This is our last post in a 5-part series on getting managers on board with talent management. If you didn't see the first 4 articles covering feedback, appraisals, goal alignment and developing bench strength, here's your chance to get caught up.
This post is about making compensation decisions.
Do you feel confident that managers are making informed and equitable decisions about pay? Is it a struggle to get them to submit their comp adjustment recommendations on time? And are you sure that increases, bonuses, and stock options are truly encouraging and rewarding high performance?
Better Compensation Decisions
Compensation is one of those sticky areas that can cause lots of pain for everyone in the organization. But some of the key tactics to ease this pain rest in the hands of managers.
To help keep your compensation adjustments fair and effective in encouraging high performance, HR pros need to give managers four key things:
Let's be honest, managing employee compensation is not an easy thing. To effectively manage compensation and rewards so they motivate high performance, managers need training on things like:
- How pay affects motivation and engagement
- Other ways to reward high-performance all year round
- How to effectively communicate about compensation and adjustments to keep employees motivated and engaged
- The basic elements of compensation and how to use them: pay scales, job codes, compa ratios, bonuses, stock options, variable pay, etc.
- How and why you should consider compensation when conducting performance appraisals
- What your compensation management process is, and their role in the process
2. Data to Make Informed Decisions
To make informed decisions about compensation, managers need to know things like:
- Your organization's philosophy and policies related to compensation. This includes things like: where employees should start on the pay scale; what is the preferred target in a pay scale (e.g., mid-point, 70th percentile, etc.); how do you deal with high performing employees who are already at the top of their pay range; are there groups or skills sets that need special compensation. etc.)
- How much money do they have in their compensation budget?
- What the pay scales are for the various job codes
- The job codes that apply to their employees
- Where does each of their employee's salary fall on the pay scale?
- Are any of their employees considered high potential or a scarce skill?
- Their employees' compensation history
- Their employees' performance history
- And most importantly, each employee's performance rating for the year
Compensation adjustments aren't something that should be rushed. Make sure you give managers sufficient time to do it right. That means making sure performance appraisals are completed on time (a clear, straightforward process with effective forms and support tools can help), training is completed, and managers have the data they need to make decisions - all in sufficient time to allow thoughtful consideration.
Managers need to know how employees in the organization feel about their compensation. Do they have confidence in the current process? Do they feel fairly rewarded and recognized? How do they perceive communication around compensation?
Understanding their employees' perspectives and attitudes can help managers improve their compensation management skills and make sure employees are effectively rewarded for their performance.
You might also like this resource paper we put together with David Creelman - Why Pay for Performance Can Work at Last. If you have compensation tips for managers, please leave a comment below.