compensation strategies: finding the right balance between rewarding individuals and spending wisely
DESCRIPTION
Compensation is one of the biggest investments a company will make. Learn how to invest wisely by developing a simple compensation program to support sustainability and growth. Many young companies manage salaries in an intuitive, ad-hoc manner learn about the pitfalls of this approach, and how to avoid them as your company grows. Part of the MaRS Best Practices Series - with speaker LYNN CAMERON & HELEN ROBERT, Managing Partners, TechEdge More, including session video: http://www.marsdd.com/events/details.html?uuid=df2648aa-c50c-4c4b-9a61-66101151c9bdTRANSCRIPT
Entrepreneur’s Toolkit: www.marsdd.com/entrepreneurs-toolkit.html
HR Workbook 1: Building an A-Team HR Workbook 2: Compensation HR Workbook 3: HR at Work
Creating an HR plan: Butteriss on human resources Building HR processes, policies and procedures Compensating employees Hiring your friends: Is it such a good idea?
Video: Human Capital: Building high performance teams Video: Human Resources Management
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Compensation and Your Battle for Talent
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Assumptions - Technology Industry
• People biggest asset
• People cost $$$
• Top talent in demand
• Change affects whole team
People Knowledge & Skills Success Products &
Services
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Is Pay Important?
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Absolutely … If you get it wrong!
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Are you sure……
1. ……that your pay decisions are: Fair internally? Competitive externally? Not discriminatory?
2. ….. that you are managing your compensation investment well?
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Goal for Today
Get prepared to answer YES!
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“Not Just the Money”
Sick leave?
Vacation?
Incentives?
Stock Options?
Sales commissions?
Mileage?
Pension/RRSP?
Maternity leave?
Disability?
Personal leave?
Relocation?
On-Call?
Overtime?
Referral Bonus?
Signing Bonus?
Shift premiums?
New Grads?
Students?
Work/life balance?
Health/Wellness?
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Salary is the Foundation
For most candidates and staff: Perceived sense of personal value Perceived sense of fairness affects trust Drives commitment and productivity
For some people (ie. Sales) Drives short-term behaviour Drives immediate activities Drives or detracts from results
Drives value of other benefits
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Potential Exposures
Underpaying: Difficult to hire and keep good
people Increased costs of turnover and
unhappy staff Overpaying:
Cost/value? Can take years to correct Budget restricts headcount
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The Ad-hoc Intuitive Approach
Difficult to recover Mismanaged compensation
investment Loss of employee trust
Growth More
Decision Makers
CHAOS Inconsistency
Might work for now….
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Signs You May Have a Problem
Good people leaving Absenteeism New people “not working out” Good people won’t join Missed deadlines Lots of knowledge gaps Employee problems take up too much of
your time
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Ask Yourself…
Are you paying enough? Too much?
Are recruiting and training costs too high?
Are people leaving or complaining? Do they trust management pay decisions?
Can you defend changes to your board of Directors?
When and how should you use incentive plans?
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Developing a Philosophy
Focus on overall compensation package: Who do you compete with for skills (not
product)? Lead? Match? Lag? What’s more important - Internal or external
equity? What compensation mix?
Communicate!
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Philosophy should include…
Big Picture Nondiscriminatory/competitive, Consider financial condition, Consider supply and demand Consider individual performance.
Specific (What)median salaries (Where) local marketplace, (How) industry surveys and labour statistics.
Protection Company reserves the right…..
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Check out the competition….
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Assessing Competitiveness
3 key ingredients Follow your philosophy Benchmark the relevant market Differentiate “jobs” and “people”
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Competitive Context
Big Picture Compensation Philosophy Business Reputation and Financial
Situation Other factors (benefits/perks/flexibility)
Details Define the jobs
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…How do you do this?
Assessing Your Position…
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Assess your Current Position
Sources of information: Reputable, relevant surveys Industry articles, websites Association networks, social media Recruitment experience & feedback Attrition rates & feedback Employees who express concerns
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Selecting Surveys
Job matching Integrity of data Methodology Relevance of data Affordability
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Benchmarking
Jobs Match your jobs to the market data that fits
your company’s philosophy Identify & research trends, variances Establish competitive salary ranges based
on all inputs
Employees Review how employees in each job are
currently paid against salary ranges Identify exposures
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Make a Plan
How to determine "the right price" for an individual Range reflects market data for the job and
company strategy Positioning employees within the range
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Reviewing Compensation
Moving target – be pro-active: Upon Hire At least annually Upon Promotion/transfer
Consider: Internal equity Competitive position
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Build Consistency into Growth
Develop a philosophy Benchmark objectively Create ranges, assess performance Use decision-making guidelines Review situation regularly
Rollup reviews Peer Reviews Management Coaching/training
Communicate!
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Improvements You’ll See
Improved performance because…. Hired the right people at the right price! Reduced absenteeism = Increased
productivity Improved retention More time for running the business
Remember… Success depends upon overall Employee
Engagement
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Key Take Aways…….
Compensation is a moving target – know where you stand
Take the time to do it right the first time Make a plan Consider the entire package
Invest a little to save a lot
Communicate – transparency creates trust!
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Questions?
Lynn Cameron, Managing Partner [email protected], 613.794.7166 Helen Robert, Managing Partner
[email protected], 613.798.3505
Toll Free: 1-877-848-0499