It’s budget season again, and that makes it time to update your data for next years comp plan. The first critical step is to get a sense of where the issues are.

1. Compensation
Budgeting Part I:
Managing Pay
Inequities
Mykkah Herner, MA, CCP
Head of Professional Services
Ian Englund, CCP
Compensation Professional
www.payscale.com

2. 14,000 Positions 3000 Customers 11 Countries
40 Million Salary Profiles
250 Compensable Factors
www.payscale.com

3. Compensation Budgeting
Part I: Managing Pay Inequities
Part II: Determining Increases
Part III: Putting it all together with
PayScale Insight

4. www.payscale.com
Agenda
Start with a Plan
Identify Compensation Inequities
• Organizational Level
• Department Level
• Position Level
• Individual Level
Develop solutions
Next month: determining increases

5. Start with a
(comp) plan

6. Comp
Design
Elements
Philosophy
High-level view on the aims of the
organization with regard to compensation
Strategy
o Define your talent market(s)
o Determine level of competitiveness
o What do you want to reward?
Structure
Mathematically sound way of aligning your
positions to market and internally
Policy
Ensures that the comp plan is carried out

7. Get Reliable Market Data
Compensable factors for benchmarking jobs
Defining your competitive set
Accurate and current market data

8. Build Compensation
Structure
Define Grades & Ranges
Assign Jobs to Grades

9. Test for Pay
Inequities

10. Types of
Pay
Inequities
 Plan Level
 Department level
 Position level
 Employee level

11. Plan-wide Pay Inequities
Pay Fairly to Market
Determine your target market percentile
Budget
Competitiveness and impact on retention/attraction
Stay competitive relative to market
Annually, keep ranges current

12. Analyze Ranges to Market
Create a report: range midpoints, market values, and delta

13. Cross-Department Pay
Inequities
Target / Strategy
Determine appropriate target(s) by department
Build ranges around targets

14. Position-specific Pay
Inequities
Market movement & critical positions
Listen to your employees

15. Employee-specific Pay
Inequities
Pay according to your comp plan
Compression issues
Examine compa-ratio (.8-1.2)
Look at range outliers

16. Disparate Pay & EEO
Concerns
Create a Disparate Pay Report
o High disparity is a flag for litigation
o Low disparity may indicate not following your comp plan

17. Develop Solutions

18. Identify Solutions
o Identify options
o Determine cost to remedy
o Examine budget allowance
o Consider multi-year strategy
o How critical to resolve?
o Develop multiple scenarios
o Create communication plan

19. Identify solutions:
Plan Level
Plan Level Options
 Do nothing
 Make small incremental
change
 Update comp strategy
 Adjust all ranges at once
Plan Level Costing
 Increase plan
 $ impact of green outliers
 Former red outlier
eligibility for increase

20. Identify solutions:
Position Level
Position Level Options
 Keep position static
 Move position to new
grade
 Offer market premium
Position Level Costing
 Cost to move to new
grade
 Cost to market premium

21. Identify solutions:
Employee Level
Employee Level Options
 Identify critical issues
 Compression
 Disparate pay
 Green outliers
Employee Level Costing
 $ for critical issues
 $ for compression
 $ for market adjustments

22. Communicate
Pay Inequities
Develop Budget Request
 Ask for what the organization needs
 Help the organization manage the
budget once approved

23. Next Month
Calculating Increases
to Base Pay

24. PayScale Delivers Where Other Compensation Providers Fall Short
PayScale leads the world in compensation knowledge with the freshest and
most detailed data from over 40 million salary profiles. More than 3000
organizations use PayScale’s software and intelligence to get the greatest
return on their talent. Smart businesses use PayScale Insight to recruit, retain
and motivate their people.
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Mykkah Herner, MA, CCP
Head of Professional Services
Ian Englund, CCP
Compensation Professional
www.payscale.com