WageWatch Ibrief Blog

Login

Blog Archives

HOW TO DETERMINE NEW HIRE SALARIES

New Hires

Without established salary ranges and salary structure, setting a salary can be like spinning the roulette wheel.  Most companies have salary offer guidelines based on competitive market data and established salary ranges for positions.  Ideally, you will have these established tools and practices in place before you have to make a salary offer.  Salary scales are a valuable tool in recruiting and hiring new employees as well as providing baseline amounts in making salary adjustments for existing employees.

There are many things to consider when determining where to set a salary for a new hire including the candidate’s experience and qualifications that are either required or needed for the job, current salaries of employees in the same or comparable worth jobs, salary range, geography, industry conventions, and company budget.  Other considerations may be bargaining agreements, prevailing wage contracts or arrangements, and the company’s compensation philosophy.

To determine accurate external wage comparisons, employers should carefully define the appropriate market and competitive set.  Defining the market too narrowly can result in wages that are higher than necessary. Conversely, defining the market too broadly may cause an organization to set wages too low to attract and retain competent employees.  Paying prevailing wages can also be considered a moral obligation.  This focus on external competitiveness enables a company to develop compensation structures and programs that are competitive with other companies in similar labor markets.  Employee perceptions of equity and inequity are equally important and should be carefully considered when a company sets compensation objectives.  Employees who perceive equitable pay treatment may be more motivated to perform better or to support a company’s goals.

Internal equity is of equal importance to external competitiveness when setting pay.  You want employees to feel they are paid fairly as compared to their co-workers as well as to adhere to regulations regarding pay discrimination.  If starting salaries are negotiated, ensure that such a practice does not have an adverse impact on women or minority workers.  Generally, jobs do not have to be identical for equal pay to be required, only substantially equal in terms of skill, effort, and job responsibility, and performed under similar working conditions.  For discriminatory purposes, pay refers to salary, overtime, bonuses, vacation and holiday pay, and all other benefits and compensation of any kind paid to employees.  Pay disparities may be allowed under a seniority system, a merit system, or a system measuring earnings by quality or quantity of production.  Hardly anyone notices when you pay “above average” compared to the outside world, but any perceived deficiency in “internal equity” can come back to bite you.

As you can see there are many factors and considerations when setting pay and it can sometimes feel like a delicate balancing act.  But doing your homework, keeping up with the external market, and addressing internal pay inequities will go a long way to simplifying the task of setting new hire salaries.  It is important to ensure that the approach taken is guided by the compensation philosophy and is applied consistently.  An effective Salary Administration Program allows a company to meet the basic objectives of compensation:  focus, attract, retain, and motivate.

At WageWatch our compensation consultants are focused on your organization’s compensation needs and are ready to help you ensure that your compensation programs support your company’s business strategy and objectives.  WageWatch also offers accurate, up-to-date benefit surveys, salary surveys, and pay practice data that will allow you to stay current.  This information is beneficial in creating the best salary and benefits packages that meet or rival the industry standards.  For more information on our services, including consulting, salary survey data, benefit survey data, and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

 

ARE YOU ATTRACTING TOP TALENT?

Attracting Talent

Many business owners find it to be a huge challenge to attract and retain a group of talented and hardworking employees that are loyal to the company and its mission.  Finding high caliber employees with advanced skills to complete important jobs within a company is a challenge that not only exists in today’s marketplace but one that business owners have had to navigate for years.  Everyone is looking for top talent, and those companies that excel in attracting and retaining this talent are the ones that will reap the rewards.  In addition to a number of other factors, businesses that best retain employees offer great compensation and benefits packages.

To retain talent, it is essential that loyalty is established.  In order to do this, the employee must feel that their job is instrumental in achieving the goals of the company, making them excited to come into work each day.  It is also important that the work the employee puts in is acknowledged, affirming their place within the company, and offering them opportunities for growth.

