How to Implement a Strategic Compensation Plan for the Enterprise

This piece is part of our series on sessions presented at Compference19. You can register or learn more about Compference20 here

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Highlights from Compference19 Session: Don’t Stay in Your Lane: Bringing Strategic Thought to Basic Reporting with Emily Brown, Managing Director of Global Compensation for FedEx Express

In a standing-room-only session from PayScale’s Compference19 in September, Emily Brown, Managing Director of Global Compensation for FedEx Express, provided sound advice for HR and compensation professionals looking for guidance on how to implement a strategic compensation plan in large, complex organizations.

With a Bachelor’s in Human Resource Management and an International Master of Business Administration, Brown’s early experience was analyzing compensation retention strategies for the U.S. Navy as a senior consultant with Booz Allen Hamilton. Years later, after changes in her personal life led her to pursue new opportunities, Brown joined FedEx Express to manage compensation for the operating company’s 113,000+ U.S. team members.

Today, Brown uses PayScale’s Insight Lab, incorporating all market survey house data, to build a proactive compensation strategy based on up-to-date market data and real-time analytics. Her advice to compensation professionals who want help on how to implement a strategic compensation plan for the enterprise has three fronts:

  1. First, dig into data and take a stand on what the company should do about compensation.
  2. Second, tell stories that illustrate the importance of what your compensation strategy is trying to achieve and why it matters.
  3. Third, build relationships with internal resources cross-departmentally in order to achieve buy-in and champion change across the organization.

1. Take a Stand

Executive leaders need people who are experts in their respective domains. They hire smart, talented professionals for a reason. If you are a compensation professional, you are expected to provide recommendations on compensation to help solve problems for the organization. For that, you need reliable compensation data.

It’s common for managers of teams or departments to seek special consideration, particularly for highly skilled people that are difficult to replace, positions that are difficult to fill, and in high income areas where the cost of living exceeds national averages. If you don’t have insight into up-to-date market data, how do you know who to believe? You might be prone to dismiss requests for compensation adjustments out of hand. Without reliable data and a compensation strategy, you can earn a reputation for being out of touch, slow to act, or as a function of the business that “always says no.”

The reverse might also be true. You can run into situations where you believe an adjustment to compensation is necessary but where common practices in the organization or industry are overriding your judgment because of how things “have always been.” In this scenario, you need to be able to consult data in order to challenge assumptions that stem from cultural norms. Policies can be changed. Cultures can evolve. But to do either requires both accurate and reliable information and the context with which to understand that information.

Once you have data, you need to take a position. Don’t just send a spreadsheet and expect upper management to know what you are asking for. Don’t ask anyone to do your homework for you. You must be able to show why action is needed and what action you want upper management to take. Go bold with your reporting. Use headlines, not titles. Present data but draw conclusions. Make recommendations.

In short, never submit data that hasn’t been analyzed. Know what it means. Always have a point of view.

2. Tell a Story

The recommendations you make need to be clear and compelling and they need to tie to the human experience. Stories are how humans learn.

Ideally, data should tell a visual story. Assume that an executive audience will spend only eight seconds looking at the report you show them. How do you capture their attention and communicate the gist of the story and what needs to be done in eight seconds?

Don’t just hand over tables or lists. Nobody can understand this at a glance. For data to be actionable, it must first be insightful. This requires context and comparison. Is compensation rising or falling over time? How does it compare to inflation? What about at the regional or individual city level? How does compensation compare to the median within an industry? What other factors impact the employee experience and job satisfaction other than compensation?

The following is dummy data for compensation corresponding to employee hire date:

dummy compensation data in a table - strategic compensation plan

The plotted graph below represents the same data reorganized into a visual timeline:

dummy compensation data in a chart - strategic compensation plan

Which is more explanatory and actionable?

