Show Notes: Episode 64 – SHRM Credit: Compensation 101
September 16, 2019
Find Joy in Slowing Down
September 19, 2019

Click here for this episode’s show notes.

This transcript was created using an automated transcription service and may contain errors.

Susan 0:10
Welcome to The JoyPowered® Workspace Podcast, where we talk about embracing humanity in the workplace. I’m Susan White, a national HR consultant. With me is my co-host, JoDee Curtis, owner of Purple Ink, an HR consulting firm, and author of “JoyPowered®” and “The JoyPowered® Family.” JoDee’s most recent book is one she co-wrote with me and five other authors, and it is called “The JoyPowered® Team.” In today’s episode, we’re going to talk about the fundamentals of compensation management. You know, JoDee, I recognize that most of our listeners are business leaders or HR professionals, and my guess is some of them probably specialize in compensation, but most of us don’t, right? You know, we dabble in it as part of our running a business or being in HR. But today, we’re going to get a chance to really go deeper on that and talk about how to drive performance through whatever total rewards system you have in place today, and maybe even get some ideas about how to expand on what you’re, what you’re currently doing.

JoDee 1:08
Yeah, I love it. I don’t know if I’ve ever shared with you, Susan, that early in my career I thought, because I’m an accountant, an accountant by trade. I thought compensation seemed to, like, sort of a natural fit, for me to be in the numbers business still in HR. And I started on my Certified Compensation Professional certification, which is a very long, expensive process.

Susan 1:34
Oh dear, yeah.

JoDee 1:35
And made it through about three of the examinations and decided I was bored out of my mind, which I think is probably why – not that you have to be certified to be a consultant or specialize in this topic, but it is, it’s a very intensive process to get certified, which I think is probably why there aren’t that many people who do it.

Susan 2:00
Well, I’m just hoping that none of our listeners right now is bored about this topic.

JoDee 2:04
I, no, I think that –

Susan 2:07
Yeah.

JoDee 2:07
I think the topic is excellent, though.

Susan 2:09
Yes.

JoDee 2:10
Because I think we all need to know, actually, selfishly, even personally, I think people are always intrigued with the topic of compensation, because they want to know how their own is established.

Susan 2:21
Show me the money! You know, early in my career, I spent about a year as a comp analyst.

JoDee 2:25
Oh, you did?

Susan 2:26
I did, and I, I really did enjoy it. I kind of liked, I felt like it was the most black and white thing that we were doing in HR. A lot, a lot of the things we’re doing is like, oh, you know, it depends, and I, or it’s, you know, touchy feely, but compensation is not, and we know how important it is to employees. So we’re fortunate today to have as our guest Jennifer Loftus, who is a founding partner of and national director for Astron Solutions. Her primary areas of expertise are total rewards, customized market surveys, employee opinion surveys, and technology-based HR solutions. Jennifer has 23 years of experience garnered at organizations including the Hay Group, Parsons Brinckerhoff, Eagle Electric Manufacturing Company, and Harcourt General. Both JoDee and I have met Jennifer because, like us, she’s a SHRM instructor. Jennifer is very accomplished, including having received the 2014 Gotham Comedy Foundation’s Lifetime Ambassador of Laughter Award.

I love that. I cannot wait to talk to her about that.

Me too. Me too.

At the end of all of our podcast episodes, we say that we welcome listener questions and comments, and we really do enjoy reading what you think about our show. So to show our appreciation, we wanted to give a shout out to some of our reviewers. This week, we’re sharing a review from Kira. JoDee, why don’t you share it?

JoDee 3:48
“I really enjoyed listening to this podcast. It discusses a wide variety of different business and HR topics. The hosts are very engaging and always have great input/stories to add to the topic they are discussing. I definitely would recommend this to HR and business professionals. There are a lot of great nuggets of information. If you listen you’re bound to learn something new, or at the very least get great reminders.”

Susan 4:15
Kira, thank you so much. I really appreciate that. That was very kind. JoDee, I think you’re engaging. But thanks for letting me engage with you.

JoDee 4:22
Yeah, well, I think you’re always teaching us something.

Susan 4:27
Nice. If you want the chance for a shout out on our show, want to share your thoughts, or just want to make it easier for other people to find the podcast, please rate or review us on Apple Podcasts.

We’ve been excited to see our listenership going up a lot this last year, and now we want to learn more about you and what you think about our podcast. We’ve created a listener survey that will be open for the next few months. If you want to help us out by telling us a little bit about yourself, you can access the survey at surveymonkey.com/r/joypowered2019. We’ll also have a link to the survey on our website. If you take the survey, you’ll have the option to enter to win a set of our three JoyPowered® books, “JoyPowered®,” “The JoyPowered® Family,” and “The JoyPowered® Team.” We hope you’ll take a little time to help us make the podcast the best it can be, and we look forward to hearing your thoughts. Again, you can take the survey at surveymonkey.com/r/joypowered2019. Thank you so much for listening to our show.

Jennifer, we are so glad that you’re here. We would love to start out with you telling us a little bit about this laughter award. How did you earn it? What’s that about?

Jennifer 5:40
Well, Susan, it’s a pleasure so much to be here with you today. And yes, you know, the, the Lifetime Ambassador of Laughter Award, that was something that I received a few years ago, because those who know me know that I’m always smiling, always trying to laugh, always trying to have a good time. Well, of course, we’re doing serious things here in compensation and human resources. And a colleague of mine from the New York City SHRM board is also part of the Gotham Comedy Foundation’s board as well, and they do a fundraiser every year. And as part of that they bestow this honor, the Lifetime Ambassador of Laughter, on one or two people to recognize the joy that they are bringing to others in the community and hopefully then also spreading that into the larger group whose real focus is on individuals, spreading joy to individuals who are in hospitals or other healthcare situations. So that is the story of how my ever-smiling face got the Lifetime Ambassador of Laughter Award.

