Modernize Comp Mgmt
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Join Payscale’s Chief Product Evangelist, Ruth Thomas as she discusses 5 key principles of modern compensation management and what the future of compensation management technology could look like.
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Modernize Comp Mgmt
- 1. Is It Time to Modernize Your Compensation Management?
- 2. Today's Presenters Ruth Thomas Chief Product Evangelist Russ Wakelin Chief Product Officer Raj Cherukuri Chief Technology Officer
- 3. Is it time to modernize compensation management?
- 4. Today's Agenda • Do we need to modernize compensation management? • Five principles of modern compensation management • What’s the future of compensation technology? • Q&A
- 5. Today’s workplace challenges Pay Low engagement Pay Transparency Pay Equity Career progression Skill shortages Rapid wage growth Hiring freezes & layoffs Pay progression Remote & hybrid work Job architecture Categorize skills Skills based pay Fair Pay Labor market volatility Personalized reward Pay Compression
- 6. Poll Question 1: What are the key challenges you are facing right now? (select all that apply) A. Developing or revising our comp strategy B. Creating or revising comp structures C. Creating or managing job architecture and leveling D. Investing in new sources of pay data E. Budgeting and getting approval for pay increases F. Getting more from compensation management software G. Managing pay for a remote workforce H. Creating or managing a skills-based pay structure I. Creating or managing variable pay J. Conducting pay equity analysis K. Conducting manager training on pay communications L. Preparing for or increasing pay transparency M. Creating or getting more use out of total rewards statements N. Managing pay compression
- 7. Top priorities for 23 include creating or revising comp structures, revising comp strategy and getting budget approval for pay increases. Source: Payscale’s Compensation Best Practices Reporting Data 2023
- 8. Source: Deloitte: Compensation Management Solutions: Market Primer 2021 Only 9% of companies report being ready to address the changing nature of compensation strategies.
- 9. Between 2021 and 2022 we saw a 10% increase in organizations who are implementing a compensation strategy – However 50% were looking to update their compensation strategy* Source: Payscale’s Compensation Best Practices Reporting Data 2023
- 10. The compensation market needs help adjusting to the new talent landscape and transparency trends 64% of organizations will adjust their compensation structures in 2023 42% of organizations will adjust their compensation strategy for 2023 37% of organizations are rapidly trying to improve pay data, structures and pay equity in response to pay transparency legislation. Source: Payscale’s Compensation Best Practices Reporting Data 2023
- 12. Modern compensation practices require: Increased agility Collaborative practices Greater transparency An employee experience Manage increasing complexity
- 13. Increased agility • Business agility is driving talent agility • We need to build resilient compensation practices so they can adapt to labor market trends more frequently than annually • Fast moving jobs are driving the demand for more real time data points and on-demand compensation recalibration
- 14. Organizations shifting slowly from annual cycles Payscale’s Compensation Best Practices Reporting Data 2023
- 15. • Emerging body of pay transparency legislation driving change in compensation strategy adoption • Requires a proactive rather than defensive approach to stay ahead • Identify what frameworks you need to put in place to support a more transparent approach • Increase stakeholder engagement with training and communication Greater Transparency
- 16. Organizations are making gains on their transparency targets Source: Payscale’s Compensation Best Practices Reporting Data 2023
- 17. Collaborative practices • Transparency driving the requirement for increased collaboration • New stakeholders need visibility of job and compensation data during compensation and talent lifecycles • This is driving the requirement for real time collaboration
- 18. Job Description: Collaborate, Approve & Price Jobs
- 19. Choose data sources that reflects the market & your competition around the world Leverage Payscale data and/or manage and participate in third party surveys. Understand Competitive Market & Determine Data Strategy Benchmark jobs at scale in alignment with your pay strategy Develop your job architecture that supports the complexity of your entire organization Reporting makes it easy to make pay decisions but budget in mind Benchmark Jobs and Create Pay Structures Communicate total compensation internally by securely delivering customized compensation statements Confidently develop competitive salary ranges in line with your strategy for external transparency Communicate Compensation Internally and Externally Facilitate Collaborative Compensation Planning Rapidly build, standardize and maintain job descriptions to ensure accurate and consistent pay. Understand