While compensation and benefits packages are one of the largest factors considered by employees, it isn’t enough to make top talent to stay. The following are a few ways that you can attract and retain the best employees at your company:

  • Promote open communication.  When a company is completely open with employees, everyone will feel respected.  Instead of allowing rumors to spread, let your employees know as soon as possible about anything that is going on in regards to the company.   When possible, let your employees be a part of the decision making process.  A culture of open communication is very attractive to employees.
  • Provide opportunities for team building.  Most employees enjoy interacting with their coworkers. By encouraging teamwork, employees are able to build great working relationships and establish a trusting, open environment for the company.  When working together toward a common goal, employees are more motivated and excited about their jobs, often producing excellent results.
  • Cater to individual work style.  Each employee has a different way that they prefer to work, learn and be managed.  When you as an employer take the time and effort to make adjustments for each employee’s needs, they will respect the company more and loyalty will, once again, be built.  This will also help you to establish teams that will work best together based on their work styles.
  • Acknowledge your talent.  When an employee does a good job, it is important that you recognize them for their efforts, so they feel that they are a valued member of the team.  A majority of employees leaving a company do so because they feel unappreciated.  Employees want to feel that the work they are doing is making a difference, so acknowledging their work often is essential.  Also, review surveys for 2013 healthcare compensation, 2013 casino compensation and other market compensation data surveys for your industry to determine what benefits and bonuses you should be rewarding your employees with.

Implementing the above suggestions will help your company to build a culture that encourages the retention of employees, which in turn will attract top talent.  In addition to providing a great work environment that respects employees and provides opportunities for learning and growth, it is also important that they receive a solid benefits package.  At WageWatch, we provide accurate data for hospitality compensation, healthcare compensation, casino compensation, and compensation information for a wide variety of other industries.  To learn more about our up-to-date market compensation surveys, call 888-330-9243 or contact us online.

WHAT IS THE COST OF ENGAGED VS. DISENGAGED EMPLOYEES?

Employee Engagement

Employee engagement levels are at their highest in years!  The Gallup Organization has been measuring levels of employee engagement since 2000.  Over nearly two decades, the annual percentage of actively engaged U.S. employees has ranged from a low of 26% in 2000 to the recent six-month high of 34% in 2018.  On average, 30% of employees have been engaged at work during the past 18 years.  Conversely, the percentage of actively disengaged U.S. employees has ranged from a high of 20% in 2007 and 2008, during the heart of the recession, to the current low of 13%.   On average 16.5% of U.S. employees have been actively disengaged over 18 years of tracking.

To better understand employee engagement levels, it helps to understand how Gallup categories the three different segments of employee engagement.  “Actively engaged” employees are involved, enthusiastic, and committed to their work while “actively disengaged” employees are unhappy at work and aren’t afraid to tell others about it, they are resentful that their needs aren’t being met and act out, potentially undermining coworkers.  The biggest group of employees, those “not engaged” are unattached to their work and while putting in the time, there is no energy or passion put into their work.  To summarize, the 2018 Gallup survey categorizes employees as:

  • Actively Engaged = 34%
  • Not Engaged/Disengaged = 53%
  • Actively Disengaged = 13%

What is the cost of unengaged employees in an organization?  Gallup describes an “actively disengaged” employee costs their organization $3,400 for every $10,000 of salary, or 34%.  If the average salary is $60,000 per year, the cost for each disengaged employee is $20,400 ($60,000 x .34).  For a company size of 1,000 employees, 13% are actively disengaged, totaling 130 employees; the annual cost to the organization is $2.65 million (130 x $20,400).  This loss is only for the actively disengaged employees and does not represent the loss of employees who are “disengaged” (53%).  However, it is extremely compelling to understand the cost for the most actively disengaged employees, knowing that the cost of total employee disengagement is higher.
After computing the cost of disengagement, the focus shifts to increasing engagement.  Based on attributes measured by Gallup in their employee engagement survey, employees place the greatest importance on a role and organization that offer them:

  • The ability to do what they do best
  • Greater work-life balance and better personal well-being
  • Greater stability and job security
  • A significant increase in income
  • The opportunity to work for a company with a great brand or reputation

In terms of an action plan, a first step is for an organization is to develop great managers as their impact trickles down throughout the organization.  In turn, managers need to have career conversations with their employees to help guide them in their career development.  A component of career development is to provide on-going training opportunities.  Employee training helps employees gain new or greater skills which provide them with a better sense of personal worth leading to greater opportunities for income to increase as well as promotional opportunities.  From an organization perspective, prioritize diversity and inclusion at all levels which helps employees feel welcome and care more about their role within the organization.  To better understand the specific tactics that will increase engagement within your organization, measure engagement through employee surveys to find out what works and doesn’t work at your organization.