Susan 6:46
I love that, you know, every time I’ve seen Jennifer, she is always smiling or laughing or so positive, and then she tells me she’s going to go in and teach a class in compensation. I think, “I just don’t get it. There’s nothing funny about it.” But, you know what, she makes it fun. So thank you so much for joining us today.

JoDee 7:01
I was just thinking, I wish our listeners could see the big smile on your face right now, Jennifer. But I also wonder that, I bet there’s a lot of listeners right now thinking that, “Well, compensation is a joke. It is funny,” or it is… So they’re probably making some connection on their own as well.

Jennifer 7:23
Absolutely.

JoDee 7:24
But tell us, how did you get into compensation?

Jennifer 7:28
Yes. Oh my gosh. And compensation wasn’t something that I was thinking about, you know, so as a child, I wasn’t saying, “Oh, I want to be a comp expert.” When I grew up, that was not on the radar screen. Back in the day, I always thought I wanted to be an accountant, and I went for my undergraduate degree at Rutgers, majored in accounting, and thought, like, “Gosh, what better job could there be? Money and numbers.” I got through the course on auditing and I did fine in the course, but I was going through it, I thought, “This isn’t going to work for 40 years, so I need to find a different career path.” So at that time I made some strategic decisions, figured I would finish the accounting degree because accounting can’t go bad on you. It’s always very helpful skills, important knowledge to have for anyone in a business situation. But I also knew I wanted to go on and get my MBA and I figured that’d be the perfect time, right after undergraduate. So that way, I’m not pigeonholed as the accountant who wants to change jobs, right. And as I was looking at concentrations, of course, there was marketing and general management and international business and so forth. And back in the day, and of course, this was when dinosaurs were roaming the earth, there weren’t many programs that offered a concentration in human resources. But Pace University was one of them. They had an MBA in HR. And I had remembered from one of my management classes at Rutgers, we talked about HR for probably 45 minutes, you know, as a little bit of afterthought. And I thought, you know, this is pretty cool, because you’ve got compensation, you’ve got benefits, you’ve got the analytical side of running a business, if you will, but then you have the, the, I’m going to call it the softer side, but the, the more qualitative, but not any less important, with recruiting and learning and development and employee relations and all that. I thought, you know, this sounds pretty cool. So I brought this idea to my parents, and they’re like, “Don’t really know what HR is, but as long as you can find a job, we will support you in this endeavor,” and went through the program, went full-time. And of course, then almost getting my degree starting to go on interviews and so forth and seemingly interviewed with every company under the sun here in New York. And finally then interviewed with a company, at the time, they were known as Parsons Brinckerhoff, which is a civil engineering firm with a global presence, and they were hiring for a compensation analyst and, yeah, the job sounded so exciting, so interesting to me. And of course, they’re like, “Do you know about the FLSA and market pricing?” And I’m like, “Yes, yes.” Now, my prep, college was not as deep as I might have others believe, I’m sure they saw through that as well. But nonetheless, I did get that job, and that was my entree into human resources, in, into compensation. And it has been a wonderful ride for the past 23 years. Every day, there’s something different with compensation, and I’m so thrilled that my journey took me on that path.

JoDee 10:36
Yeah. Excellent, beautiful.

Susan 10:38
So, so Jennifer, can you walk us through the various compensation philosophies different kinds of organizations may have?

Jennifer 10:45
Oh, absolutely, absolutely, and this is a multi-faceted question, because when we’re thinking about compensation, sure there’s the, the, the numbers side, the quantitative side, or the scientific side, if you will. But there’s also an art to compensation, and philosophy is really where those two marry together. So if I step back for a second, if we think about different salary surveys or even benefits surveys, a lot of times they’ll present the data for different percentiles of the market for certain jobs, for example, 25th percentile, 50th percentile, 75th percentile, and each of these align with different philosophies. So, many organizations will say “We want to take a match the market philosophy, we don’t want to be the highest payer, we don’t want to be the lowest payer either. We want to be right in the middle of the road. We’re competitive, but it’s still fiscally conservative to a certain degree.” 25th percentile tends to be more of a market lag position, where we might have an organization that’s just come out of bankruptcy, or it’s a not for profit organization with limited funding, and they might say, “Well, this is the best we can do at this point in time and still be financially viable for the long term.” 75th percentile is that market leader position, where we are paying higher than a majority of organizations out there, and this could be for organizations that say “We need to pay high to attract and retain the talent that we need to be successful, or maybe we don’t do so much with our benefits, or maybe we don’t have a bonus plan, so we have to pay more to balance out that total rewards equation.” So when an organization is thinking about philosophy, not only do they have to think about these different percentiles, but they also have to think about, what is their philosophy for base pay? What is it for bonuses or incentives? What is it for benefits? What is it for the other total rewards elements? So philosophy is for each of those individually, and then how do they come together to make a total rewards philosophy for the whole organization. And that being said, one size does not fit all. We might have a philosophy for our IT individuals that’s different than our leadership group that’s different than our clerical group that’s different from the rest of the organization. There’s a lot of creativity and art that comes into developing that compensation philosophy.

Susan 13:24
Makes sense.

JoDee 13:25
It sounds complicated.

