Stupid Things in Compensation

By Tripp Ritter, PayScale.com

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Save Yourself Some Pain and Read On
Did you miss last week's hugely popular PayScale webinar? The one in which Stacey Carroll, PayScale's Principal Consultant, detailed the big mistakes companies make in compensation decisions? Well don't worry, we've got you covered. Read on for highlights and then, when you are ready to learn, listen in on the recording.

Don’t Make Across-the-Board Increases
The first mistake is providing flat across-the-board increases to all employees in the organization. As Carroll notes, this is expensive, provides the wrong incentives and can lead to the flight of your top performers. Fixing this mistake requires accurate salary ranges, a pay-for-performance culture and having leaders who are engaged in the comp planning process.

Location Matters. Don’t Ignore it.
Making decisions based on just a little data can be worse than with no data at all. Using a single factor like cost of living to adjust compensation for employees in differing geographies can lead to severely inappropriate salaries. Instead, companies should use a broad and deep set of data that takes into account the market rates of specific job types in a given geography, Carroll advises. 

Leveling for People not Positions
Another common error is basing pay on the employee's circumstances rather than the needs of the position. Too many times, companies increase the salary due to tenure, rather than what the role provides the company. Moving to a focus on position will correct out-of-whack salaries.

Solving Management Problems through Compensation
Many companies succumb to the temptation to use raises to address employee dissatisfaction. Using salary as a blunt instrument tends to have limited impact on retention and may not even retain the employees you really want to keep, Carroll argues. Instead, companies should ensure they have the right overall compensation strategy, and should implement a broad incentive program.

Doing the Smart Thing
Now that you know the basics, it's time to go deeper. Watch the video and learn how to start making changes in your organization.


2 Comments

  1. 2 Paige 13 Aug
    It is imperative that we read blog post very carefully.
  2. 1 Rachael 13 Aug
    I am already done it and find that this post is really amazing.

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