When was the last time you updated your company’s compensation plan?
If you can’t remember, then it has been too long!
We recommend updating your compensation plan every 18 – 24 months. If you’re in that range, updating your compensation plan could be one of the most critical things you do this year!
Here are five steps to help make this challenging task a little simpler.
How To Update Your Compensation Plan in 5 Steps
#1 Update Your Job Descriptions
Nothing spells consistency and credibility more eloquently than having accurate and updated position descriptions in your organization.
Not only do they serve as a guide for job expectations, but they also help to set the course for performance.
Job descriptions are also critical when benchmarking compensation. Before you can accurately assess the market value of the position, it’s incredibly important to have a solid account of the requirements for a job.
So update those position descriptions – just in case anything has changed over last year. (Which we all know that is has!)
#2 Obtain Industry And Market Survey Information
When you are updating your compensation plan, it is important to compare jobs in your organization to those in like industries or even compare position pay to industries where you are likely to compete for employees.
Purchasing or having access to compensation surveys that serve this purpose is critical.
Be prepared to have a solid budget for this tool. Compensation surveys can be costly depending on your industry and type of position you seek to benchmark.
#3 Conduct Pay Benchmarking And Identify Gaps
Once you have completed items one and two, now it’s time to knuckle down and compare your positions to your benchmark survey data.
Utilizing your job descriptions, seek to find an 80% match within your survey for the positions you want to benchmark.
When you are purchasing industry surveys remember to look for those that provide some job description information. Without that, you are merely comparing a position to a job title that could vary widely in duties and responsibilities.
Here are your next steps:
- Plot out your findings from your benchmarking and compare those to your current salary grade midpoints
- Identify gaps that may be causing challenges in recruitment and retention
- Strategize regarding improvements in your plan
#4 Update Your Plan and Policies
Once you have conducted steps 1 – 3, it’s time to update your pay plan as well as your policies.
Every organization should have well-defined compensation policies that provide governance for pay increases and for all matters relative to employee pay such as authority levels for pay changes.
If you have not prepared compensation policies, now is the time to do that.
Having solid compensation policies and procedures will provide guidance and add integrity to your pay system.
#5 Get Help If You Need It
Updating your compensation plan can take a considerable amount of time.
Sometimes having an objective third-party (like Integrity HR) can help you sell your program updates to senior leaders and also help you prepare policies and procedures with efficiency.
Utilizing a consultant or another resource to assist with benchmarking can also be beneficial to the HR professional in order to provide objectivity, confidentiality, and expertise.
Don’t get bogged down in the details – compensation is critical to attracting and retaining high performers. Getting it right makes HR shine and keeps great people engaged!
As we get into the second quarter, be sure to keep an eye on your compensation plan. The savvy business professional will keep abreast of market changes, and respond to those quickly to stay ahead of the competition!
Just remember these five simple steps… and don’t over complicate it!
If you’d like help updating your compensation plan or benchmarking your key positions, give us a call at 877-753-0970 or contact us here.