Jennifer 13:26
It doesn’t have to be scary. And so many times clients and even SHRM students will say, “Oh my gosh, I’m not quite so sure about this,” like, just, just break it down to the elements, right? And let’s think of each one. Let’s think through it slowly and carefully. Let’s not panic, and, and we can take what seems to be very complicated and make it easily digestible and practical for that organization.

JoDee 13:51
Right. Very good. Jennifer, could you tell our listeners a little bit more about what it means to have internal or external equity, and then also which one do you think is more important?

Jennifer 14:06
Whoo. All right, great question there, JoDee, a loaded question as well. If I’m thinking about the concept of equity and the two extremes or the two components are internal and external equity. So if we imagine a visual in our minds, let’s think about a picture of a house, and let’s pretend that we have a sliding glass door that opens either into the living room of our house or out onto a very nice deck. So if we stand right where that sliding glass door is, we’re straddling the line between internal and external equity. Internal equity is where I’m focused more on the living room, the inside of the house, I am concerned with how jobs relate to one another in our organization and how pay opportunities will vary within our organization, I don’t care so much what’s happening in the outside world, it’s really what’s going on in our organization that matters the most to us. If I turn the focus, however, and if I’m looking out towards the deck, I am focusing on external equity, and here I’m keeping my eye on the neighbors. Not in a creepy way, in a professional way.

Susan 15:24
Thank you for clarifying!

Jennifer 15:28
What’s going on with those competitor organizations out there? What are they doing in terms of pay benefits, total rewards? And so you’ve got this idea of what internal and external equity are, and in reality, organizations will use a blend of those. They rarely exclusively look at external equity or only focus on internal equity. That said, one of them will be primary, and for many organizations, it’s external equity. They say “We have to keep our eye on the competition.” However, we’re defining competition to make sure that we can attract and retain that talent we need to be successful. Now, “Which is better?”, if you will, that is a question that comes up every time when I’m working with clients. And the one that is better, or the primary focus that’s better for an organization, is really the one that’s going to work for that organization’s strategy and their total rewards philosophy, right? So I can’t, as a consultant, just come in and say, “Oh, focus on external equity.” No, everything has to link together and work together. That said, if I had to choose one over the other, if you will, I’m going to focus more on external equity, right? I don’t want to lose pace with the competition, or if I’m positioning myself ahead of market leader, I want to maintain that position, but I can’t ignore the relationships that are going on in my organization.

Susan 16:58
Yeah, that makes sense to me, because inside people catch wind that were, maybe one part of the organization, which is really in hot demand, you keep raising the salary on them, but you don’t take care of your, the steady people who have, you know, delivered year after year after year, because there’s not a lot of people or a lot of demand for those jobs. So I can get that. I don’t want that ill will.

JoDee 17:17
Yeah.

Jennifer 17:17
Exactly. Yes. And that’s something that I see a lot of times with organizations that are targeting, let’s say, a p75 philosophy for IT roles, or in a not for profit, it might be the development, the foundation, the fundraising positions, because there’s such a shortage of talent in healthcare, it might be the nurses or the therapists where we’re having to pay more. Yes, we want to attract and retain talent, and without those individuals, the hospital or healthcare organization ceases to exist, and we understand that, but without that messaging, that can become a sore point for everyone else, as you mentioned, those solid performers who’ve been there year over year and feel like “Hmm, why am I here? Why don’t I change jobs or change organizations to get ahead?”

Susan 18:03
Okay, makes sense. So, Jennifer, talk to us about different ways organizations of all sizes can do salary benchmarking to figure out what is the external equity component?

Jennifer 18:15
Sure, yes. And there are a variety of different options an organization could use, primarily dependent on their size, the time constraints that they have, the budget that they have and the resources that they have already internally. So if I’m thinking about a rather large organization, maybe 1,000, couple thousand employees, and they probably have someone on staff in their HR department or on their HR team who can do that benchmarking for them, but a lot of organizations don’t fall into that category. So what can they do? Well, there’s a number of different salary survey sources that they could either access or subscribe to, that could give them the data that they can use by the job to benchmark and to figure out what is going on in that external market and how do we set our philosophy. So for example, SHRM recently announced that they had some new salary benchmarking products available, so for SHRM members, that could be a valuable tool for them. For others, your organization’s industry may have a salary survey or other resources that you could tap into. Similarly, there could be a chamber of commerce or a Better Business Bureau or some other local group, or a local SHRM chapter, that might have some resources available. There are many, many different salary surveys that one could purchase, and some of these range from a few hundred dollars a year to several thousand dollars a year. So again, depending on your budget, depending on the number of jobs you have, one or several of those might be appropriate. The Economic Research Institute, or ERI, has a very effective, well-rounded, many jobs survey; for someone who says “I can only focus on one salary survey source,” that should fit the bill for for most of their needs. If the organization finds, however, that they don’t have the budget or the time or the competency to do that kind of analysis, there’s always, consultants like me would be happy to help out with that. Well, one question that I do give is, organizations that rely on sources like Glassdoor, for example, and they say, “Well, we can go into Glassdoor and just look up the jobs at these competitors and see what their pay rates are and go from there.” Well, if that’s the only piece of information that I could work with, then I suppose it’s better than nothing. But we have to take that information, that crowdsourced data with a bit of a grain of salt, because we don’t know who’s really reporting that data to Glassdoor or some other similar website, it could be someone who is disgruntled with that employer and trying to make them look bad. Or maybe they are trying to raise their own salary level in the market, if you will. So that way, as they go on a job interview, they want to boost their salary opportunities at that next employer. We don’t quite know where that data is coming from. It’s a relatively small sample as well. And so that’s why we’d say, go with some kind of published survey from a consultant or an association that you know, because there will be a lot of quality checks that are done on the data and a wider pool of organizations providing their information.

