Are you constantly fighting against leadership in your organization? Too often executives resist comp planning because they see it as a set of rules intended to limit their authority to make good decisions.

1. Mykkah Herner, MA, CCP
Senior Compensation
Consultant, PayScale, Inc.
Kit Redwine
Client Executive, PayScale, Inc.
www.payscale.com
4 Steps for Getting Execs to
Care About Compensation

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14,000 Positions
2500 Customers
36 Million Salary
Profiles
250 Compensable
Factors
11 Countries

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AGENDA
o Step 1: Communicate with Execs in their Language
o Step 2: Align to Business Goals
o Aligning comp plan for impact
o Defining the competition
o Step 3: Incorporate Leading Edge Practices
o ROI on comp investment vs. pay-for-performance
o Pay grades and ranges vs. broad bands
o Stay nimble
o Step 4: Keep Execs Up-to-Date with Quick Snapshots
o Immediate Action

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STEP 1
Communicate with Execs
in Their Language

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Know your Audience
o Leaders don’t want to be told what to do
o Leaders can be distrustful of change
o Leaders are decision-makers
o Many leaders have access to
information
o What matters to your leaders?

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Exec Communication Basics
o Kill the HR Jargon, yet do use enough industry
language to demonstrate your knowledge
o Don’t present problems without solutions
o Describe how you will solicit their input
o Focus on results not processes
o Be succinct
o Strike an appropriate level of urgency

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Using Comp Terms with Execs
o Compa-Ratio = are we on track with our pay philosophy?
o Market Ratio = How are we doing vs our competitors?
o Range Penetration = How well are employees moving
through their ranges – do the ones at the top deserve it?
o Green-Circled Employees = We may be untruthful and/or
paying un”fair”ly.
o Red-Circled Employees = These are employees we decide
to pay more, even though the data doesn’t support it.
o Range Width = how much flexibility do we give our
managers in setting pay?

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For example…
o Don’t say…
o I’m going to create a compensation plan to provide
more structure to how salary decisions are made.
o Instead say…
o I’ve noticed some challenges that continue to disrupt
our ability to do business and I want to help fix them.
Therefore I would like to facilitate a process to define
and articulate the goals of our comp program.

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STEP 2
Align to Business Goals

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Aligning comp plan with
business goals
Why alignment matters
o Comp plans vary from org to org
o Comp plan should support business goals
o Alignment shows you’re in tune with org needs
What’s on the business agenda?
o Focus on growth
o Emphasis on doing more with less

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Benchmarking to market vs
Defining the competition
Where are you recruiting or losing losing your talent?
o Get specific, but not too specific
o Define the appropriate labor market (s) by:
o Industry
o Size
o Location
o Local, Regional, National
o Urban vs Rural

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For example…
o Don’t say…
o I’m going to benchmark against the market and create salary
ranges.
o Instead say…
o “I’ve noticed (State the business problem you are trying to
solve). I think it’s important that we decide where we think
we want to be with compensation and what is going to serve
our business best. I’m going to do some research on where
we get and/or lose our talent and present my findings to you
so we can decide what course of action we need to take.

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STEP 3
Incorporate Leading Edge
Practices

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ROI on Comp Investment
o Comp trend of yesterday: COLA
o Leading edge practice: Pay for Performance
o Exceeds expectations
o Meets expectations
o Does not meet expectations

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Pay Grades and Ranges
o Comp trend of yesterday: Broadbands
o Leading edge practice: Pay Grades & Ranges

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Stay Nimble
o Consider “the mix”
o Determine level of transparency
o Be able to keep your comp plan current without a full-blown
project

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For example…
o Don’t say…
o I think it’s time to move to a pay-for-performance
compensation structure.
o Instead say…
o We have each been tasked with making sure we’re
being good stewards of our budgets. Since
compensation is my biggest expense, I want to ensure
our organization is doing everything we can to get the
best ROI from our compensation costs. I’d like
permission to explore compensation structure
improvements.

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STEP 4
Keep Execs Up-to-date
with Quick Snapshots

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Report High Level Info
o Get them familiar with a dashboard (Compa Ratio, Market Ratio, etc)
o Report these on a regular basis

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Report Relevant Info
Execs are also Managers
o Give them tools for success:
o Flight Risk report & the inverse report
o Disparate Pay report
o Give them insight into what employees care about
o Am I making enough money to cover my basic needs (entry level)
o Am I being paid fairly (professional level)
o Am I being paid enough to deal with managing people (Mgrs/Dirs)
o Give them talking points for comp conversations with employees

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Immediate Action
1) Begin conversation about comp reporting
2) Consider how leading edge comp practices
would impact your organization
3) Evaluate current comp policy
4) Framing Comp & HR plans:
• Results-Oriented
• Clarify the problem and present options
• Align to business goals
• Minimize jargon

22. Mykkah Herner, MA, CCP
Senior Compensation
Consultant, PayScale, Inc.
Kit Redwine
Client Executive, PayScale, Inc.
www.payscale.com
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