WageWatch offers accurate, up-to-date HR metrics, benefit survey data, market compensation data, and salary reports that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. The PeerMark™ Wage Survey is a custom-built survey tool that allows individual survey participants to select their competitive set for comparison purposes.  Our experienced compensation consultants can assist with your organization’s compensation needs.  We can help you ensure internal equity and compliance with regulations as well as help structure your compensation programs to support your company’s business strategy and objectives.   For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

THE BOOMER GENERATION IN THE WORKPLACE

Baby Boomers

It is not uncommon for baby boomers to now work side by side with co-workers from generation X and generation Y.  Each of the generations in the workplace today grew up in times with widely varying political and social issues, technology, and other factors, which have affected their attitudes on everyday life.  As an employer, it’s important to understand each generation’s needs and to provide them with the work environment and rewards that make them happy.

The basic employment packages for businesses are based on the needs of baby boomers, a very loyal generation of workers, typically staying with the same company for many years.  Employees of this generation value their benefits, such as health insurance, life insurance, and vacation time.  To determine if their company is providing salaries and benefits that are on target with the industry average salary, many employers turn to market compensation and benefit survey data. These baby boomer employees that have stayed with a company for most of their careers have invaluable knowledge and experience that is essential to business operations; because of this knowledge, it’s valuable to keep them happy and reward them for their loyalty.

While it is important to keep baby boomers satisfied by analyzing market compensation data, benefit survey data and salary reports, it is also essential for employers to look at the needs of the upcoming generations.  Many baby boomers are in management positions but will start to retire around the same time leaving a large number of open positions.  It is essential that skilled employees of the X and Y generations be ready to take their place.

The new generations of workers enjoy benefits like the baby boomers, but these employees prefer additional incentives and small tokens of appreciation for their efforts.  This generation is not as loyal to the companies they work for, and have no problem moving to a job at another company every two or three years.  For this reason, it is even more important to build loyalty with employees of these generations by providing them with the benefits and incentives they desire.  It is very beneficial for companies to use benefit survey data, market compensation data, and salary reports to determine the types of compensation, including incentives that are standard for the industry. Having this data will help companies to stay competitive with other employers by creating appealing benefits packages that will attract and retain top talent.

Today’s world moves fast, and as an employer, you should constantly be monitoring and adjusting your business operations to meet the ever-changing wants and needs of your employees.  At WageWatch, we offer accurate, up-to-date benefit survey data, market compensation data and salary reports that will allow you to stay current with the times.  This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards.  For more information on our services, including market compensation data, benefit survey data, and salary reports, please call WageWatch at 888-330-9243 or contact us online.

HOW ABOUT A SIX HOUR WORKDAY?

Six-hour

Can a move to a six-hour workday increase productivity and the happiness quotient of employees and their families and at the same time increase productivity and company profits?   In the U.S., more than 60 years after workers, through their unions, began organizing for an eight-hour day in the 1860s, President Franklin D. Roosevelt signed the Fair Labor Standards Act in 1938 for all workers to see limits on working hours – initially, it was set at 44 hours a week, then reduced to 42 hours, and by 1940 the workweek was reduced to 40 hours.

Some businesses in Sweden have experimented with a six-hour workday with the hope of getting more accomplished in a shorter amount of time and ensure that employees have the energy to enjoy their private lives.   This change is purely experimental—one that has not been mandated by law nor implemented nationwide.

A Toyota vehicle service center in Sweden’s second-largest city, Gothenburg, moved to shorter days fifteen years ago.  The service center reported a happier staff, a lower turnover rate, and an increase in profits during that time.  The new system keeps the garages open longer and generates new business.  Employees are doing the same amount in the six-hour workday, often more than they did in the eight- hour day.  The service center reports that employees have more stamina to do this heavy work, and they have seen greater profits and customers because cars are getting fixed faster.

A high-profile case is the publicly funded Svartedalens nursing home in west Sweden.  They began a trial a six-hour day to determine if the cost of hiring additional staff members to cover the hours lost, was worth the improvements to patient care and the boosting of employees’ morale.   The nursing home had 80 nurses working six-hour shifts (maintaining their eight-hour salaries) while 80 staffers at another nursing home worked their standard hours.  Halfway through the test period, the nursing home with the six-hour workday had half the average sick leave, the nurses were happier, and the care was better.   The study, however, equates productivity with a quality of care, which doesn’t necessarily translate to white-collar work.

Several startup companies announced that they are testing the concept.  The companies include Background AB, a creative communication agency in Falun, Dalarna and Filimundus, an app developer based in Stockholm.  Linus Feldt, Filimundus CEO believes that staying focused on a specific work task for eight hours is a huge challenge.  During an eight or more hour workday, employees take frequent breaks and look for distractions and diversions such as social media to make the workday more endurable.  With the six-hour workday, staff members at Filimundus are not allowed on social media, meetings are kept to a minimum, and the company does it’s best to eliminate other unproductive distractions.