Susan 21:43
Yeah, I had one comment and one question for you on that. One of the reasons that I really like participating in a salary survey from you know, a reputable consulting firm or association is that, of course you have to do a lot of the legwork, you have to input all of your company information, but you, you get back so much. I mean, not only just salary, but you can get back, like, average number of managers to employees. I mean, they have just so much other great data that helps you, I think, help your organization make some good data-driven decisions.

Jennifer 22:13
Absolutely. Absolutely. Yes. The salary survey isn’t just reporting back on salaries, there could be information on historical turnover rates, salary, increased budgets, historical management ratios, there’s so much that can go into those for questions that you might either have now, or might come up in the future. And the price discounts from most consulting firms can be tremendous. Trying to purchase those surveys as a participant, maybe it’s a few hundred dollars. As a non-participant, sure, you can buy it, but now it’s going to cost you several thousand dollars to do that. So there’s a a savings as well. So my recommendation always is yes, it does take some time upfront, but generally that time is well spent and will give you a very positive return on investment.

Susan 23:04
I agree. And then my question was, do you have an opinion about maybe, like, salary.com versus payscale.com versus glassdoor.com. Any of those that you feel like might be a little more credible? If we have a listener who is maybe not doing it for their company, but they themselves are interested in going to what you think is the one site that might help give them their own personal benchmarking?

Jennifer 23:25
Sure. Oh, my gosh, that, that is a tough question, because each of those sites do have their own unique advantages, and so I don’t want to say that one is terrible, or one is the absolute best. That said, if I was going to pick one, I would most likely go with salary.com. Now salary.com, we have to be careful with this, because there’s actually a couple of different versions of it. There’s the free information that some, like, if I was just Jennifer Loftus, employee XYZ, right? I could make an account, I could log in, I could go get information. There’s also a paid subscription that either employers or consultants can get that has a whole different set of data. So for purposes of your question, I’m going to focus on the crowdsourced, the individual employee access to that data. And based on my own experiences with salary.com, I found that they tend to be in the ballpark, as I look at how that data comes out with other surveys that I’m using, you know, they’ve been around for many, many years, so it’s got that brand reputation, if you will. That said, payscale, if I was looking in particularly for international data, right, so if I was thinking more about, I need information for Europe or Japan or certain other locations, that might not be in salary.com, I can find that in payscale. So if I’m thinking about “Oh, I want to relocate to the United Kingdom or Mexico or something like that,” salary.com might, pardon me, payscale.com might be that better resource for me.

Susan 25:01
Thank you.

JoDee 25:02
Good, good sharing. So Jennifer, if you are a small business, or maybe you’ve even had some clients who fall into that category, who have grown to a size where they want to build their own comp structure, where would you recommend they start?

Jennifer 25:19
Oh, alright, so we are going to do this in house and we want to build a compensation structure that effectively attracts and retains and motivates employees, while at the same time juggling all of the other duties that I have to do as probably an HR department of one. So first things first, I would not rush this process. I’ve seen organizations that say, “Oh, you know, we can put this together in a couple of days.” No, no, this is going to take, again, depending on the size of your organization, a few weeks, maybe it’s going to take a couple of months, and so don’t short circuit that process. Once we’ve got an understanding of the timing involved, the very first thing that has to be established, agreed to, and committed to, is that compensation philosophy, we’ve got to have that set up front, because that’s going to help us determine what is our focus on internal versus external equity. What is our target philosophy as we’re looking to the outside world? So we’ve got to have that philosophy, that strategy set up first. And that would involve getting my senior leadership team together and talking through a lot of these types of questions. There may be some very contentious discussions that come up, depending on how much people agree or disagree with one another. So we’d want to plan for, you know, a couple of meetings, maybe a couple hours of each meeting to really hammer that out and get a working philosophy and strategy document. Then my next step would be to benchmark positions that are in my organization. Now, this will depend on the size of the organization, so if I have maybe 15 job titles in my entire organization, I can easily benchmark all 15 of them. If my organization is larger, however, maybe we’ve got 50, 75, 100, 200 job titles, or, a handy rule of thumb is that you don’t need to benchmark every single position in order to build a comp structure for every single position. You can benchmark about 50%, or about half of those titles, and slot the rest of your jobs into the pay range and grade system using internal equity. So figure out which are the jobs you’re going to benchmark, whether it’s all, whether it’s half, if it’s half, give or take, which are those titles, look for a good cross section across your organization, different levels, different disciplines. Where do you have the bulk of your employees? Where are you seeing the most turnover? These are all things you should ask yourself to think about what those benchmark roles should be. From there, then you’re going out to the survey or surveys gathering data, and once you’ve processed that data, what you’ll want to do is group together jobs that have similar or like market values. There’s a few different approaches to this. One of the simplest might be to say, “Let’s take all of the jobs that have a market value at p50, that’s our philosophy, market values between 80 and 85,000 dollars a year, put them together in a grade. Those that are between 75 and 79,000, let’s put them together in a grade,” but the idea is that you’re grouping jobs together that have similar market value. That creates your grades, and then based on the average of that market data for all those jobs in each of those grades, you build your minimum and your maximum, or your range, and whatever your philosophy is, that needs to be the midpoint, the central point of that pay range. So you’ve got room down towards the bottom for someone who’s very green, very junior, someone new to the role, they have room to grow. You’ve got room above your midpoint for the stellar performers, for the long service employees, so that way they’re not maxed out immediately. Last step before you launch this is to think about costing out your system. So applying all of your employees, overlaying your census onto those grades and ranges to see how many people do we have below the minimum, and what will it cost to bring them to the minimum of the range? Do we have a lot of people over the maximum, and in that case, do we need to think about a different philosophy for those jobs? Looking at where people are paid within the range. Do we have everyone grouped together? Maybe we need to spread them out based on performance, based on length of service, for example. So there’s a few different costing elements that we need to think about. And then actually, the last step then is the rollout, the communication, sharing with employees, you know, where do I fall in the range? Do we want to share the ranges? Then we get into a whole discussion on transparency and how much do we want to have.

