Here’s my challenge to my peers in the HR profession: what would it look like to focus on putting people central in the increase process?
Exceptions to the rule
One of the very real concerns about deviating from a process is that, when not done right, there could be serious consequences. I have said a number of times that discretion isn’t far from discrimination. That said, we know that exceptions happen. One of our favorite stories at PayScale is the 12 Names in the Drawer story, which is all about exceptions. The objection we often hear about comp plans is the fear that they might tie the hands of managers or executives who need to pay whatever it takes to retain top talent, and comp plans aren’t intended to do that.
Knowing that exceptions are likely to happen, make sure they happen for the right reasons and are handled in the right ways. Making an exception for the right combination of skills, experience, and demonstrated results makes sense. These exceptions, with clear rationale and documentation, aren’t as risky depending on the laws in your state. Newer generations consider performance-based exceptions as fair. On another hand, making an exception because someone is nice or funny is not super great for morale and is also not usually protected by the law.
Insert disclaimer here: this is not intended to be legal advice and most lawyers will probably advise you not to make exceptions at all. If you have any questions about exceptions to your HR processes, it’s a good idea to talk with an attorney.
Talk to people about pay
Another area where we sometimes forget to be human is when communicating with employees about their pay or their increases. In PayScale’s most recent Compensation Best Practices Report, we found that only 17% of the respondents felt very confident in their managers’ ability to talk about compensation with employees. In doing a webinar about pay transparency, I asked attendees how transparent they were with their pay practices. 63% answered that their employees find out about pay on their paycheck.
At some point we seem to have collectively decided that not talking about pay was somehow safer and easier than learning how to talk about pay well. What a missed opportunity! If we don’t talk with our people about pay, we miss the chance to ask them what motivates them, what they hope to do next, and what may be preventing them from doing their best. Sometimes managers and HR alike fear the compensation conversation because it can potentially have heightened conflict. But when we regularly provide employees with feedback, and we have a sense of them as whole people, there shouldn’t be any surprises when it comes time to reveal their increase or incentive amount.
Benefits of the new FLSA ruling?
Here’s one last thought about putting people back in the center. For years, because the salary floor of the FLSA rules was so low, it was almost a foregone conclusion that if someone’s job passed the exemption status tests, so would the employee’s pay. Now that the minimum threshold is more than doubling in December, we may be forced to separate people from jobs again. Obviously the job will have to pass the exemption tests first and foremost. But the examination won’t end there. Now we’ll also have to take a look at individuals and their pay. We’ll have to consider their unique contributions, their performance, skills, experience, and results. And at that point, we’ll have to decide whether the employee is also exempt or not. There may be a lot of downside to the FLSA rules changing, but this part of it is a great reminder to consider the humans.
As it comes time for performance reviews and then budgeting and doling out increases this year, ask yourself what processes matter and how you might appropriately and legally deviate from those processes to bring focus to your people. The next generation, Generation Z, is both private and entrepreneurial and expects to be treated like individuals, so we’re going to have to start learning how to treat them as such.