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The compensation planning season begins with a bang for many organizations. Businesses frequently begin their annual budgeting, compensation planning, and personnel research toward the second half of the fiscal year.
In this employees’ labor market, having a market competitive compensation scale is imperative. What may have been an attractive salary or short-term incentive may now take you out of the running for potential or incumbent employees.
When your goal is to head into the new year with a strong compensation plan in place, consider taking the summer months – or your slower season — to strategize.
For compensation and human resources staff, the summer months are typically a time to catch your breath. You’ve completed the resource intensive annual increase and performance cycle, the survey participation season is mostly behind you, and you have not yet begun end-of-year planning.
Fall rolls around and the stress of responsibilities that should have been expected — budget projections, annual increase planning, survey releases, and market pricing analysis — sets in with a vengeance.
By taking advantage of the slower pace that occurs during the summer months, you can take steps now to reduce the chaos of the transition to the compensation planning season in the fall.
Compensation and total rewards programs impact the entire business. If you lack attractive market competitive salaries, you will have more challenges securing the employees you need. That sets off a chain reaction ultimately preventing the organization from achieving objectives.
Rather than prioritizing downtime in the summer, use these months to collaborate with the business’s stakeholders. This includes everyone from department managers, executive leadership, and finance professionals, to recruiters and other members of the human resources team.
Consider allotting about 30 to 45 minutes during the slower months to get together and have a meaningful conversation. With summer travel, put time on each person’s calendar, including a description of the purpose and expected outcome. This shows them the importance of the meeting and builds rapport.
Plan ahead for each meeting by building a conversation around predetermined questions. Since your goal is to discover how best to support these colleagues during the work year, determine:
For HR and Compensation professionals, access to data insights from salary and policy and practice survey results are the name of the game. What happens when those surveys fail to provide the needed insights?
Operational needs, job performance duties, and the nature of the business itself change over time. The surveys that you use to understand your labor market competitors’ positioning and practices may need to change to provide what your organization needs.
A best practice is to review salary surveys for potential gaps every few years. During the summer months, asses the salary surveys and ask yourself:
You can start by using the Mercer Benchmark Database, to evaluate pay and design competitive offerings. With data from over 6,000 positions, you can purchase the entire database – or the module most relevant to your industry.
It’s not enough to implement a new compensation plan and call it quits for that fiscal year. You won’t know whether you’re on track to hit certain key performance indicators related to your objectives and those of your team without continuous analysis.
For example, imagine your goal is to hire and retain a new team. This team’s task is to assist a given department in achieving a particular key performance target. To reach your own goal, you’ll need to not only identify the team members, but empower them to remain with the business.
If the year closes and half the members have left, then it’s too late to correct whatever problem caused them to leave. Instead, create an automatic process to check in with these new employees to evaluate their successes and continuing needs. Consider checking in at least quarterly.
Some jobs (or job families) are the problem child of the business. It seems that no matter how you advertise for the role, it fails to attract the best candidates or the ones who will last. Beyond simply comparing benchmark jobs to survey data, it’s a best practice to review your most highly populated job families annually, and put others on a rotation every few years.
Beyond simply comparing benchmark jobs to survey data, it’s a best practice to review your most highly populated job families annually, and put others on a rotation every few years.
To get the most bang for your buck, select those job categories that need some extra care. Determining factors include those jobs that are lower paid compared to the market, jobs with a disproportionate turnover rate, and job categories with continuous requests for salary adjustments by current employees.
In addition to responding to these needs:
The next year’s planning likely begins a few months after summer ends, or 3-4 months prior to the start of your fiscal year. Make this time more effective by planning for it now.
Is there a new survey or data-aggregating tool you’ve got your eyes on? Have you found a training program that would make you or other colleagues more effective? Use the summer downtime to prepare a financial case.
You could also use this time to prepare for the next quarter’s or next year’s workload. Start by coordinating with the departments you assist. Based on your one-on-one check-ins, you should have an idea of their needs and how you can support them.
Budget time and resources now to enable them to be successful. At the same time, commit to timelines with your colleagues while also setting realistic expectations.
Then use this information to demonstrate what resources or budget you need for the next fiscal year. By relying upon facts and figures communicated to you by the business’s constituents themselves, you can present a powerful argument to the financial team.
Finally, design an annual calendar that sets you up for success. You’re already aware of numerous activities that recur annually. Schedule these first:
Creating a meaningful calendar will enable you to control your workload while remaining responsive to the daily needs of your colleagues.
Mercer’s suite of data-powered products are designed to inform your compensation planning and annual budgeting needs. Products like Mercer’s Salary Surveys will enable you to get the information necessary for constructing logical pay structures and identifying top talent.
Contact us today to get started.