As a company leader, if you’re not already doing so, you need to ensure your compensation practices are a top priority as part of your employee value proposition. This helps you keep your competitive edge, build a positive culture and retain top performers. Turning the Corner is happy to announce that we have talent ready to help you with your employee total rewards needs.
At some point in our careers, you and I have likely had at least one of our employees come to us asking for a pay raise. You may hear a compelling case for moving forward with a pay increase, because you’re speaking with a high performing employee. Other times, you may have an employee who requests a pay increase leading you to wonder, “how could this person be so far off from how I see their performance? Why are they asking for a raise?”
Or you may hear rumblings from managers saying that they’re losing employees to another employer that is paying higher wages than your company’s pay rates. There’s a part of you and me that wants to believe that we wouldn’t lose an employee due to pay because we have such a great working relationship, and isn’t that the most important factor to employee engagement? While positive employee-manager working relationships are essential, our companies need to have a culture of paying fairly.
A 2022 study by Gartner found that just 34% of employees believe their pay is equitable. In addition, their survey found that employees who perceive their pay as unequitable have a 15% lower intent to stay with their employer and are 13% less engaged at work than employees who perceive their pay as equitable. Can you afford to lose 13% engagement and productivity from 2/3 of your workforce, and/or possible resignations from those employees?
Several years ago, I was faced with this situation. I was leading HR for a firm employing Field Engineers who spent most of their time traveling around the globe installing and translating data from research equipment. On more than one occasion, I had an Engineer or Engineering Manager in my office stating that our pay levels were too low for us to attract and retain qualified engineers. We could not afford to lose any personnel or productivity.
While I had been in the HR field for over 10 years at this point, I hadn’t spent much time doing hands-on compensation work, beyond responding to compensation surveys from salary assessment organizations, and plugging new employees into established pay bands. I wasn’t sure where to start, so I decided to take on the daunting task of becoming a Certified Compensation Professional. This involves hours upon hours of classroom time and passing 10 grueling exams. Most HR and finance professionals who decide to become certified do so over the course of several years. I became certified within one calendar year.
Part of what I learned during the certification process (besides fine-tuning my math and analytical skills) is that completing a compensation study begins by answering the following questions at an organizational level before even looking at pay data by which to build pay bands:
- What is our pay philosophy today and what do we need it to be in the future?
- What level of transparency do we want around our pay practices?
- Where do I find the best compensation data?
Once we locate sound data, we’ll have more questions to answer:
- How can I know that I’m paying my employees fairly across demographic groups?
- How can I differentiate pay between high performers and lower performing employees, and how do I identify my high and low performers?
- Besides base pay, what other variables should be included in a total rewards package that’s attractive to current and future employees, and affordable to the company?
Compensation is a delightful mix of science and art. What works well at one company may not work well at your current company. We may see hard data giving a pay range for a job title, however we need to ensure we’re reviewing the best data available for the specific position within our organization.
If you would like to have a professional assessment of your current pay practices, a roadmap to propel your organization forward in this regard, as well as hands-on implementation of the plan, please reach out to us. Our talented team would love to help you with this mission and culture-critical endeavor.
For more information on the Gartner study, please see https://www.gartner.com/en/newsroom/11-28-22-gartner-hr-research-finds-only-thirty-two-percent-of-employees-believe-their-pay-is-fair
Tracy Carsten Nadal, Director People and HR Services
Turning The Corner, LLC