JoDee 30:16
And of course, all employees are then happy and satisfied and they love what they’re being paid. Right?

Jennifer 30:23
Amen. Well, that is, that’s the ideal goal. In reality, hopefully a majority of our employees should be feeling happy, or if they’re not happy, at least satisfied, that they understand that “Yes, I am paid fairly. I understand where my pay is coming from.” That’s our ultimate end goal. If we can get happy, that that’s like the cherry on the top there. But if we have a lot of people coming in still not understanding, still complaining, still grumbling, still threatening to leave, maybe even coming in looking for counteroffers. Now we need to really go back and say “Ooh, we’ve missed the mark here.” Or maybe it’s something else that’s an issue. Maybe it’s employee-supervisory relationships. Maybe it is the expectations in that workplace that everyone should be working 60, 70 hours a week and, and if I’m paying you based on a 40 hour week, yeah, we’ve got a big disconnect there.

JoDee 31:19
It, Jennifer, your story reminds me of a time of my career, where I have to say, was one of the most fascinating experiences of my career, although when I think back about it now, it sounds like a nightmare to me. But it was in the mid 90s, I was working for an accounting firm in Indianapolis, and a coworker and I flew out to New Jersey and sat in a giant, like, library. It was at a consulting firm, and we sat in their library for, I don’t know, I think it was three or four days, and the library was filled with binders of job descriptions. Back before we were using computerized systems and could go to payscale and salary.com and type it in, we had to manually find the binder that matched with the job description and then created, I think we did have an Excel spreadsheet to enter it in. But it was really a great learning experience for me. But the thought now of being in that room with all those binders was a bit horrifying to me as well.

Jennifer 32:31
Oh, I laugh because that takes me back. So I started in the mid 90s as well, and yes, I remember having a big binder and it was on this side of my desk, that’s why I’m looking over there, and it was all the job descriptions, and if someone had a question, I would have to reference it, and everything was on paper. Yes, we’ve come so far in a relatively short period of time, but to your point, so many clients that I’ve worked with, and students as well that I’ve had, they say that going through this kind of a compensation system development has opened their eyes and they have a much better understanding of what your organization does, how it is successful, and what could derail it. So while compensation projects and even writing job descriptions might seem intimidating or daunting, the rewards, no pun intended, are invaluable for the person who is doing that work, whether we’re alone or on a team.

JoDee 33:25
I totally agree.

Susan 33:26
It really, I think a stint in compensation is a great development opportunity for any HR person.

JoDee 33:32
Yeah.

Jennifer 33:33
Absolutely. Absolutely.

Susan 33:35
So Jennifer, what mistakes have you seen businesses make in the area of total rewards?

Jennifer 33:41
Oh my gosh, I don’t think we have enough time on the podcast. I’ll think about maybe the top five or so.

Susan 33:49
That would be great.

Jennifer 33:50
Sure. First one is not having a comp philosophy and strategy. That is such a big mistake. You’ve got to have that. That is your guiding document, if you will, it is your foundation for all the decisions that are made down the road related to pay and bonus and benefits and work life balance and everything. So don’t go it alone, make sure you’ve got that philosophy and strategy in place. Now thinking about the previous question, with the building your pay structure. One mistake I see is organizations that do their benchmarking based on job title, not job content. This is huge, because as I’m sure both of you know, job titles can vary wildly from one organization to the next. So what my organization calls a secretary, another might call a clerk, another might call a coordinator, another calls it an administrative assistant. If I bench on title, I’m not going to get that correct read on the market. We’ve got to look at job content from the job description, the responsibilities and education, experience, budget authority, all those good things, and match on that. Third mistake that I’ve seen is HR departments that try to go it alone. They don’t involve senior leadership, or finance, or other key players that we need their insight and their buy-in to make sure that the resulting comp program is successful. So make sure to get them involved early and relatively often. They don’t need to be down in the weeds when we’re benchmarking, but when it comes to those strategic decisions, get them involved. Let’s see, a couple others. Not taking action is another mistake I’ve seen, where maybe the HR department is saying “We’re too busy. We have all these position openings we have to fill, we don’t have time to think about comp.” No, you’ve got to make time to think about comp, or maybe we’re afraid, maybe we don’t have that, that internal competency, we haven’t done compensation before, we’re afraid to embark on this new initiative. So not taking action is not an appropriate thing to do, right? We have to do something. And list last pitfall that I will leave you with is not asking why. And I particularly see this with organizations that are developing variable compensation programs, bonuses, incentives, long-term incentives. In these cases, often it’s the president or senior management that comes in and says, “Oh, we need a sales commission plan,” or “We need a bonus plan.” Okay, you know, let’s go back to our desk and develop it. We have to ask why. Why is this important? Why do we need this? How is this going to help us be successful as an organization? If we can answer those key questions, then rushing out to build a plan is probably not our best course of action. So don’t be afraid to ask why, to push back. Getting those answers can only help you and your organization to be successful.

