Q&A: Compensation planning; where do I start?
Do you have a plan when creating compensation packages for your team members? If you’re basing your decisions on a case-by-case basis, you’re not alone, but you may not be doing what’s best for your people or your business. In this episode of POPS!, Zenefits Sr. Director of People Danny Speros breaks down the different […]
Do you have a plan when creating compensation packages for your team members? If you’re basing your decisions on a case-by-case basis, you’re not alone, but you may not be doing what’s best for your people or your business.
In this episode of POPS!, Zenefits Sr. Director of People Danny Speros breaks down the different factors to keep in mind when crafting your compensation strategy.
In this Q&A, you’ll hear:
- [01:03-01:33] How discrimination can creep in with the absence of a compensation strategy.
- [01:34-02:16] Start with a goal in mind to start planning
- [02:17-02:39] Once you have your goal, it’s important to have a strategy
- [02:40-04:21] Use market data is critical to making decisions around compensation
After you listen:
- Creating the Perfect Compensation Package: https://www.zenefits.com/workest/creating-perfect-compensation-plan/
- Compensation Benchmarking: https://www.zenefits.com/workest/your-guide-to-compensation-benchmarking/
- Compensation: Best Practices Guide: https://www.zenefits.com/learn/compensation-best-practices/?utm_source=podcast&utm_medium=organic&utm_campaign=03-15-21-compensation-best-practices
POPS Star Bio
Danny comes from a family of entrepreneurs and spent 8 years running the family construction business including HR, Sales, Operations and Accounting. He understands the joys and challenges of building a business and learned a lot about how to avoid some common pitfalls. This context fuels his passion for working with other small businesses at Zenefits. Today, Danny taps more than 20 years of People Ops and small business leadership in his role as Senior Director of People at Zenefits. This makes him a great guest expert for the podcast, so you’ll hear from him often. And you might just catch an occasional cameo from his young daughter in the background.
Danny: Compensation planning. Where do I start?
Didi: Welcome to POPS, the show that shows you how to shift from human resources, paperwork to people operation, but the new world of work by answering one question at a time.
Today to help us answer your question. Here’s Danny Speros, the Director of People Operations at Zenefits.
Danny: 54% of companies don’t have a compensation strategy and sadly many companies, whether it’s intentional or not are basing their comp decisions on a case by case basis. And that’s often influenced by the employees wants demands or pay history, which pay history, by the way, is actually illegal to use in making compensation decisions in a small, but growing number of states and locations.
In the absence of a strategy, discrimination can actually creep in historically men have made more than women. And so if you’re using someone’s pay history as a basis for making decisions about their pay future, you may run into troubles where you’re taking something that was already out of whack or out of equity.
And just further exacerbating that problem. And that can happen even if you’re just using someone’s pay expectations or, or demands or things along those lines. And so it’s important to have a strategy around this and leverage some market data, which I’ll get to in just a moment. So where do I start? The place to start is really with a goal, without a goal.
It’s tough to know where you’re headed and if you ever got there. And so your goal could be something along the lines of pay equity, paying men and women and people from various demographic backgrounds, paying everybody a fair wage for fair work. Another option could be retention, making sure that you save your, your talented people.
Another option could be for attracting people from the outside. It can be a variety of different goals, and maybe you’ve got all of those goals wrapped up into one. Or maybe, um, you just want to focus on one at this moment in time. The next things you’d take a look at. And again, I could spend, I could spend a lot of time talking about how to go through these, but it’s important once you’ve got your goal to have some sort of a strategy around how you’re going to accomplish it, a plan, a budget, and the plan of action.
It’s important to take a look at the internal value of different jobs and the external competition for talent so that you can have a sense for, where do you need to be along those different scales and make sure that you’re weighting different roles fairly internally as well. And then lastly, market data, market data, market data, it’s critical to making solid fact-based data-based decisions around compensation.
When you’re looking at market data, it’s important to look at the work that someone is doing as opposed to their title. Uh, the vice president of marketing at one company could have completely different responsibilities than a vice president of marketing from another company. So it’s important to look at what does the person actually doing and what does that role, what are those duties?
What does that authority and responsibility? What does that pay in the marketplace? One other thing to think about when you’re considering market data is where. Where do you want to pay on that scale? Do you want to pay right in the middle of the market? Do you want to pay at the top of the market somewhere in between, somewhere below?
One sort of thought to consider, and we see this from time to time and some companies contemplate paying right at the top or very near the top of the market so that they make sure that they attract and retain top talent. One concern with that is that. You certainly will attract and retain top talent, but you may not attract and retain people that are more or less tied to your mission and to your vision and to your culture and to your team.
We may just be attracting people that are in it for the money and don’t get me wrong. We’re all working for money, but I think most companies would agree that it’s important to have people that are in it for things in addition to the money and the concern there is that if. Someone is truly just in it for the money and they’re paid at the top. aThey may not ever leave. Even if they’re not inspired by your company’s mission and vision.
Didi: Do you have a question for our experts? Click the link in the show notes, or if you’ve got other ideas and feedback about our show, send them to [email protected]
About The People Ops Podcast
Every week, we share the decisions, struggles, and successes for keeping up with an evolving workforce and a changing workplace. No matter if you’ve been in HR or are just getting started, this combination of transformational stories with actionable ideas, as well as context on hot issues, keeps you up-to-date while answering the questions you didn’t even know you had.
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