Fairness is such a valuable thing that no money can buy it. Alain-Renee Lesage
Each year around this time, national and local survey results are published, revealing actual and projected salary increases for the current and forthcoming year. HR, Compensation and Finance Managers among others, eagerly await this information for guidance on formulating their own salary budgets. For many of you involved in this process, I would venture to guess the same holds true.
As you go deep into the numbers, I encourage you to occasionally bring your head above the data to keep your eyes on the big picture. I know and understand that much time is expended on budgets – rightly so – but the same amount, if not more time needs to be spent on compensation program design and practices.
Climate and engagement surveys often show that compensation programs rank in the bottom third by employees when compared to other programs. Compensation programs and practices include but are not limited to: compensation philosophy statement, job descriptions, job grades, salary ranges, annual salary planning, annual increases, promotional increases, internal/external equity adjustments and salary related communications, both company-wide and one-on-one between manager and employee. Companies largely falter when it comes to compensation communications. In a recent study by WorldatWork (B Christie, 2020) found that over 60% of the participants did not have managers who were trained to effectively deliver pay communications.
Employees today want to see three main elements rooted in their company’s compensation programs and practices. First, they want a program based on a strategic (S) approach. Second, employees want to see equitable (E) pay practices. And third, they want decisions relative to their pay and pay in general to be transparent (T). Employees don’t only want to know what’s going to happen when it comes to their pay, but why it’s going to happen. The WHY is HUGE. Pay is personal so when changes are made, they want to be brought in on the reason behind the decision.
When it comes to your own company, you need to ask yourself if your compensation programs are S.E.T. Are they strategic, equitable and transparent? Keep in mind that compensation is part of total rewards, a strategy that is meant to attract, motivate, engage and retain employees. If any of the S.E.T. elements are missing, the likelihood of attaining the total rewards goals have been diminished.
Anecdotally, I have found in my years working in or consulting for companies, that many companies have a compensation philosophy and consciously make the effort to work towards equitable pay; but often they don’t want to talk about. My experiences are somewhat supported by other research findings from WorldatWork (2020):
What is important to note is that “pay transparency, along with pay equity and pay strategy, plays an important role in delivering an authentic employee experience, which directly impacts employee engagement. (T Rahman, Mercer, 2020). Ensuring your compensation program and practices are S.E.T. is not only wise from a business perspective, but it is also the right thing to do on behalf of your employees.
Julie Caspar, President HR Hotline Associates
Whether or not you agree or disagree with the famous late movie director, when it comes to money, employees today wish to be paid at a level commensurate with internal and external job value in line with a company’s compensation philosophy or strategy.
The last two blog entries discussed the critical nature of feedback and coaching, applying it throughout the year in informal as well as formal settings. This entry wraps up feedback and coaching with focus on how the manager can better position both for understanding and acceptance by the employee.
Informal performance chats should take place throughout the year. By doing so, the probability of increasing employee engagement, goal achievement and advancing an employee’s capability in their jobs and respective careers significantly rise.
For those companies on a calendar fiscal year, the annual review season is almost here. Many managers, especially those with large teams, look disparagingly on the process; wondering from where the time is going to materialize to complete everything on time – and complete they must.
We at HR Hotline Associates are very excited to welcome you to our latest venture, the new HRHA! newsletter and blog. HRHA! is not only an acronym for the company name, but it also stands for Hurrah – a word that exemplifies feelings of achievement and celebration.