Most of the companies who have made the shift to the six-hour workday have reported a positive impact, from increased efficiency to better communication and fewer staff sick days.  A 2014 Stanford University research paper found a “non-linear” relationship between hours worked and productivity, as well as too much work, can impinge productivity.  According to a study by the Families and Work Institute, overworked employees make more mistakes.  Research has shown that condensing work into more efficient hours is very unlikely to hurt productivity.  There is no need to lower pay and in fact, companies are likely to save money through less sick and personal leave, less stress leading to better health, and lower turnover costs.

The six-hour workday would be less acceptable in the U.S. because the eight-plus hour workday ethic is so deeply embedded in our culture.  According to Gallup’s 2014 poll, full-time employees in the U.S. work an average of 47 hours per week.  However, even with encouraging results, it’s unlikely that the U.S. will shift to shorter days any time soon.  The rest of the world (outside of Europe) a 40-hour workweek would be a very nice improvement as well.

At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives. WageWatch also offers accurate, up-to-date benefit surveys, salary surveys and pay practices data that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

STRATEGIC ISSUES AND THE PAY MODEL

Perceptions of compensation vary.  It is seen as a measure of equity and justice.  Stockholders are focused on executive compensation.  Legislators may view average annual pay changes as a guide to adjusting eligibility for social services.  Employees see compensation as a reward for their services and a job well done.  Managers will view compensation from the perspective of a labor cost, but also from a competitive perspective that enables them to recruit, engage and retain employees.  The four basic compensation policy decisions that an employer must consider in managing compensation are: 1) internal consistency, 2) external competitiveness, 3) employee contributions, and 4) administration of the pay system.  The balance between the four policies becomes the employer’s compensation strategy.

It is valuable for companies to link an organization’s overall goals and strategiesPay Model with the Human Resource strategy.  Not doing so, can lead to serious issues of employee retention, engagement, and productivity that can be laborious and expensive to repair.  Compensation for many organizations is the single largest business expense and is visible and important to employees, managers, and stockholders.  Therefore it is important to strategically plan and regularly evaluate compensation systems.  Working with your company’s executives is critical to ensuring your compensation philosophy is supporting business objectives.  Strategic objectives will include significant challenges and priorities now and over the next two to five years.  Some examples are business growth plans, key talent and training objectives, market competition, and whether or not you are in a union environment.  Some other key considerations for your compensation program are:

  • Attracting the appropriate skill sets and types of employees when needed
  • Rewarding employees for their efforts, such as increasing workloads, taking on new tasks and projects
  • Employee morale and perceived value of a company’s benefits, incentives, and work environment
  • A mix of base pay, incentive pay, work environment and benefits that makes the most sense for the organization
  • The link between base and incentive pay with performance
  • Legal issues such as wage and hour

An example of a compensation strategy that aligns with other Human Resource initiatives is matching pay ranges to the desired outcome.  If quality, experience, and a sophisticated skill set are a strategic advantage to an organization, then it will not be successful in hiring employees significantly below the market rate.  Determining whether the organization wants to lead, lag, or match the market is a key decision.  A ‘mixed market position’ approach has become more common as employers realize that a one-size-fits-all strategy does not fit the entire workforce.  For example, location and market competitiveness will impact your pay levels and certain key or hard to fill or retain positions may require pay well above the market, while other positions may be ok with a lag approach.

A successful compensation program will focus on top priorities, guide employees to where their effort can create the most value, create financial and non-financial consequences for success and failure, drive and reward the development of skills and encourage teamwork and collaboration.  Many organizations today keep an eye toward aligning workers’ interests with company goals through innovative types of rewards in the workplace, including skill-based pay and goal sharing.  The right total rewards system is a blend of monetary and nonmonetary rewards offered to employees and can generate valuable business results.  These results range from enhanced individual and organizational performance to improved job satisfaction, employee loyalty, and workforce morale.

Maintaining a competitive advantage and being able to retain key employees is increasingly important.  At WageWatch, our compensation consultants can assist with your organization’s compensation needs and help you ensure that your compensation programs are supporting your company’s business strategy and objectives.  WageWatch also offers accurate, up-to-date benefit survey data, market compensation data and salary reports that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

TWENTY-ONE STATES RAISE MINIMUM WAGE RATES ON JANUARY 1, 2020

Pic of Map

The current federal minimum wage, under the Fair Labor Standards Act (FLSA), is $7.25 per hour which has been in effect since July 2009.  States can set a rate that is higher than the federal minimum rate and employers are obligated to pay the higher rate.  Currently, there are 29 with laws at the state or local level mandating higher pay than the federal rate.

