Sharing some of the more popular pieces from the eight years of Compensation Force archives. This post, first published in June 2010, challenges us on a common pay design oversight. Too often (still) we build compensation structures without any conversation about or consideration of what a career in our organization is supposed to look like.
Let's change that!
I get a lot of questions (and so do many of you, I bet) about seemingly isolated pieces of pay program design, like:
- How many pay grades should we have?
- How much differential between pay grade midpoints should there be?
- How wide should our salary ranges be?
- Should we establish multiple levels for some jobs (e.g., Accountant 1, 2 and 3) and, if so, how do we determine the number of levels needed?
- What guidelines should we establish for promotional increases?
While circumstances will press you to make decisions like this quickly and on their own (supposed) individual merits, to do so misses the chance to pull them together in a manner that supports the kind of work experience designed to make your employees - and ultimately your company - more successful.
It starts with asking one important question: What should a career in your company look like?
And underneath this big question are a number of more pointed and specific ones, including:
- To what degree should a career in your company be about upward movement, encouraged and reinforced by the chance for a promotional increase?
- To what degree should a career in your company be about lateral development? Cross departmental/functional/divisional development? How should this development be encouraged and reinforced?
- Should the pay program encourage people to stay and learn in the same role for many years? Should it encourage them to move on or up after a year or two?
- Do the answers to these questions vary by employee group? By professional discipline? By functional area? If so, how should the pay program best address these differences?
Bottom line: Is a career at your company better because of your pay program ... or in spite of it? Only proactive planning (and resisting the pressure for isolated pay design decisions) will ensure that career and pay progression are in purposeful sync, rather than at odds with one another.
Image "Ladder to Success" courtesy of Sira Anamwong at FreeDigitalPhotos.net