makingaCOMP

teamsport

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Rowing term that refers to an elusive sensation of near-perfection; a state in which all rowers in the boat are seemingly in a symphony of harmonic motion, with no wasted energy.

Swing

bow =managers coxswain = HR

engine room =employees

bow =managggggerrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssss ccccoooooxxswain = HHHHHHHHHR

engine room =employees

stroke = executives

Today, modern organizations understand that comp is a team sport. Executives and managers

must work together if they want to develop a successful compensation plan. Picture a boat where

everyone must row in the same direction to reach a destination. Everyone in the organization must

play their own special role; everyone is truly in the same boat. Let’s take a look:

HR has a lot on their plate. Depending on the size of the team, they may handle recruitment,

employee relations, compensation, payroll, performance management, workforce development,

and compliance (whew, I’m tired just writing all that!). Don’t make the mistake of thinking that

compensation is strictly HR’s responsibility, though.

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The Coxswain: HR• Steers the boat

• Provides motivation and encouragement for the crew

• Informs the crew of where they are in relation to other crews and the finish line

• Makes necessary race tactic calls to course correct as necessary

HR’s Compensation Role

HR has a few critical jobs in steering the compensation boat: aligning the strategy, coordinating

processes, providing resources, and informing the organization of progress.

Aligning the Strategy HR guides compensation planning, budgeting, and administration every

step of the way. From high-level business planning sessions to developing a long term strategy, HR

leads the charge. HR steers the compensation plan from strategy development through a market

study, ensuring an externally competitive and internally equitable pay strategy and structure.

Ultimately, the goal of the compensation plan and the talent strategy overall is to help the

organization accomplish its objectives by helping individuals thrive.

Coordinating Processes Together with organizational leaders, HR develops policies and processes

for consistent, fair, and compliant administration of the compensation plan. These typically include

documenting the basis for allocating base pay increases; handling employee outliers, promotions,

demotions, and transfers; and establishing a hiring range for managers to use.

Updating and Informing One of HR’s most critical roles is to continually keep executives and

managers in the know on the compensation plan.

For executives, that means providing them with regular updates about market movement,

especially for hot jobs. It also means keeping them apprised of industry trends that matter, like

using a targeted compensation strategy vs a one-size-fits-all approach.

For managers, that means HR giving them the tools for success, insight into what employees care

about, and talking points for their critical conversations.

Providing Resources HR has a great training opportunity to equip managers to talk pay with their

employees. HR can help managers understand the organization’s compensation philosophy, as

well as other details of the comp plan and policies, in accordance with the chosen transparency

level. Why is this so important? Managers’ credibility and authority are bolstered when they can

confidently have pay conversations with their employees instead of telling them to “go ask HR.”

In addition to providing manager training, HR supports comp review conversations by providing

managers with personalized Total Rewards Statements to show each of their employees the value

of the non-cash elements of their total comp package.

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HR’s Key Messages• For Employees: We’re listening. Here are the comp processes you should know.

• For Managers: Here is some information you (employees) should know. Here’s what I expect

from you in your role. How can I help?

• For Executives: This is how we’re doing, and some information to help you make some key

decisions for our comp plan.

While 35 percent of companies report offering training to managers to teach them how to talk to employees about pay, only 17 percent of companies report being very confident in managers’ abilities to have tough conversations about compensation.

PayScale’s 2016 Compensation Best Practices Report

PayScale Crew guides HR and managers through the merit cycle without the need for complex spreadsheets. See how Crew improves communication about pay

between managers and HR.

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The Stroke: Executives

• Sets the rate and rhythm for everyone else to follow

• Leads the boat by bringing out the best in everyone

• Is calm yet competitive

Executives’ Compensation Role

Executives set the pace for the compensation plan by establishing a clear philosophy and strategy,

as well as deciding on the right level of transparency for the organizational culture.

The leadership team establishes the pay philosophy, which identifies what the organization aims

to accomplish with its compensation dollars. They work together to clarify the compensation or

pay strategy, which is determined with the organization’s business objectives in mind and serves

as the foundation for the comp plan.

Next they should decide how transparent the organization plans to be about their pay practices,

keeping in mind that most employees want more transparency and, according to the 2016

PayScale Compensation Best Practices Report, nearly half of top performing companies are

providing it.

Executives typically approve the compensation budget, and they ultimately hold operating

authority for the plan (or overall authority if there is no Board of Directors). The compensation

budget provides the opportunity for executives to put their money where their mouth is, by

communicating their compensation intentions. Executives would be wise to remember that how

they pay says a lot about their company, often much more than that dusty Core Values poster

taped to the wall.

A common thread that runs through all organizational roles is communication, and it starts at the

top. Executives are responsible for communicating compensation broadly across the organization.

When executives deliver messages about compensation, it demonstrates to employees that

executives are in the boat with them. Not only does it show that organizational leadership agrees

with the comp plan, it lends weight to the plan’s importance.

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Executives’ Key Messages

Compensation Philosophy and Purpose After agreeing on the intention behind the organization’s

pay plan, the leadership can communicate this intention to employees. Overall, what is the

organization hoping to accomplish with compensation?

Sample comp statement script: “Our goal is to pay competitively to the market, while maintaining appropriate internal alignment as well.”

Market Study and Results It is beneficial if employees hear directly from executives that a

market study was used as a basis for the organization’s comp plan. This helps establish trust that

compensation is being handled appropriately. Some organizations will share results of the study at

a high level: “Overall, we meet the market,” while others will keep that information behind closed

doors.