Susan 37:08
Wow.

JoDee 37:08
Nice.

Susan 37:08
Jennifer, I know today we’re talking about compensation 101, but I think we’re gonna need to have you come back and spend a whole episode on incentive programs.

Jennifer 37:16
Yes. Oh my gosh, I would love that. Thank you. Thank you. That’d be a lot of fun.

JoDee 37:22
And you’ve just given our listeners a lot of advice there, but anything else that we haven’t talked about that you wanted to share with our listeners?

Jennifer 37:31
Oh, my gosh, I’ve got a few things here. And actually, Susan, you touched on one earlier, and that was that everyone should spend some time in compensation, whether it is on a project, or maybe it’s a three month or six month stint in the function, if you will. That experience is invaluable. Compensation impacts so many other parts of HR and of our organization, so when the opportunity comes up, take it. Take it. Don’t be afraid of the math. There’s power in math and analytics. So many times I’ve had students when I’m teaching a certification prep, and we get to the section on comp and benefits or total rewards, and there’s a lot of grumbling that goes on. It’s like, “Oh, it’s math. I don’t like math. That’s why I got into HR, so I wouldn’t have to do math!” No, don’t be afraid of it. We’re not doing calculus, right? It’s not advanced physics. It’s, it – you can handle it, and don’t be afraid of it. So that’s one. Second, be an internal consultant, and that means not necessarily solving every problem. For example, working with a client to refine their sales commission plan, and the HR team is trying to design everything, including all the goals and quotas that the sales people should strive for. No, we have to get to senior leadership involved in that, we can’t decide what that salesperson in the Texas market is going to do. We need leadership’s involvement. So don’t be afraid to push back and say, “I’m going to help you, leadership team, come to that right, quote unquote plan, that right structure, but I’m not going to solve every problem explicitly for you.” Third item I want to share with our listeners today is to not be afraid to ask for help, and, and this happens to all of us at some points in our career. We’re like, “Oh, if I ask for help, this is going to diminish my authority. It’s going to make me look bad to my peers.” Don’t be afraid. We don’t all know everything. There’s always something new. There’s power in asking for help. There’s power in learning, taking classes, like the classes that we all teach, and so go out there, keep learning, keep building your network, and most of all, have fun while you’re doing it. HR is, there’s never a dull moment. There’s always an exciting thing happening, and compensation is no exception to that. So take joy in the things that are going well, have fun. If it seems like there’s a lot of stress, and there can be stressful times with comp, especially around year end and bonus season and so forth. But have fun. Enjoy every moment of it.

JoDee 40:26
Great advice.

Susan 40:27
Well, I’ve enjoyed every moment of you this morning, so thank you so much, Jennifer. How can our listeners reach you if they would like to be in contact with you or maybe get advice from you?

Jennifer 40:38
Absolutely. So my profile is in on LinkedIn, they can feel free to reach me there. Also on my company’s website, www.astronsolutions.com, company name is Astron Solutions, then dot com, you can reach me through there, or by telephone as well.

Susan 40:59
Good, and what is your telephone number?

Jennifer 41:01
Oh my gosh, yes, of course. That is 212-792-8885.

Susan 41:09
Excellent.

JoDee 41:10
Thank you so much. It’s been a joy to have you today.

Jennifer 41:14
Oh, and likewise, and thank you both for the opportunity to reconnect and just spend this time with your listeners. It’s been a lot of fun and we’ve had laughter along the way, so I have lived up to my award.

Susan 41:26
Yes, you have. Yes, you have. Thanks again.

JoDee 41:28
Thank you.

Jennifer 41:29
Thank you.

Susan 41:30
Thanks, Jennifer.

The JoyPowered® Workspace Podcast is sponsored by our new book, “The JoyPowered® Team.” JoDee and I wrote this book with five of our colleagues, and we can’t wait for you to read it. “The JoyPowered® Team” challenges you to choose joy for yourself and your teammates. Learn how to build inclusive teams., navigate workplace challenges, revitalize teams who falter, and thrive as teams evolve. Joy starts with you, whatever your role, industr, or area of expertise. Learn more about our new book and how to buy it at www.getjoypowered.com/books. That’s W-W-W dot G-E-T J-O-Y-P-O-W-E-R-E-D slash B-O-O-K-S.

So HRsoft.com has an article on its site entitled “Five Must Have Elements for Every Compensation Management Process.” So JoDee, why don’t we share those with our listeners and see what other insights we might have?

JoDee 42:37
Yes. So the first one is budget allocation. Make sure merit, promotional, and emergency dollars are set aside so that you know if your overall budget, for example, is to have a 3% increase, and you have a lot of employees expecting five, six, and seven, that’s likely not going to work.

Susan 42:59
That’s right, and you know, I, the clients I work with, they are usually pretty meticulous about making sure they’ve got money set aside for a pool for merit increases and even promotional, but I’ll tell you, they very rarely put emergency dollars away. And almost every single client I work with, there’s something that comes up they didn’t expect, right, I think, that’s going to cause them to dip into those pools if they don’t have some, right, you know, emergency money ready.

JoDee 43:23
Right. I like that one, too.

