With 2013 right around the corner, there are already a lot of steps HR professionals can be taking to create a great 2013 compensation strategy. To get your compensation administration on track for 2013, Chuck Csizmar gave us some guidance in a recent BLR webinar. Here are some steps that you should have taken by this point in the process—if you haven’t completed these, now is the time to get started!
2013 Compensation Strategy: Steps You Should Have Taken By Now
- Conduct a market pricing study. "You simply must know how competitive your pay is—not only the salary structure (the midpoints, high ranges and such), but your actual pay practices." Csizmar noted. Use at least two survey sources (three is even better). "The more data you collect, the more focused of a picture you’ll get of the marketplace and the better armed you’ll be to respond to the inevitable criticism." You’ll want to see how your pay structure and pay practices compare against the market in terms of both base salary and total cash. Know the information both in summary and by pay grade and employee segment.
- Review your metrics. HR metrics such as average pay, turnover, employee performance data, and payroll dollars spent can give you a sense as to whether your programs are working properly. For example, are your performance ratings inflated? Are new hires being paid more than incumbents with more experience? Is the avoidable turnover rate trending upward? Understanding what the metrics are telling you is important before any changes are implemented. Address any problems the metrics highlight.
- Kick the tires of your current program. What is the state of health of the current program? "A mistake would be to presume that simply because complaints haven’t risen to the level of pitchforks and burning torches that everything is just fine, that the natives aren’t restless." Csizmar noted. For example, if 95 percent of your employees get an annual merit increase, perhaps the existing pay-for-performance system needs an overhaul.
- Alert management of any problem areas. No one likes surprises. By alerting management to the current issues, they will be more receptive to any proposed changes that are suggested for the 2013 compensation strategy. Be sure to explain that the issue is being addressed!
For more information on creating a 2013 compensation strategy, order the webinar recording of "2013 Compensation Outlook: What to Do Now to Get Your Compensation Plan Ready for the New Year." To register for a future webinar, visit http://catalog.blr.com/audio.
Chuck Csizmar is a Global Compensation Consultant and the founder and principal of CMC Compensation Group, a professional services provider specializing in analytic, project management, and consultative services for US and international clients.