3 Tips for Updating Your Compensation Program

Updating your salary structure? Market data discrepancies, pay compression, and alignment with the compensation philosophy are all problems employers experience when updating their compensation programs. Here are some tips to deal with these problems:

Problem 1: Market data shows discrepancies

You’ve established pay rates for your organization’s positions based on a salary survey, but the next year the same survey shows that a given job encountered a moderate salary decrease or large increase. Market data discrepancies are a common problem many employers face when updating their compensation programs.

Salary surveys sometimes show discrepancies annually. These discrepancies occur mainly from differences in participation from year to year (different or new employers submitting data for the job). Other reasons for discrepancies may include organizational factors, such as pay decreases or large merit increases and higher or lower demand for certain skills or jobs in the labor market. To cope with market discrepancies...

  • Use multiple sources of market data (salary survey information) to establish market averages to benchmark your positions versus just using one source. By taking more data into account when benchmarking, you dilute the impact of these market differences on your pay decisions.
  • Although it may be tempting to use the most specific and targeted breakouts available to make pay decisions, these are often more susceptible to variance and discrepancies because they have lower participation. As a general rule, it’s important to use breakouts of data that have the most participation from employers (such as “all employers”). These are the most reliable figures and are unlikely to experience major differences year over year. 
  • Be cautious in making pay decisions annually. Continue to benchmark pay on an annual basis, but only make pay decisions based on distinct trends. Market data is highly susceptible to variance and trends are more likely to become evident over multiple years.

Problem 2: Jobs show pay compression

Pay compression is a common problem organizations experience when revising their pay structures. It results when there is a pay difference between positions requiring different skills and responsibilities – when lower-level jobs are paid as much or more than higher-level jobs. It often occurs when typical adjustments or increases have not been given and instead pay raises are only given to a select few employees (such as top performers). It may also occur when a salary structure is not used. To resolve the issue of pay compression…

  • Determine which positions show pay compression. Is it a job-specific issue, affecting only one or a few employees? Or is it a widespread problem?
  • Create a salary structure with formal pay ranges. This will set the upper and lower limits of pay that employees can earn for a given job or job family. Keep pay ranges updated once they are established.
  • Consider coupling your market analysis with a job evaluation. Job evaluation is often an under-used method of determine pay rates, however, establishes which jobs are most and least valuable to the organization and thereby encourages internal equity. It involves assigning points or ranking jobs according to their value to the organization.
  • If ranges are established, adjust pay ranges by the same figure each year – such as a cost of living or across-the-board increase to ensure that pay keeps in line with the market.
  • Consider using lump sum bonuses instead of merit increases to reward employees who have hit the maximum in their pay range. Similarly, for new-hires with special skill-sets, you may consider offering a lump-sum sign-on bonus.
  • Establish career paths. Pay compression is more likely to occur in organizations that do not have clear advancement opportunities and upward mobility. Such paths provide more opportunities to earn more pay and reward performance. 

Problem 3: Pay not aligned with compensation philosophy

Let’s say that your organization’s compensation philosophy is to pay all of your organization’s jobs at market, which means at the 50th percentile or median pay rate. Perhaps this philosophy has been newly developed or changed since the creation of your current pay structure. After analyzing the market, you find that you are actually paying above or below market for some positions. This is your organization’s position to market.

Your organization’s position to market should not necessarily determine its compensation philosophy. For example, if your philosophy is to pay “at market” and your organization pays “below market” for some positions, this should not lead you to change your compensation philosophy, unless it feels that this is best for the organization’s attraction and retention of talent. To address this problem...

  • Determine whether the philosophy applies to all positions. It’s important to be aware that a compensation philosophy does not need to apply for all positions.
  • Keep pay where it is and “red line” the employees paid above market until the market catches up to their pay rates.
  • Make pay adjustments to employees paid below market, unless reasons for this discrepancy are justifiable.
  • Hire new employees at the “at market” rate.

Updating a compensation structure presents its challenges for many employers, and can be one of the more complex tasks HR encounters. Should your organization need additional assistance with updating its compensation system, be sure to check out the resources ERC offers to support your compensation programs below.

Additional Resources

HR Consulting
Our compensation consulting services cover a broad range of assistance on the total rewards spectrum; from basic job description updates to the complete design of organization-wide base salary compensation systems and variable pay programs. For more information, please contact consulting@yourerc.com.

EAA Reports Northeast Ohio Sales Manager Pay

According to the 2010-2011 EAA National Sales Compensation & Practices Survey, Northeast Ohio employers report paying higher median total compensation for some sales managers. Specifically, Northeast Ohio employers report higher median total compensation for General Sales Managers and District Sales Managers than other U.S. employers.

 

Northeast Ohio Employers Report Higher Pay for Customer Service Jobs

According to the 2010-2011 EAA National Sales Compensation & Practices Survey, Northeast Ohio employers report higher median total compensation than employers across the U.S. for nearly all customer service positions surveyed.