Susan 43:25
So the second thing that HRsoft.com recommends for a really good compensation management process is to make sure that you have established salary ranges and do audits. So continually benchmarking against your industry and really having a transparent salary scale that employees can actually go out and look at is important, because we know that employees go out and look at payscale.com and glassdoor.com and salary.com, or they’re benchmarking themselves, so why not get ahead of it and do it?

JoDee 43:54
Right, right.

Susan 43:55
So companies that you’ve been with, JoDee, do they normally tell the salary range?

JoDee 44:00
I have seen very few companies do that. I totally encourage it. I love it. I think it’s important. But I haven’t seen a lot of companies that do it.

Susan 44:12
The large company that I had worked with for many years, they did not do it purposefully, even though in employee engagement surveys and whatnot, employers would say, “Can you please post the salary ranges so I know if I want to apply for a job or not?”, but our CEO felt very strongly he did not want people moving to new jobs for the money, he did not want money to be the motivator, he wanted people to move because he, to round out their experience and to learn, so he just had a personal bias against it. So we did not do that. Now, we would tell any employee their own salary range, happy to do that. But we wouldn’t tell you the salary ranges of others

JoDee 44:46
For others.

Susan 44:46
Yeah, but I’m with you. I noticed when Purple Ink posts a job, unless I guess your client would say no, you’re always posting ranges,

JoDee 44:53
Right. I just think that saves a lot of time on both sides, right? The candidate is making a hundred thousand dollars and our position’s for 70, they can make that decision right away if it’s something they’re interested in or not.

Susan 45:08
Self-select out if not

JoDee 45:10
Right.

Susan 45:10
Yeah, I love the transparency of that, and then the audit piece of this, you just, because you’ve gone through the process of setting, you know, salary ranges you feel are competitive and fair, and so on and so forth. Remember, you got to look at those every year, because things are changing every year.

JoDee 45:24
Yeah.

Susan 45:24
It doesn’t mean you have to change your salary wages, but at least go through the process and assess. Does the salary range still keep us in a marketable position?

JoDee 45:32
Right, right. I really expect to see salaries increase in the next couple of years with the tight labor market, and I think people are going to have to continue to pay more to get the people they want, I think you’re right, or to keep them as well. Number three is benefits, which is so important to remind your employees that their total rewards are greater than just their pay and to spell out the cost of those benefits. There’s many different tools organizations can use to run reports and share information with employees about the cost of their health insurance, not just the employee cost, but the employer cost of taxes and health insurance and life and dental and vision and retirement plans and all of that. So you really get a feel for how much your company is spending on you. And I’ve just heard so many people over the years say they’ve left a position because “Oh, at XY company, the health insurance costs less,” well, do they understand what the health insurance might be not near as much coverage, right, or so there’s so many factors to think about when comparing total rewards versus just the salary.

Susan 47:01
Yeah, you know, a best practice I’ve seen on this is where a company, when they have an employee put in their resignation notice, they sit down with them and they actually walk through, we just, you know what, make sure that as you are going to your new company, that you look to see what you’ve left behind. And then again, it’s kind of their, you know, their attempt to, we’d love you to be a boomerang employee, just make sure that you’re asking the right questions, and that you really understand what you’re getting at the new place versus what you had here. Now, at that point, you might say that’s really kind of late, the person has already emotionally checked out. So…

JoDee 47:32
That’s exactly what I was trying to say.

Susan 47:35
So the companies that actually send out an annual Statement of Benefits, my husband works for a large university, and every year he gets a letter telling him what his employment at that university is really worth, and he always looks at it for like two seconds. And then I say, “Let me see it,” because I want to go through it. I love it. I love seeing…

JoDee 47:52
I love it too. And those are really simple tools that companies can invest in to provide that information.

Susan 48:00
Right, not that hard to do. Well, good. And so number four on the list by HRsoft.com is performance management. So where you have the option, trying to – making sure that you’re anchoring your pay decisions to how well people are performing, really can drive the behaviors you want to see. So I know, JoDee, we’ve talked before about some – a lot of people have said, you know, the performance management system is dead, that people aren’t doing performance reviews anymore, because of the big name companies like JPMorgan Chase and Adobe and GE, and I’m not saying that they’ve killed their annual performance review, when in fact, what they’ve done is they have really made their performance evaluation and performance management system be continual, you know, they’re getting constant feedback and they are constantly letting people know how they’re doing and encouraging them and do it being very forward thinking. Well, the fact is, if you want to drive behaviors, you do want to think about, how am I incenting people through cash, through bonuses, through stock, all those type of things, and make sure there’s a correlation. And that is how people are going to want to rise to the level you need them to rise to, because they understand the reward they’re going to get for doing it.

JoDee 49:11
Right. Absolutely. There is some school of thought on separating the timing of those two events, maybe that look, for example, annual reviews will be done on June 30, and pay increases or are completed on September 30. So I’ve heard that theory, I used to work for an organization that did that that way, not that it wasn’t, the pay wasn’t reflective of that performance review, but that they didn’t want it, reviewers to be feeling that direct impact of, “If I rate this person lower, they’re not going to get as big of a raise,” or “If I rate them higher, they will,” so they just like separating the process, but also, ultimately, or the timing, I should say, they separated the timing. But ultimately, yes, we should be paid for performance. And that should definitely be reflective of that.

Susan 50:13
Makes sense.

JoDee 50:14
And then number five on HRsoft.com list is legal compliance, making sure your pay practices comply with laws such as the Fair Labor Standards Act, federal state or local minimum wages, which, now we’re getting into counties and cities having their own local minimum wages, so there’s all kinds of different rules. Should they be paid overtime? Can they be paid salary, anti-discrimination regulations, Equal Pay Act, and on and on, so it’s not an easy. It’s not an easy process to manage.

