Sinking Seven Sacred Sayings of Compensation

Dindy RobinsonDirector of CompensationTexas Christian University

A JOB IS ONLY WORTH SO MUCH

Organizations need to limit how much they will pay for any one job.

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Compensation Saying

Protests

• “But Mary is so valuable to this organization! We couldn’t operate without her!”

• “Jorge has been here forever! He knows everything about this institution.”

• “But it’s ridiculous to expect someone with a Masters Degree to work for that amount!”

“But Mary is so valuable to this organization! We couldn’t operate without her!”

• What does Mary do that is so valuable?• Is it truly necessary for the organization or is it

just nice to have?• “She knows exactly who to call to get results,”

may be necessary for the organization.• “She makes my coffee just the way I like it,” is

probably not essential.

• Revise the job description to include the additional factors that are necessary.

• Factors that truly are necessary for the job may increase the compensation level.

“Jorge has been here forever! He knows everything about this institution.”

• What does Jorge’s extensive knowledge of the institution add?

• Is it necessary for the performance of his job?

• Could someone without his knowledge perform equally well?

• If it’s necessary, add it to the job description and adjust compensation accordingly.

“But it’s ridiculous to expect someone with a Masters Degree to work for that amount!”

• Does the job REALLY require an advanced degree?

• Does your institution compensate for additional degrees for staff jobs?

• Do similar jobs at other organizations require the advanced degree?– Is your pay rate competitive?

• If the degree adds value, modify the job description and adjust pay accordingly.

REDUCE THE NUMBER OF SEPARATE CLASSIFICATIONS

An organization should keep the number of separate job classifications to the bare minimum.

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Compensation Saying

Advantages of Many Unique Job Titles in an Institution

• Greater ability to require KSA’s, experience and education specific to the job

• Allows more specificity in essential job functions– employees knows exactly what is expected

But what about finding market matches for 5000 different jobs?• Can make it harder to find market matches• Group jobs into similar positions and levels– a Suicide

Prevention Coordinator and Drug and Alcohol Education Coordinator are both Program Coordinators.

• Look at education and years of experience required.• Look at outcome or role of the job: Budget Specialist

and Financial Specialist both keep the financial house in order.

• Suicide Prevention Coordinators and Alcohol Education Coordinators both run programs to keep young adults from engaging in self destructive behavior.

GENERIC JOB DESCRIPTIONS!

Keep job descriptions generic so they fit as many people as possible!

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Compensation Saying

Advantages of Specific Job Descriptions

• Valuable tool in recruiting and hiring• Identifies specific behavioral competencies

necessary for top performance• Defines what is expected of the employee• Provides standards against which objective

performance appraisals can be made• Helps employers zero in on exactly what they

need from a position• Helps define and maintain organizational

structure• Defines essential job functions for ADA

Caveats

• Must be updated regularly• Is at its most accurate on the first

day of the job-- loses accuracy as the employee grows in the job

• Be careful not to restrict employees’ initiative to be innovative.

• May result in employer missing out on skills employees have that fall outside the detailed description

SHH! SILENCE IS GOLDEN!

Employees shouldn’t talk about their salaries and shouldn’t know what other employees are making.

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Compensation Saying

Policies Forbidding Employees to Discuss Pay

• May be an unfair labor practice under NLRB

• Allow the employer to keep control• Allow employer to hide arbitrary or

illogical pay practices• Are an exercise in futility: People will

talk.

Disadvantages of NOT Communicating Pay Info

• Employees will make it up.• Employees may be given inaccurate

information.• Inconsistent messages about pay

structure• Could expose the institution to potential

legal action or reputational damage• Demotivate employees who think the pay

structure is random, unfair or driven by favoritism

Advantages of Open Communication About Pay

• Can motivate employees- they know what they have to do to make more money

• Can promote the goals of the organization

• Employees know what factors influence salaries: customer satisfaction, quality of work, hours worked, seniority, skills, commitment to the institution…

How to Talk to Employees About Pay Structures

• Share market analyses. If your pay structure is not competitive, state what the organization is doing to address that.

