Maintain and Communicate a Competitive Pay Philosophy
Developing a formal compensation communications program provides employees with an understanding of why pay decisions are made.
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.
To begin, compensation professionals should consider what transparency means in their organizations. This will help them determine how much information will be shared in the plan and to whom.
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. At a minimum, the compensation philosophy should be reviewed every two years to:
- Confirm linkage with 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
Best practices
Keep these best practices 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 are industry-specific
- Develop a planned timeline to conduct 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.