benefits, Comparator Pool, compensation strategy, employee compensation, employee surveys, employee value proposition, External Equity, forced ranking, Internal Equity, Pakistan – a high-inflation country, pay-for-performance, satisfaction with income, total Rewards
If your company conducts Employee Surveys, the one question you are sure to get a low score on would be about ‘satisfaction with your income’. One reason for this is because employees (probably) feel that it may encourage you to increase their pay. Another could be that you are not very transparent about your structure and processes.
An important element in the compensation space is communicating the ‘total rewards’ your company offers. Too often, employees see only the monthly pay slip, forgetting about the other benefits that go into your Employee Value Proposition.
Accept that staff will compare themselves with each other and with colleagues across industries. This is what makes Internal and External Equity so important. However, if you clearly define your Comparator Pool (the companies who participate in your salary survey), then the comparisons should be less painful. The makeup of the pool is critical: similar industry/size/HR offerings – but also who you compete with for talent.
The next critical element is where do you position yourself in this pool – top, middle or bottom quartiles?
Of course, there are a number of steps to be taken to ensure internal/external equity: updated Job Descriptions and Job Evaluations, benchmarking with companies in the Pool (compare jobs not titles) and quantifying the allowances and benefits you provide. Since this is a costly and time-consuming effort, your target frequency might be every two years. However, as Pakistan is a high-inflation country, the survey should be done annually so as to ensure you do not slip out of alignment with your desired positioning.
There may be other elements that envelop your compensation strategy: pay-for-performance (versus seniority), forced ranking (as opposed to everyone getting the same increments)and a predominance of benefits (instead of cash) – all these need to be communicated openly and frequently. Keeping up with emerging trends will help you stay competitive when attracting talent.
Ultimately, even if employees are not satisfied with the ‘amount’ of pay, they should be comfortable that the company has been fair and transparent.
– Leon Menezes
The writer is a senior HR practitioner, professor-of-practice and an executive coach.
First published in the Careers Section of The DAWN National Weekend Advertiser on February 22, 2015.