Susan 50:52
So JoDee, do you think that most companies would want to handle their total rewards in-house, or are you seeing more companies saying, you know, with the compliance element, they’re outsourcing some of that?

JoDee 51:03
Well, I think companies are outsourcing more and more of it. But I do see more and more of a demand for people who specialize in compensation. And then I think it’s, we found in this area it’s difficult to find people, either on the consulting side or internally, that are focused on this. So unless you really get someone with the with the strong specialty in this area, I’d say outsource.

Susan 51:37
Makes sense.

JoDee 51:38
Some of the basic work can be done internally, but.

Susan 51:41
Sure. Yeah, well, that’s great. So those of you who are listening or thinking, what area of HR might I want to specialize in? Sounds like compensation is really ripe.

JoDee 51:51
Right.

Susan 51:51
For talent.

JoDee 51:51
Right. Good, I think so. We have a listener question today from Mary in Nashville. Actually, Mary has two questions. Number one, she says, “I’m worried that it is taking a very long time for my company to fill its openings. I know it is a very competitive job market, but we aren’t asking for rocket scientists. What is the reasonable expectation for time to get a job filled?” Let’s talk about that one, Susan, and then we’ll, then we’ll read question number two.

Susan 52:23
Okay, sure, that makes sense. Well, SHRM, the Society of Human Resource Management, actually does a lot of research on everything people related, and they have a report that they did in 2017 called The SHRM Talent Acquisition Benchmarking Report. In that report, it says the average time to fill for, across all industries, across all levels, across all jobs was 36 days, and those are calendar days. 36 days. So what is that? Just a little over five weeks, right? Now, I will tell you that I see it happen much quicker than that, and I’ve seen it happen much longer than that. I recently worked with a company doing a talent acquisition assessment and really looking at their whole process. This particular company, which is a premier employer, it’s averaging 90 days for them to fill jobs across all levels across their whole enterprise. What do you normally see JjoDee?

JoDee 53:16
Well, I think it’s tough. I think in today’s market, people have to move quickly. But then there’s a balance too, right, where we can’t move so quickly that we’re skipping steps or not doing due diligence or not getting, you know, if your company wants to do background checks or reference checks or drug testing, that you skirt those processes to get them hired faster. But I will just say once you’ve found a candidate that you think is a good fit, I encourage people to move as quickly through that process as they can, use telephone screens, use video screens, or conference calls. So that, that you can keep moving them along without making it a hardship on the candidate to keep coming back to the office and taking time off work.

Susan 54:10
I probably have told you my mantra on this, which is if you don’t hire quickly, you won’t hire the best, you’ll end up hiring the rest.

JoDee 54:16
Right.

Susan 54:16
And I do think that’s true. So, especially this one company I was thinking of that I’ve recently worked with, they, they do have to have people go through very rigorous background checks and fingerprinting and all of it, and you may very well, the listeners may have that same type of situation. And that builds a lot of time on the end. Well, the fact is, what you want to do is make a conditional job offer so the person knows you want them and it’s just contingent on you passing that background check.

Yeah, good. So in our best practice sharing, we recently asked our listeners through our JoyPowered® newsletter, “What techniques do you use to focus at work?” Let’s share what we heard, JoDee.

JoDee 54:53
One of our listeners said, “I use my headphones and listen to relaxing music when I need to concentrate.”

Susan 55:01
And our second one, “Knowing I have a deadline causes me to pull out every ounce of energy I have and focus on meeting someone else’s expectations.”

JoDee 55:10
And number three, “I will put my noise suppression headphones on to cancel out the clutter in my office, and then the additional benefit of that is coworkers are less likely to come over and chat as I look occupied.” Yeah.

Susan 55:28
Now it’s time for in the news. HRdive.com cited that Flex Jobs and Blue Star Families recently released a survey in May of 2019 of 500 military spouses and found that 16% of those military spouses were unemployed, which is more than four times the rate of civilians currently. So some of the key findings of this study said that 91% of respondents said being a military spouse has negatively impacted their career. About a third said that they had to leave a job at least three times during their career due to military relocations. 56% have stopped looking for a job because of the difficulty of finding one with long term sustainability, and half have tried to hide their status as a military spouse to avoid being targets of discrimination. Employers must think they’re going to leave if, if they, you know, reveal the fact they’re a military spouse. Finally, the study said that they appear to make well qualified hires, with 71% having at least a bachelor’s degree, compared to just 34% of the general population. I think the message for us in this article is that, as business leaders and HR professionals, is that we need to continue to broaden our applicant pools by tapping into veterans, people with disabilities, and individuals with criminal records. We also might want to think even broader about targeting military spouses.

Please tune in next time. Thank you for listening today. If you’ve missed any of our podcasts, you can catch all episodes for free on iTunes, Google Play, Podbean, Spotify, or wherever you listen to podcasts by searching on the word “JoyPowered.” If you like our podcast, be sure to subscribe so you don’t miss any upcoming episodes. And we’d love for you to rate and review us on iTunes. It helps people find our show. If you have any questions on any HR topics, you can leave us a voicemail at 317-688-1613 or email us at joypowered@gmail.com We’re also on Facebook, LinkedIn and Twitter @joypowered. We welcome listener questions and comments.

Emily Miller
Emily Miller
Emily works behind the scenes at JoyPowered, helping to edit and publish the books, producing the podcast, and running the website and social media.

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