Compensation Plan Changes at the Highest Level If the market study led to a significant shift

in the compensation plan (ranges moved, many jobs switched grades, a big portion of staff will

receive market adjustments) or some other big shift, it’s a good idea for executives to share

some information first, i.e. “We’re in good shape overall, however we’ve decided to make some

adjustments in our research department.”

Next Steps—Talk with Managers Finally, the real information that impacts employees should

come from those they work with every day, their manager. Executives get to direct employees to

their managers for more information, then reach out to their direct reports as managers and enlist

managers to act as the point person for their direct reports.

The “WHY” Matters

82 percent of employees would feel satisfied with below-market pay, as long as their employer was transparent about the reasons.

http://www.payscale.com/hr/infographic-employee-engagement

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PayScale Crew guides HR and managers through the merit cycle without the need for complex spreadsheets. See how Crew improves communication about pay

between managers and HR.

www.payscale.com

The Bow: Managers• In coxless boats, gives out calls to the crew

• Provides stability and direction

• Adaptable and quick in their movements

Managers’ Compensation Role

Managers are the key decision-makers for their teams and the work being accomplished by their

teams. Ultimately, they’re the ones who share compensation specifics with their direct reports. In

fact, 75 percent of conversations with employees about pay come from the manager.

At many organizations, managers are directly involved in determining pay for those they supervise.

They receive a merit pool and are responsible for allocating raises and sharing merit updates

during individual comp review meetings.

Managers work with HR to ensure job descriptions are accurate. If the work shifts significantly,

managers should proactively partner with HR to update the job description, or–in cases where

the work requires an entirely new job–develop a new one. In addition to maintaining job

documentation, some managers partner with HR to develop career paths.

Bringing Managers into Compensation: • Allows HR to focus on the strategic aspect of pay versus the administrative side.

• Creates greater rapport between HR and managers, increases mutual respect, and brings HR

into the “whole business” mindset.

• Enables managers to have more successful comp conversations, which aids in retention,

motivation, engagement, and ultimately, achieving better business results.

The influence managers have on the employee experience cannot be overstated; countless polls

and articles tell us that people leave managers, not companies, which is a huge reason why the

manager role in compensation is so critical—and why executives and HR should set managers up

for success here by providing training in talking pay.

Managers’ Key Messages

Every conversation about compensation is an opportunity for managers to better understand what

motivates their employees.

When sharing information with employees, coach managers to connect the dots between

employee goals and interests and organizational goals. Depending on the level of transparency,

managers may share grades and ranges for jobs along employee career paths to demonstrate how

an employees pay could increase right along with their job title and responsibilities.

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Managers should reiterate key organizational messages about compensation, like how the

organization is doing, reaffirm a commitment to fair pay, highlight changes to the compensation

plan, and share any other relevant data points. If the organization is more transparent, this would

be a good time for managers to explain how the market data point was calculated for their direct

reports.

Communication between managers and employees should be ongoing, with regular check-ins, so

employees always have an idea of whether they’re on track to achieve their goals.

35.1 percent of employers cite a bad relationship with direct supervisor or manager as in the top three reasons people voluntarily leave.

PayScale’s 2016 Compensation Best Practices Report

The Engine Room: Employees• Strongest and heaviest rowers

• Pull as hard as possible

Employees’ Compensation Role

Employees aren’t without a role in compensation and communication. Their role is mostly asking

clarifying questions, understanding the compensation plan, and the goals of the organization, so

they can decide to get in the boat and paddle as hard as they can.

Employees have the responsibility of being honest with themselves about what motivates them,

and then communicating that to their manager. Organizations are discovering the value of

flexibility in retaining and motivating employees, so it’s up to employees to start asking for the

things that will really help them accomplish results that matter.

Employees and employers are in an ongoing relationship where they exchange value. Employers

provide total rewards and employees exert effort. This is the “deal.” Both groups are always doing

mental math to decide if the deal is still fair and still worth it.

Employees also have to actively listen to the why – to the rationale that employers are providing

for their compensation plans. If the “employer why” and the “employee why” aligns, compensation

becomes a win-win instead of an either/or. This is the ultimate goal of modern compensation.

That’s when employees get on board.

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Bottom line: executives, HR, managers, and employees all play important roles in a comp plan’s

success. When it comes to achieving the organizational goals that the comp plan is designed to

support, getting everyone in the boat and sprinting to the finish is both exhilarating and rewarding.

“Great crews may have men or women of exceptional talent or strength; they may have outstanding coxswains or stroke oars or bowmen; but they have no stars. The team effort—the perfectly synchronized flow of muscle, oars, boat, and water; the single, whole, unified, and beautiful symphony that a crew in motion becomes—is all that matters. Not the individual, not the self.”

Daniel James Brown,

The Boys in the Boat: Nine Americans

and Their Epic Quest for Gold at the 1936 Berlin Olympics

About PayScale

PayScale powers compensation solutions in the cloud to provide immediate visibility into the right

pay for any position. Creator of the world’s largest database of rich salary profiles, PayScale offers

modern compensation software and real-time, data driven insights for employees and employers

alike. More than 5,000 customers, from small businesses to Fortune 500 companies, use PayScale

Benchmark™, PayScale Insight™ and MarketPay. These companies include Dish Network, Getty

Images, Skullcandy, Bloomberg BNA and Chipotle.

For more information, please visit: www.payscale.com.

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PayScale Crew guides HR and managers through the merit cycle without the need for complex spreadsheets. See how Crew improves communication about pay

between managers and HR.