20 Dec How to Maintain a Competitive Pay Philosophy
Only 36% of employers have a formal compensation communications program, according to an HRsoft poll. However, this is something all organizations should have, because a compensation plan is only effective when the workforce understands it. Developing a formal compensation communications program provides employees with an understanding of why pay decisions are made.
To develop a communication plan, compensation professionals should consider what transparency means in their organizations. This will help them determine how much information will be shared and to whom.
In addition to developing a communications program, employers must also ensure they are continuously maintaining competitiveness in their pay philosophy. Developing a compensation philosophy is not a “one and done” activity; it must be revisited as the business strategy evolves to reflect current goals. At a minimum, the compensation philosophy should be reviewed every two years to:
- Confirm linkage with the HR and business strategies
- Reevaluate where the company is in the business cycle (growth phase, maturity, etc.)
- Assess industry trends
- Raise and address any questions or issues before senior management does
Here are some best practices to keep in mind for designing, reviewing, and updating compensation programs:
- Understand changes in job roles and responsibilities
- Confirm job matching process for internal and external comparisons
- Recognize that roughly half of jobs are typically more general industry while the other half is usually industry-specific
- Develop a planned timeline to do in-depth market survey matches with line management using selected groups each year
Specialized compensation surveys are advantageous for employers because organizations are always changing. Each year, there are new products or services which demand new skills and abilities. Market surveys do not require a significant time investment to incorporate the jobs needed, but many organizations have a need for more customized reporting. As such, using data from a specialized survey can help companies make pay decisions based on accurate data.
By routinely revisiting your compensation philosophy, you can ensure your company is effectively meeting both internal and external demands, and that your approach to compensation is reflective of current conditions. This helps to maintain pay practices that are both equitable and up-to-date with your company’s goals.
HRsoft is the trusted global leader in compensation management software whose COMPview solution is proven to control and simplify the full process and allocation of merit, bonus and equity awards to drive manager and employee engagement.