Customer Service Managers and Supervisors, in particular, showed the largest differences in total compensation when compared nationally.

 

Customer Service Skills Training

Customer Service Skills Training

This training helps you build better relationships with your customers.

Train Your Employees

6 Ways to Improve Your Hiring Process

6 Ways to Improve Your Hiring Process

Job candidate engagement and relationship management, recruitment metrics and streamlining, selection assessment, and hiring manager relations are all key areas of opportunity for many organizations and some of the major hiring practice trends.

Here are some ways to improve these aspects of your hiring process.

Improve candidate engagement

Each conversation and interaction with a candidate is an opportunity to engage or disengage the individual and establish a positive or negative relationship or perception of your organization. Remember that declined candidates can be sources of other job applicants, and they are just as important to engage.

  • Establish a timeline for the hiring process regarding when candidates should expect certain stages to occur (interviewing, testing, offer, etc.). Communicate this to candidates.
  • Follow up with candidates in a timely manner by setting a standard for response time. For example, set a goal to respond to candidates who have submitted a resume to your organization within 3 business days of their submission.
  • Communicate expectations. Tell candidates when they will hear from your organization following a stage in the hiring process, such as an interview.
  • Communicate all decisions to candidates. Follow up with candidates after each interview and stage of the hiring process, and when the final decision has been made. Additionally, consider providing feedback to candidates on why they were not selected. Approach the conversation in a way that keeps the door open for on on-going relationship.
  • Make a good impression. Be sure that hiring managers or others involved in the hiring process act professionally, ask appropriate interview questions, are prepared and have reviewed resumes, and treat the candidate with respect.
  • Survey or gather feedback from the candidate about the hiring process. Applicants and candidates are your customers, and in order to improve your hiring process, their feedback can be helpful.

Manage candidate relationships

Staying in touch with candidates and building relationships with them over time can help improve the recruitment process and build a network of contacts for future positions. It also can save money on sourcing.

  • Connect with all great job candidates on LinkedIn so that you can maintain contact with them in the future, should staffing needs emerge.
  • Reach out to exceptional job candidates every once in awhile to “check in” and build a relationship. You never know when you may be looking for their talent.
  • Periodically call or email employees that have left the organization on good terms. Stay in touch with top talent that has left your organization.
  • Consider creating alumni groups or events for previous employees that have left the organization. Some organizations create these groups on social networking sites like LinkedIn or Facebook, while others initiate in-person meetings or events.

Use more effective selection methods

Selection problems typically occur when a) the methods used don’t match the skills, abilities, or knowledge that need to be evaluated and b) the process or people involved in the process approach it in an unstructured, untrained manner that makes decision-making subjective and error-prone.

A comprehensive selection process should be based on a thorough review of the knowledge, skills, and abilities required for the position, as well as organizational and cultural fit. By analyzing your hiring needs in depth, your organization can create selection practices that best fit the requirements of the position.

For example, if your organization wants to determine whether a candidate’s style or personality fits the position, it is best to conduct an assessment versus asking personal questions in the interview. If other candidate traits should be evaluated, such as leadership style or problem solving abilities, assessments can be used to evaluate those traits.

By focusing on selection methods that fit the position, your organization can improve its selection effectiveness.

Additionally, your organization may consider improving its interviewing practices by providing more structure to hiring managers with an interview guide to ensure that they are asking appropriate, targeted, and consistent questions of all applicants and rating them according to objective criteria or by ensuring that managers are trained on interviewing practices.

Measure effectiveness

Your hiring process should be measured so you know how it is working. If your organization only has time to track a few critical hiring metrics, make sure these are the ones: time to fill, cost per hire, sourcing effectiveness, and quality of hire.

They will show how efficient and costly your process is, what sourcing is generating the most applicants and the best hires, and the quality of candidates whom you are hiring, all important to measuring your recruitment and hiring process’s effectiveness.

Additionally, linking or correlating quality of hire metrics back to the selection tools and sourcing methods can help your organization validate its hiring approaches and determine which ones are effective.

Enhance recruiter/HR and hiring manager relations

Recruitment of great talent can suffer when HR and hiring managers are not on the same page. This can create disorganization, inefficiencies, and inconsistent communication that candidates often pick up on during the hiring process. Positive and efficient recruiter/HR and hiring manager relations can be improved by enhancing communication in all of the following ways:

  • At the beginning of the process, identify the core people that will need to interview, partake in selection phases, and make the final decision. This will prevent the inevitable “reeling” of others into the process which can elongate the hiring timeframe.
  • Communicate the hiring process to hiring managers before recruitment for the position starts. You may consider including a timeline to manage their expectations, help them carve out time, and answer questions. This could be an introductory email or a meeting.
  • Manage their involvement in the selection process. If managers are to rate candidates in an interview, be sure that they have received rater training. If they design interview questions or conduct interviews, be sure they have received interview training. Also ensure that managers have the job description and are aware of any competencies or criteria they will need to assess.  Give hiring managers the tools and training to hire effectively.
  • Keep hiring managers abreast of the hiring process and where candidates stand. Maintain open lines of communication throughout the process.