Voters across multiple states approved ballot measures to raise their state minimum rates over time, with increases occurring through 2020 and beyond.  There are 21 states implementing a rate increase on January 1, 2020, including:

1) Alaska
2) Arizona
3) Arkansas
4) California
5) Colorado
6) Florida
7) Illinois
8) Maine
9) Maryland
10) Massachusetts
11) Michigan
12) Minnesota
13) Missouri
14) Montana
15) New Jersey
16) New Mexico
17) New York
18) Ohio
19) South Dakota
20) Vermont
21) Washington

For more details, click on the following link to view the WageWatch Minimum Wage Chart with details of federal, state and local minimum wage increases:  WageWatch – U.S. Minimum Wage Increases.  (Some states vary wage rates based on company size or annual revenue.)  In addition to the statewide minimum wage increase, multiple states have approved minimum wage increases that are higher than the statewide average.  (The increases are referenced in the attached Excel spreadsheet).  NOTE:  There are a few states and cities that increase rates on July 1, 2020, and/or other months throughout 2020; where known, they are noted.

At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives. WageWatch offers accurate, up-to-date benefit surveys, salary surveys and pay practices data that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online.

HOW ENFORCEABLE IS YOUR NON-COMPETE AGREEMENT?

Non-Compete

Does your organization have a non-compete agreement in place?  If so, has it been reviewed recently?  Non-compete agreements are driven by state laws.  Over the past year, there have been a few states that have changed their laws, with changes taking effect next year. The revisions that states are enacting move to restrict using unreasonable non-compete agreements with employees.

Washington, New Hampshire, Massachusetts, Maine, Maryland, Oregon, and Rhode Island have modified their non-compete agreements this year and are leading the way in non-compete agreement reform.  These states have not adopted a uniform approach, but each state provides some direction to other states that may be considering reform.  Reasonable non-compete agreements are helpful and often necessary for employers to hire individuals without risking that they will then lose their customers if an employee leaves and tries to take clients with them.  However, some agreements go too far and have become unreasonable.

The Washington Statute, effective January 1, 2020, will be unenforceable for employees earning less than $100,000 in total annualized compensation or independent contractors earning less than $250,000 per year.  Non-compete agreements are unenforceable for a period greater than 18 months and the terms must be disclosed to prospective employees no later the time the employee accepts an offer of employment.  In addition, the statute has several employee protection mechanisms in place, such as requiring an employer to pay an employee’s legal fees and damages should they seek to enforce an unreasonable non-compete agreement.

Potential areas to revise with a non-compete agreement include:

  • A threshold for an employer’s salary, anyone making less than the stated amount are excluded from the agreement (i.e., employees making less than $75,000 are excluded from a non-compete agreement)
  • Length of employment; an employee could not be held to a non-compete agreement if they were not employed for at least a year by the employer or terminated or laid off without misconduct
  • Employees faced with an employer that seeks to enforce an unreasonable agreement should be penalized by having to pay the employee’s legal fees and a small number of damages.  It may be a good time to review your non-compete agreement, especially to determine if your agreement is currently relative to any changes in the law that governs it.

WageWatch offers accurate, up-to-date benefit surveys, salary surveys and pay practice data that will allow you to stay current.  This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards.  For more information on our services, please call WageWatch at 888-330-9243 or contact us online.

 

 

MERIT BUDGET ALLOCATION

Merit Pay

 

 

 

 

A primary goal of any compensation program is to motivate employees to perform at their best.  Most organizations have to pay for performance at least in the form of a merit pay system.  An accurate, reliable, and credible performance-appraisal program that is aligned with company goals, core values, and industry best practices is the foundation of a successful merit pay program.  Performance measures should be tailored specifically for the organization and its jobs with clear outcomes that minimize bias and misinterpretation.  Consistency, manager training, effective communications, and a periodic review are also essential for success.

