trying to develop a compensation philosophy or ensure internal pay equity. Here at Compensation Today, we have written a number of articles with how-to information about compensation planning. Whether your compensation plans are established but you need help communicating them to employees, or you’ve never prepared a compensation plan before, you’ll likely find some helpful information in the articles listed below.

Performance-Related Pay Models

Making Pay-for-Performance Models Work

The top level has announced that the organization is shifting to a performance-related pay model. What does pay for performance mean? Aren’t we all performing already? Aren’t we getting paid for that? The real answer is probably not.

Performance Matrix Questions

Q & A Session – Shifting to Pay for Performance

The following is a transcript of questions and answers from PayScale’s webinar, "How to Play a Key Role in Compensation Budgeting." The topics covered include how to offer meaningful employee rewards on a tight budget, how to train managers on pay for performance, and how to talk to employees who have reached the top of their pay range. Answers are provided by PayScale’s director of customer service and education, Stacey Carroll, M.B.A., SPHR, Frank A. Cania, SPHR, and Betty Richardson, CCP.

Average Salary of Jobs in Manufacturing

Climbing Back: Average Salary of Jobs in Manufacturing

By Staff Writer

If you ask most people to name an industry that really suffered during our recent recession, you’re likely to hear “manufacturing.” According to the Bureau of Labor Statistics, the unemployment rate in the manufacturing industry reached 12.5 percent in November of 2009 then climbed to 13 percent in January 2010. Fortunately, that percentage is slowly dropping and the number of job openings and new hires is growing right now.

Why Develop a Competitive Compensation Plan

Ways to Beat Your Competition with Your Compensation Plan

By Staff Writer  

Your company is likely already looking to profit in all of the obvious ways, like sell more products, buy better equipment and invest in more lucrative locations. But, has your company leadership considered that they can beat their competition with smarter compensation planning? Any HR person knows that this approach is not only possible but essential. The key is to know how to get it done.

To-Do List for Human Resources Planning

 

More Compensation Planning Mistakes and the Steps to Avoid Them

By Staff Writer

In a previous post, “Top Compensation Planning Mistakes (And How to Avoid Them),” we discussed the first five of ten most common compensation mistakes and how to avoid them. In this second post, we’ll cover five more habits that can lead you into trouble. We’ve also compiled for each an HR to-do list to avoid these common pitfalls.