Streamline

If technology isn’t being used in your organization’s recruitment process, it’s time to start integrating new systems of tracking applicant and recruiting data. One of the most challenging aspects of recruitment is managing resumes and applications. There are plenty of great systems and software applications that your organization can invest in to help streamline this process. Leveraging applicant tracking systems is important in making the process efficient.

Beyond social media, which is also technology your organization can use to enhance its recruitment and hiring process, some organizations have expanded their sourcing efforts to mobile technology like cell phones and texting.

Behavioral Interviewing Training

Behavioral Interviewing Training

Participants will learn the importance of proper preparation for an behavioral interview.

Train Your Employees

Greater Cleveland ASTD Seeking Nominations For Award

The Greater Cleveland chapter of the American Society for Training and Development is seeking nominations for its 2011 Workplace Learning & Performance Leadership Award. In its 15th year, this award recognizes a Northeast Ohio organization that demonstrates outstanding leadership in organizational learning, employee development, or workplace performance.

You do not need to be an ASTD member to apply. Winners will be honored during the 15th Annual Business Leadership Award luncheon at the Rotary Club of Cleveland meeting in May 2011.

For more information or to apply, visit www.astdclevele.com.

Cleveland Leadership Center Offers Programs for Our Region’s Leaders

The Cleveland Leadership Center offers five outstanding, interconnected flagship programs. Leadership Cleveland, Cleveland Bridge Builders, Civic Leadership Institute, (i)Cleveland, and Look Up to Cleveland provide participants with an economic, social, and political context for our region. This context motivates participants to be active and engaged. An active, engaged civic community is essential for a healthy business community.  And a healthy business community is a competitive asset in a global economy. Learn about joining an engaged, active community of leaders at www.cleveleads.org.

Some select programs of interest to you & your employees, friends, and colleagues in 2011:

  • Leadership Cleveland, for positional, senior-level leaders. Program runs September 2011 to May 2012. Apply by March 18, 2011.
  • Cleveland Bridge Builders, a hands-on civic leadership program. Program runs September 2011 to May 2012. Apply by April 1, 2011.
  • Civic Leadership Institute, short, succinct, six-session programming designed to deliver need-to-know information direct from key in-the-know leaders. Register now for the upcoming session: February 9 to March 16. Summer session begins in June. No application process.
  • (i)Cleveland encourages civic awareness, leadership and networking for summer college interns. Program runs June 2011 through August 2011. Register your summer interns beginning March 1, 2011. No application process.
  • Look Up To Cleveland, for high school juniors in Cuyahoga County. Program runs December 2011 to June 2012. Apply in September 2011; inquire with high school guidance counselor.

Applications available now at www.cleveleads.org. Be a part of Cleveland's new wave of civic leadership!

The 2011 NorthCoast 99 Application is Now Available

In its 13th year of honoring 99 of the best places to work in Northeast Ohio, ERC is excited to announce that the 2011 NorthCoast 99 Application is now available! Applications will be accepted from now until April 29, 2011. Applicants are encouraged to register at www.northcoast99.org/application to begin their organization’s application process.

There is still no cost to apply, and every applicant receives a free benchmark report in September which summarizes how an organization scored relative to the winners and other applicants.

The application process involves the following:

  • Top Performer Workplace Practices Audit - Our comprehensive online questionnaire that asks for detailed information about your organization's policies and practices.
  • Branding and Culture Submission - Applicants submit materials such as employee handbooks, sample job ads and materials shared with job candidates. 
  • Top Performer Engagement Survey - You select a group of top performers within your organization to complete an online survey that measures their engagement with your organization. 
  • New-Hire Assessment - You select three employees hired by your organization in 2010 and employed in Northeast Ohio to complete a short online assessment of your organization. 
  • Special Awards - ERC will recognize select organizations for unique and innovative practices described within the application.

To be recognized as a great place to work during good economic times is certainly a great achievement; however, during tough times the ability to attract, retain, and motivate top performing employees becomes even more critical. For more reasons to apply for NorthCoast 99 this year, please visit: http://www.northcoast99.com/.

The 2011 NorthCoast 99 Award program is sponsored by Anthem Blue Cross and Blue Shield, CareerBoard.com, CareerCurve, Cinecraft Productions, Inc., Cleveland.com, FirstMerit Bank, Frantz Ward, Inside Business Magazine, Oswald Companies, PS Awards, Staffing Solutions Enterprises, and WVIZ/PBS and 90.3 WCPN ideastream. In addition, NorthCoast 99 is endorsed by the Cleveland Society of Human Resource Management (CSHRM), the Northeast Ohio Human Resource Planning Society (NOHRPS) and JumpStart Inc.

