25 Oct A Quick Overview for Administering a Fair, Equitable, & Compliant Compensation Program
A strong compensation program is one that’s fair, equitable, and compliant with new labor laws. While achieving this trifecta isn’t always easy, it is possible when you follow a few specific steps. Here, we’ll briefly take a look at some simple yet powerful tips you can follow to administer a fair, equitable, and compliant compensation program.
Fair & Equitable
To administer a fair and equitable program, it’s essential that you actively avoid pay compression. This occurs when you have only minor differences in pay, despite variations in skills, experience, levels, and seniority. It doesn’t happen overnight, so the best way to approach pay compression is to prevent it from happening in the first place.
When employees feel that they’re not being compensated fairly due to pay compression, it can quickly lead to a spike in voluntary turnover rates. You can prevent it by:
- reviewing current incumbent salaries versus new-hire salaries;
- updating salary ranges annually (even if you’re not making changes in pay); and
- using the same administrative guidelines every time you do a salary review or recruit a new hire.
Compliant With New Regulations
Labor laws change quickly, and it can be difficult for compensation teams to keep up. From variations in minimum wage to accommodating for changes in the Fair Labor Standards Act, employers must ensure their compensation strategy conforms to the regulations that affect them.
Navigate increases to minimum wage by:
- Determining when changes will take place, and how many employees are currently paid below minimum wage
- Calculating what it will cost to update your compensation plan
- Checking to make sure you’re avoiding pay compression
- Updating your compensation structure
Fairness, equity, and compliance are all of equal importance when administering compensation plans, and in order to be effective, your plan must encompass each of these factors. By adopting the practices described here, you’ll be able to navigate shifts in the market, evolving business needs, and new labor laws with greater ease.
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