Employees Jobs Complete Pay Equity Analysis Collaboration across the Payscale portfolio HR Market Analysis, Employee Reported, Peer Payfactors, MarketPay The fair pay journey with Total Rewards Statements, Payfactors, MarketPay Automate the merit cycle including HR, Comp and front-line management teams, empowering more meaningful pay conversations Enforce budgets, strategy and timelines from a single location Compensation Planning Pay Equity Understand representation and statistical pay gaps within your organization Complete remediation planning based on your budget Compensation Philosophy and Strategy Job Description Manager, MarketPay Jobs Powered by JDXpert Develop an internal philosophy that creates consistency in how pay decisions will be made Strategic partnerships, Managed services
- 20. Fair Pay Check
- 21. • Pay was employee’s primary concern in 2022 and is playing a vital role in the employee experience • Other talent management practices have pivoted to deliver an employee experience whilst compensation has remained something that is done to you • Employees expect a consumer like experience to access, select and model their compensation - today we need to put people at the center of compensation Employee Experience
- 24. Poll Question 2: What employee experience do you offer during the compensation lifecycle? A. Access to job descriptions B. Access to pay framework information C. Access to total compensation statements D. Ability to model compensation outcomes E. Ability to make elections during the compensation process F. Choice of employee benefits G. Choice of compensation elements (e.g., base/variable/stock) H. Candidate access to pay information I. I don’t know
- 25. • New workforce trends are driving compensation complexity • Shifting work models • Evolution of skills and skills-based pay • Long anticipated move to personalization of reward • Need to calibrate an increasing number of data points to provide insights and to fuel more agile HR outcomes (AI) • Transparency is also increasing pressure to get pay right so more focus on evidence-based compensation Manage increasing complexity
- 26. Poll Question 3: Which one, of these 5 principles, would you consider needs to be tackled first ? A. Increased agility in our compensation processes B. Greater transparency and the frameworks to support this C. Increased collaboration with stakeholders D. Improving the employee experience of compensation E. Confidence in our ability to manage increasing compensation complexity F. I am not sure
- 28. Ventana Research • Nearly three-quarters (72%) of organizations use spreadsheets in their compensation management process for budgeting, forecasting and advanced modeling • More than one-quarter (26%) are exclusively using spreadsheets • While more than one-half (57%) of organizations cite spreadsheets as a data governance issue.
- 29. The future of compensation technology Real time recalibration and automation to streamline repeatable processes in support of agile compensation Solutions that support increasing demands for pay transparency and communications Workflows that facilitate multi-stakeholder collaboration Platforms that engage employees and put people at the center of compensation Ability to perform complex calculations and analyses with increasing leverage of AI
- 30. Recommendations Consider how the 5 principles might apply to your organization Evaluate how your compensation strategies and programs align Understand where the gaps are, what do you need to do to fill them? Explore how technology can facilitate the transition to modern compensation management Build the business case
- 31. “ ” If the rate of change on the outside exceeds the rate of change on the inside, the end is near. Jack Welch
- 32. Gain a competitive edge in a fierce talent market while building a more fair, equitable and transparent pay strategy Employee Reported The world’s largest real-time salary database HR Market Analysis A composite of analyst curated employer reported survey data Peer A transparent & dynamic HR reported data network Market Pricing Pay Equity Pay Structures Compensation Planning Survey Management & Participation Reporting & Analytics Total Rewards Statements Job Descriptions Management
- 33. Q&A Feel free to ask any questions in the chat!
- 34. Mercer’s 2022 Inside Employees’ Minds© study. Mercer 2022 Inside Employees Minds Report
- 35. Compensation leading driver of voluntary turnover 35% 11% 11% 10% 8% 7% 4% 4% 3% 3% 2% 1% 18% 9% 17% 11% 7% 10% 13% 4% 4% 3% 2% 2% 0% 10% 20% 30% 40% 50% 60% Compensation (i.e., pay is not competitive, there are pay equity problems, compression, etc.) Employee entitlement/grass-is-greener syndrome Limited advancement opportunities Burnout due to being understaffed/overworked Management skills Desire for greater workplace flexibility/remote work Important benefits are missing or not competitive Interpersonal conflicts within teams Arduous or unpleasant work conditions Company culture and values Unsure Outdated or underserviced technology that inhibits productivity First Second Payscale’s Compensation Best Practices Reporting Data 2023