Admittedly I don’t typically make resolutions. I like goals, plans, and measurable actions. Over time, the process of making resolutions has come to feel like empty promises to myself. That said, 2016 was a challenging year for me, so to start 2017 off right I thought I’d get back into the practice of resolving to do something differently this year.
As a word nerd, I looked up the various and alternative definitions for “resolution,” the first two of which work well for our purposes: a) the act of analyzing a complex notion into simpler ones and b) the act of answering: solving. These notions of resolving are ones that I think are both difficult and necessary, especially in the field of HR and compensation in particular. Without further ado, Compensation Resolutions 2017: seven ways to start the new year right!
#1: Develop Regular Compensation Reporting
I was working as a compensation consultant when the recession started to ease up. The thing I heard most often from clients was anxiety about how they might be doing relative to the market. They were anxious because they didn’t know. They lacked the information they needed to know not just how to act, but how to react and anticipate questions from employees. As we face uncertainty under a new administration in 2017, knowledge will be increasingly important.
The first resolution for 2017, then, is to develop monthly compensation reporting, or more often if needed. What should you look at every month? At the very least, what’s your market ratio, or how you’re doing relative to the markets where you compete for talent. Depending on your organization’s goals, you may also pick the top 10 most critical jobs or top 12 most valuable employees and track their compensation to market on a regular as well.
Once you have your reporting, don’t hoard it. Share it with your executives regularly. Get them familiar with a compensation dashboard view. It could be something as easy as this report showing, by division, how internal pay compares to market. The answer in this example, well in most areas.
#2: Train Managers to Communicate about Compensation
In 2016 we learned that most conversations about pay happen between employees and managers. Employees feel more engaged and have greater trust in their managers when this is done well. And, most companies don’t trust their managers to have effective conversations about pay. While companies have tried to have one-and-done type trainings with managers, it’s looking more and more like an ongoing commitment to manager training will have better success at moving the needle on manager proficiency.
In 2017, the second resolution is to build a case for ongoing training to increase manager aptitude in communicating about compensation. In order to do so, they may also need greater understanding about the details and purpose of your compensation plan. You may not have to break the bank to do this. Consider leading manager groups to help them coach and learn from one another!
#3: Make it Easy to Include Managers in Pay Decisions
It’s not new to want to give managers some discretion in pay decisions. HR and Comp professionals have been building spreadsheets with columns from A to BZ, making sure managers have all the information they may need to allocate increases to those they supervise. It turns out more information isn’t always more or better. Sometimes more is less.
The third resolution for 2017 is to find a way to get just the right information in front of your managers. Not sure how? PayScale Team is a good start. Asking managers what they need to know is another.
#4: Reward Results, or Pay-for-Performance 2.0
We spent a lot of time in 2016 evaluating performance evaluation. Many companies changed their processes from either stacked ranking or long and tedious annual reviews to something with more pulse-based, real-time feedback. 2016 also saw the major Wells Fargo and Zenefits busts, where because of rewarding the wrong behaviors, the wrong results happened.
The fourth resolution for 2017 is to find the right ways to connect pay with results, using modern pay-for-performance, focusing on results, and getting creative about pay.
#5: Seek Fresh Compensation Market Data for Hot Jobs
Talking about a competitive market isn’t new. New for 2016 was seeing how much some hot skills can impact pay for in-demand jobs. Skills like Django and Scala can boost pay by 20-29%! If you’re in a market that’s already somewhat competitive, staying on top of market trends becomes more than a “nice to have.”
In 2017, the fifth resolution is to identify the top jobs and skills your organization needs to accomplish your 2017 goals. Track how compensation moves in your market with real-time, fresh, and accurate data.
#6: Train Employees to Understand Compensation Decisions
We’ve talked a lot about millennials, not just in 2016 but over the past few years. One thing we know about this group of professionals is that they are good information-seekers and gatherers. Having grown up with the internet, and due to the prevalence of all kinds of salary information online, they have become quite skilled at acquiring their own compensation data. Typically, the data that employees have access to is not packaged for business use, doesn’t take into account your organization’s compensation strategy, and may not be thoroughly vetted.
2017 is the year to catch up with employees. If they’re already seeking information, why not share the compensation information you have with them? Train them to understand your compensation strategy and how their job fits in to the bigger picture. Our sixth resolution is to decide to increase transparency of your compensation plan, and to train employees about the why of compensation in your organization.
#7: Review Compensation Strategy
The final resolution for 2017 is to make it a regular practice to review the compensation strategy. Is it supporting your talent strategy? Is it helping you make great hires? Keep top talent? Accomplish your business goals? If not, revise it and review it. Compensation strategies are no longer set-it-and-forget-it. They’re living breathing strategies that grow and evolve with your business priorities.
With these resolutions in mind, comp professionals should be able to move boldly into 2017. Remember to keep it simple, not that simple is easy. And remember that part of resolving is answering and solving.
What are your compensation resolutions for 2017? Let us know below!