26 Dec How to Pay Both Competitively AND Appropriately
You already know that paying competitively is a critical aspect for retaining your top talent, but the challenge lies in making sure that your compensation plan is also appropriate for your industry, the current status of the market, and your organizational goals and values.
Interestingly, a recent study revealed that 89% of all managers believe most employees voluntarily leave their jobs due to issues or concerns related to compensation. This problem is compounded if you hail from an industry that also has to contend with positions that require highly specialized knowledge and skill-sets, in conjunction with extremely competitive talent markets.
The key, then, is to strike a balance between paying competitively to attract and retain the employees you want, and paying appropriately (so that you are not squandering your compensation budget).
Below, I share my best tips for paying both competitively and appropriately so that your compensation plan can stay in line with industry trends while still being internally equitable and reflective of your organizational values and current needs.
How To Pay Competitively
External research from multiple sources will help inform your decisions about creating a pay structure that’s competitive. Keep in mind that it’s important to gather data from your recruitment department, as well as public repositories like www.salary.com, to get an accurate estimation of how the skills you value in your company are compensated by your competitors. Once you can accurately and efficiently compare your in-house salary structure with current market data, you can then begin to assess your position and adjust your competitive pay strategy as needed.
How To Pay Appropriately
It goes without saying that you wouldn’t want to lose good talent by underpaying employees, but at the same time, you also don’t want to overpay and risk blowing through your compensation budget. A good compensation planning strategy allows you to avoid going to extremes by relying on established benchmarks, budget modeling, market data, and your compensation philosophy statement. Employees may have a very different idea on what competitive market pay should be (more or less) based on previous jobs, locations, and so forth. Your best course of action is to ask the right questions, don’t be afraid to be creative, and leverage your compensation budget so that it’s working to retain your very best talent.
While these are the basic components of developing a fair and appropriate compensation plan, it’s not always so simple to come up with appropriate pay ranges for all of your employees. Whether your company is growing or already operating on a global scale, it can be difficult to make sure that you’re paying both competitively and appropriately when there are so many variables to consider. To make it easier for your mangers, consider implementing a program such as HRsoft’s COMPview. It takes the hassle out of compensation planning and keeps you in line with the market, while still respecting your company needs and values. To learn more, visit the COMPview product page here.