It’s obvious, right? That’s what you want. The first is just a table. It has no context. Therefore, there is no insight. The second tells a story — a story of compensation that has fallen over time due to a recession but has remained low despite economic recovery. The contextualized story can be understood at a glance. When data is this insightful, you don’t need to discuss the numbers or why you are looking at this data. You only need to discuss what to do.

But graphical representation of data isn’t always enough. Your recommendations should also have emotional context. Compensation is about people. Wherever possible, you need to frame the discussion around compensation strategy as a human narrative, not only because it is more generous, but because it will be more memorable. Stories will stick in the minds of the people you are trying to convince — facts won’t.

What this means in application is that you may need to break your data down into smaller sets of stories centered around individual employees or groups of employees based on skills or location or training investment or other critical factors that tie back to the broader narrative of business investment, compensation strategy and the employee experience with the brand.

Where possible, show faces. Help upper management connect personally with the people whose compensation you are discussing and impress upon them the importance of those employees to the business. Are they the face of the company? Are they instrumental to growth, quality assurance, customer retention, innovation, or delivery? The business objective for nearly any strategic initiative rolls up to either cost savings or growth, but you can get there by framing the conversation around the productivity and importance of each employee group as a function of the business.

3. Build Relationships

Lastly, in order to make headway on implementing a strategic compensation plan for the enterprise, you need to be conscious of the whole of the business and how all departments will be impacted by something as intrinsic as employee pay.

Get buy-in from your business partners. These may include HR, Finance, Legal, Marketing, IT, and Operations to name a few.  You’ll need to look at headcount allowance and financial controls. You’ll need to look at the potential ramifications of your strategy from an HR and Legal prospective. You’ll need a communications strategy for employees. And you’ll need support from IT.

Depending on the business, you might find more success with a top-down approach where you first obtain buy-in from an executive sponsor and then secure participation from all the impacted orgs.  Alternatively, you can obtain support from the most impacted departments (e.g. HR, Finance, or Legal) to submit recommendations to an executive leadership team or board of directors as a unified front.

Regardless, the most critical thing is to build relationships internally by networking with business partners. Get to understand each department’s challenges, especially as it pertains to resource availability, employee experience, and acquisition and retention of top talent. Partner with the Recruiting and Talent teams as well. They will have useful insights on these matters.

One best practice for obtaining buy-in on implementing a strategic compensation plan is to run a pilot with a smaller group. Start by building trust with a select business unit to test the process and effect of your plan. This can be a group that is heavily at risk for losing hard-to-source talent, such as IT, or a group that will be highly beneficial in helping you expand your program across the enterprise, like Finance. The results of a pilot will provide additional, internal data that will demonstrate effectiveness as well as provide champions to help you obtain the buy-in you need to expand the program.

Final Words

It goes without saying that a strategic compensation plan is a benefit to any organization that cares about employer branding and takes the war for talent seriously.

As previously discussed, the data upon which you are basing your recommendations should be so obvious, logical, and credible as to make the data itself unnecessary to discuss. The conversation can then turn to how and when the enterprise can tactically execute a strategic compensation plan and what the philosophy of that plan will be.

You can then talk about the important questions. Which groups of employees represent the biggest risk to the business if talent is lost? How can the enterprise best adjust compensation across these groups? When can the changes take place? What will the impact be to the business? Which people or departments need to be notified or involved? How will compensation adjustments be communicated? What is the long-term vision and how soon will the enterprise be able to start measuring results?

These are the conversations you want and need to have.

If your compensation strategy is accepted by upper management and gets enacted, you will then get to experience the joy of proactive compensation management. Rather than reacting to harried, desperate, or disgruntled managers submitting requests for compensation changes and begging your consideration, you can call them with the good news that you’ve researched the data and would like to proactively adjust the compensation of employees XYZ to align with your compensation strategy and changes in the market.

The positive relationships and increased productivity that result from a proactive and strategic compensation plan will astonish you. That’s how you build credibility as a compensation professional and become a world-class pay brand.