To comply with pay transparency laws, many companies have completed the task of defining pay ranges for job postings, but the work does not end there. The next steps are to embed transparency into your compensation philosophy, add context to pay ranges and implement a strategy for communicating them. Mastering these tasks can yield your company a competitive advantage.
“There are really great practices that come from adding transparency to your compensation philosophy,” said Hali Croner, President and CEO of The Croner Company. “It takes more work, but in the long run it can improve your ability to attract and retain talent and tell your story.”
The following five steps are crucial to a well-formed pay strategy.
- Evaluate Your Compensation Philosophy
Does your organization have a written pay strategy? If not, create one. Describe your unique context and operating model. Outline what compensation achieves and define how pay is structured. Explain transparency and how the organization sets pay in its ranges. Include administrative accountability measures such as review frequency, adherence to ranges and policy execution. - Define “Place-in-Range” Metrics
With the publication of pay ranges, managers must explain to employees why their salaries sit where they do in a pay range. Your company needs salary administration guidelines that include metrics like performance, tenure, contribution in role, degree to which employee fulfills role, etc. Here is an example of place-in-range definitions recently developed with a client:Place-in-Range
Description
Lower (Developing)
Expected level for a new hire or recently promoted employee considered to be on the “learning curve”
Middle (Fully Skilled)
Expected competitive positioning for an employee performing the “full scope” of the assigned position
Upper (Expert)
Expected level for a seasoned, proven employee who provides “premium value” to the organization
- Map Employees to Pay Ranges
As you evaluate salaries against the new ranges, the compensation of some employees won’t match the defined skill and contribution levels typical for their place in range. Before communicating pay ranges publicly, be sure to adjust salaries of employees with salaries below their range minimum. Such steps facilitate pay equity. For those above the range, gradually resolve the discrepancy either by providing training and coaching so the employee can be promoted to a higher range, or slow down increases or shift increases to a lump sum award if the employee remains a strong performer. “We suggest making future pay decisions with an eye towards moving people into the proper place-in-range,” said Kimberly Rochat, Managing Director, Consulting for The Croner Company. - Assess Competition’s Pay Rates
Before you post or share pay ranges, ensure that they are market competitive.“Pay ranges need to be clearly tied to the market. Companies need a well-defined methodology that identifies their talent market and the compensation percentile they are targeting and assesses their position in that market.”
– Kimberly Rochet, Managing Director, Consulting, The Croner CompanyThis effort, when regularly applied, ensures that ranges change as market conditions change and shows employees that your organization prioritizes a current pay program.
- Implement a Communication Process
Once you’ve defined employees’ place in their range and mapped compensation, start communicating. Explaining to employees why their role is placed in a specific pay range is one of the most overlooked pay transparency issues. Share with employees their pay range and the one above and how they might develop in their role to get a promotion.
Partner With The Croner Company
In addition to these steps, The Croner Company can provide guidance on leveraging pay transparency, such as developing career paths for each, job family, defining metrics required to reach different organizational levels, and advising on pay practices and competitive compensation data via its annual compensation surveys as well as outside survey data.
As Kimberly Rochat explained, “We have our fingers on the pulse of compensation practices in the industry sectors we serve, and we customize solutions to address a client’s current situation.”
If you are seeking a compensation advisory partner who can help you establish a custom pay strategy that leverages transparency and competitively positions your company’s pay, contact The Croner Company.
The Croner Company’s surveys and consulting services are relied upon by organizations at all stages of growth to establish and modify pay practices and align compensation with mission, values and market.
- To discuss your company’s strategy for hybrid or remote-work compensation, or to learn more about our consulting services, please contact Kimberly Rochat, Managing Director, Consulting at the Croner Company, at +(415) 485-5526 or kimberly@croner.com.
- For more information about The Croner Company’s compensation surveys, please contact Laurie Krashanoff, Manager, Account Relations, at +(415) 485-5521 or laurie@croner.com.