For more information please visit www.northcoast99.org.

5 Secrets to a Becoming a Better Workplace

Why do some organizations receive more qualified job applicants? Have more positive work environments? Experience lower turnover? Enjoy higher employee engagement? Develop more innovative products? Here are five (5) of their top secrets.

Secret 1: Create an open environment

Great places to work create a sense of openness in their workplaces – openness to new experiences, continuous improvement, sharing of information, and creative thought. This openness is created through transparent, direct, and honest communication at all levels of the organization. Leaders communicate information and feedback frequently and sincerely. Little information is held back from employees, and employees constantly have access to information about the organization’s performance and direction and the ability to ask questions about the organization at any time. Similarly, managers and supervisors provide frequent feedback and communicate directly and honestly with their employees. All levels of employees, particularly non-management staff, are encouraged to voice their ideas and opinions. These practices facilitate an open dialogue throughout the organization.

Secret 2: Develop and maintain trust

A strong sense of trust is prevalent at great places to work and is built on positive and constructive work relationships. Most importantly, there is a sense of trust in leaders and their ability to lead the organization successfully. Employees have faith that their leaders will sustain and grow the organization and develop a clear vision and direction for the business. To build this trust, leaders frequently engage and interact with employees, develop a history of good decisions that move the organization forward, model organizational values, and consistently “walk the talk” by delivering on promises and commitments. These leaders are individuals of integrity that inspire their followers.

There is also a strong sense of trust between employees and their managers and supervisors. Managers and supervisors trust their employees to complete their tasks, accomplish goals, and make decisions independently. Similarly, employees trust that their managers and supervisors will support them and look out for their best interest. 

Secret 3: Treat employees fairly

Fairness is widespread at great places to work. Fairness, or perceptions of equity and justice, refers to when organizations make employment decisions (such as promotions, rewards, and pay) based on objective criteria – typically performance. By fairness, we are not referring to distributing these rewards to all employees equally. Nor are we referring to respectful and courteous treatment, which should be given to all employees. At great workplaces, those employees that outperform others receive rewards. Rewards are fairly distributed to those that deserve them.

Similarly, great places to work strive to provide a competitive total rewards package, including competitive and fair pay and benefits to its workforce. They monitor workplace trends and deliver a competitive package that attracts the right talent.

Secret 4: Support employees

Support is a critical part of great places to work, and provided at all levels of the organization – from leaders, managers, supervisors, and even coworkers. Support is prevalent when an organization conveys that it cares about helping employees achieve more for themselves or meet their needs – both personally and professionally. It is communicated and manifested in policies, procedures, and programs, and in how people interact and communicate with one another. People work together, help one another succeed, and support each others’ needs at supportive workplaces.

Great places to work provide flexibility in meeting personal and professional demands; on-going opportunities and interest in professional development through training, career development, and advancement opportunities; new and challenging work experiences; support for health and well-being; and appreciation for contributions and accomplishments.  These are all important ways that these organizations show their support to employees.

Secret 5: Have pride

There is a strong sense of pride and positivity prevalent at great places to work – specifically pride in one’s work, team, and the organization as a whole. Great places to work encourage taking pride in one’s work, recognizing that when employees are passionately and emotionally connected to their work, they are most engaged. These workplaces also encourage taking pride in team accomplishments, which facilitate stronger work relationships and camaraderie.  Finally, at great places to work, employees take pride in the organization as a whole and the products and services it offers to customers. They are incredibly connected to the organization’s mission and purpose.

Is your organization a great workplace?

We find that employers often underestimate their workplaces in terms of these characteristics, and encourage them to consider how their organization stacks up against these crucial aspects of the workplace. You may be surprised to find that your organization has all of this. Becoming a great place to work is more about building the right climate and culture that attracts, retains, and engages top performers, than instituting the most popular and attractive perks.

 

ERC Surveys Northeast Ohio Pay Rates

In 2011, ERC launched it's ERC Salary Survey and ERC Wage Survey. These surveys collected pay rate information from Northeast Ohio employers on over 350 jobs in accounting, administration, customer service, sales, engineering, human resources, IT, maintenance, marketing, production, purchasing, distribution, transportation, safety, science, and research and development functions.

With over 90 years of experience in conducting compensation surveys, ERC is known for providing the most comprehensive, reliable, timely, and local market data for Northeast Ohio businesses.  ERC’s data is collected from actual Northeast Ohio employers.

View ERC's Wage & Salary Adjustment Survey Results

The survey reports data from Northeast Ohio organizations regarding their actual and projected wage and salary adjustments.

View the Results

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