• Be up front about the fact that each individual brings a unique skill set and background to the table that is weighed against that of others in the role and the performance they are demonstrating.

• Do not discuss with employees the merits of respective profiles, performance and contribution of one employee versus another.

What if employees question their pay in relation to

other employees?Say:• “You don’t have knowledge of the skills or

performance requirements of others, even though the roles may seem similar to you.”

• “Each job has specific projects or performance criteria that can make comparing the performance of peers difficult.”

• “Individuals bring different experience that allows them to do more or less than others in the same role.”

OBJECTIVITY IN COMPENSATION IS IMPOSSIBLE!

I know in my gut what I want to pay my employees.

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Compensation Saying

Barriers

• No buy in from top- end runs and elevator conversations

• No clear and consistent policy• Departments throwing money at

perceived problems• Managers with more money ignore the

policies• Rogue managers• Reactive compensation decisions

How to Achieve Objective Compensation

• Define structure.– Clearly defined market for market based

systems– Clearly defined factors for point factor system

• Consistently administer guidelines.• Clearly communicate policies.• Analyze and document variances.• Comply with regulations.• Re-evaluate.

PEOPLE LEAVE JOBS FOR MORE MONEY

If we don’t pay our employees more, another organization will hire them away from us.

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Compensation Saying

According to a Gallup poll of more than one million employed US workers, the number one reason why people leave their jobs is because of their manager. • 2013 Survey from Randstad found that more than

80% of employees believe their relationship with their direct supervisor has a big impact on how happy they are with their job.

• 67% feel their manager has their best interests in mind when it comes to recognizing their abilities and helping their careers.

• 53% believe they could do a better job than their manager or supervisor.

Other Reasons Employees Leave Jobs

• They don’t love what they are doing. The passion is gone, if it was ever there to begin with. They don’t feel that their work is meaningful, making a difference in the world.

• They are bored and feel that they are not being challenged.• Too much bureaucracy and red tape• They don’t feel connected to the organization. They don’t see how their

job fits into the overall strategy and business plan of the organization.• They are unhappy with their pay (or they receive a better offer.)• There is no room for advancement. If they don’t see a path to continued

growth in their current organization, they will look elsewhere for a career growth or promotion opportunity.

• Job insecurity- they are worried about whether their job will exist in a few months or a few years- ties into the financial stability of the organization.

• They don’t feel valued. Appreciation and recognition is the icing on the cake for employee retention.

• Their values don’t align with the company’s. The overall culture of the company does not demonstrate respect and caring and is not conducive to employee satisfaction and engagement.

• They think the grass is greener somewhere else.

What Does This Mean?• There are many reasons besides money that people

leave their jobs.• There are many reasons more important than money

that people leave their jobs.• If an employee has started looking for a job, s/he has

made the decision to quit. Offering more money may delay the leave taking, but it won’t put it off forever.

• If organizations REALLY want to improve employee retention, then they need to implement a comprehensive exit interview strategy to determine why employees are leaving, and then fix the identified issues.

• Throwing money piecemeal at people to get them to stay will not improve retention or keep people from leaving.

HIGHER EDUCATION JOBS ARE UNIQUE

It’s impossible to find good matches for jobs at our organization.

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Compensation Saying

No External Matches?

• Find external market position with same skill set.– To whom would we lose this employee?– Where would we look for someone to do this job?

• Broaden the job description or title. Ex: Engineer for Gravel Road Pothole Repair is a Street Engineer.

• Use internal benchmarks.• Similar skill requirements, management

responsibilities, educational requirements, complexity of problems normally faced, decision-making responsibilities, impact of decisions

Questions?

Dindy Robinson, SPHR, MPA, CLRPDirector of CompensationTexas Christian University

d.robinson@tcu.edu