The merit pay budget has two aspects to it:  1) determining the size of the budget and 2) allocating the budget to organizational units and its employees.  Determining the size of the budget will be based on competitive trends, the organization’s financial situation and other factors that may impact pay such as minimum wage and cost of living changes.  For the past several years merit budgets have been small and therefore it has been a challenge to adequately reward top performers as well as those that are rated ‘Good’ and ‘Average’.  Employees with performance ratings of ‘Good’ and ‘Average’ can be the largest percentage of employees and therefore the backbone of the workforce.  These employees should not be overlooked but raises for these employees often do not keep up with the cost of living.  Also, the differentials between performance levels may not be large enough to motivate and retain employees.  These factors reduce the motivational potential of the merit pay program.

Using a merit increase matrix may help to maintain internal equity but may not properly reward top performers.  You want your reviewing managers to be engaged in the merit award process and to give appropriate thought and consideration to their pay decisions.  A certain amount of guidance and training is needed but the merit matrix can be too structured and rigid as well as make it too easy for reviewing managers to simply follow the formula rather than spend the time and effort for a thorough review.  Greater rewards for top performers and a greater deviation of awards between good and average performers can be accomplished by providing zero increases to employees whose performance falls below average.  Providing broad increase guidelines in lieu of a matrix to your reviewing managers using factors such as performance rating, time in position, and position in salary range can eliminate the rigidity of the merit matrix and drive a more thoughtful approach to the merit award process.  Once tentative award amounts are determined, reviewing managers should perform an analysis of the awards looking at the whole department and at each individual award using these and other factors as well as any unique or special circumstances.

Annual pay increases not only help keep employees’ pay at market, providing awards that are accurately linked to performance are important in retaining employees, especially your best ones.  Compensation frequently emerges as a driver of retention, and when pay increases aren’t provided regularly and fairly, it will negatively impact job satisfaction.

At WageWatch our compensation consultants are focused on your organization’s compensation needs and ready to help you ensure that your compensation programs are supporting your company’s business strategy and objectives and that your pay practices are fair, equitable and non-discriminatory. We can provide your business with compensation surveys and salary reports to help you establish a budget for your merit pay program, including bonuses and incentives. Our innovative company is a leader in the collection of data for surveys and salary reports, which allows us to provide services to a wide range of industries in both the private and public sector. To learn more about our compensation surveys, salary reports, and other services please call 480-237-6130 or contact us online.

ALIGNING COMPENSATION WITH COMPANY CULTURE

Comp - Culture

Many organizations today are focusing on their company’s culture including determining their culture, deciding what it should be, aligning with strategic goals, and transitioning to the desired culture.  Culture is important because it reinforces the values of the organization, which in turn shapes team members’ behavior.  There are many success stories of companies with cultures that are aligned to their business goals including Google, Zappos, and Patagonia.  These companies have not only developed a culture that supports their business but they have fully embraced their culture.

Organizational culture is the collective behavior of the people who are part of the organization and has important effects on the morale and motivation of the organizational members.  It includes the values, norms, systems, beliefs, attitudes, and habits of the organization which impacts the interactions of the employees with each other, and with customers.  Even before you define it, you know it is there and that it has an impact on your business. This is why it is so important to internalize the culture and understanding when company activities are in sync or not in sync with the culture.

Once the company values and desired culture are defined, compensation can support and help drive the values and corporate culture.  The role of compensation in an organization and the compensation strategy need to be well-defined.  For example, where does the organization want to set pay levels in comparison to the competitive market?  Perhaps the organization’s culture is strong in training and developing its employees, acknowledging their successes and offering advancement opportunities. This, in turn, may allow the organization to set lower pay levels than what is paid in the market.  Of course, when recruiting it is important to align the compensation strategy to support the values of the culture through highlighting performance management, performance appraisals, and the goal-setting process for each team member.

Once values, business objectives, and desired behaviors are determined then compensation plans can be put in place to support the culture.  For example, if the business objective is innovation and the desired behavior is risk-taking, then short term incentives may be the compensation strategy.  If the goal is for a highly trained workforce and the behavior is learning and upgrading skills, then skill or competency-based pay may be the compensation strategy.

Corporate culture is about people’s behaviors – how goals are accomplished – so to establish a culture that drives company success, organizations should link a significant component of their compensation systems to behaviors.

At WageWatch our compensation consultants can assist with your organization’s compensation needs and help you ensure that your compensation programs are supporting your company’s business strategy and objectives.  WageWatch also offers accurate, up-to-date benefit survey data, market compensation data and salary reports that will allow you to stay current with the times. This information is highly beneficial in creating the best salary and benefits packages that meet or rival the industry standards. For more information on our services, including consulting, salary survey data, benefit survey data and market compensation reports, please call WageWatch at 888-330-9243 or contact us online .