Salary grade movement in compensation administration

by on June 12, 2009 · 0 Comment POSTED IN: HR Info Center

Movement in salary grade has to be tracked and explained for effective compensation administration

There’s a natural tendency in compensation administration for these people lower in the range to get- moved up faster. When they get to the midpoint and beyond, we slow them down because they don’t have as much room.

If they’re high potential person, they got another layer to go, we keep moving them until they get to that layer they’re going after a while. And by the way, I don’t care how big your company is, we all have an end to the escalator in compensation administration. And we’re all eventually going to get a small percentage increase.

If you were lucky and you knew how this game were played, wouldn’t you like to be treated like the senior guy from the day one. I would love to be paid at the maximum of the market from the beginning. And I don’t care how big the increase is because I actually understand what’s going on here.

Let your employees know what’s up
I think if your employees knew more about what’s going on in compensation admninistration, they’d get the context of their increase in the proper perspective. And that’s what I want to teach you to be able to talk to them about. That’s not where you want to be. I mean you don’t want to be sad up there. You ought to be happy.

Performance plays only a minor role in compensation administration when it comes to base pay

When times are tough, performance dictates who we keep. When times are good, performance dictates who we’re going to promote. Performance rocks. Performance is really important. Performance dictates bonuses. Performance dictates who gets the best jobs. Performance dictates who gets some of the perks.

Last year’s performance is not the best predictor for a compensation administration system of this year’s raise. It never has been. And in tough years, it becomes more obvious that that’s really the case. I would strongly encourage you to teach your folks the reality that it never has been and it never can be ultimately the predictor. It’s the third best predictor though.

‘Salmon syndrome’ in compensation administration
The other part of that – and I’d say this is 3.5 but it’s still part of three, is all about potential. Is your person silly enough to want more responsibility and good enough to earn it? In other words, I call it salmon syndrome. Some people are silly enough to want, you know, salmon just swim upstream to spawn and die. They’re genetically programmed to take on more responsibility until they kind of hit the wall, okay?

We’ve got some people where it doesn’t matter that the pay doesn’t really reflect the increase in responsibility. By golly, they want to go upstream. And for those people who want all this responsibility for the minor increase in pay, they can keep moving up faster, okay? But eventually, even potential has a limit. And we will all hit the wall eventually.

I already told you this but performance does predict all these good things. So I’m not going leftist on you here. I am telling you that all these things are important. Okay, performance rocks. Performance is great. But last year’s performance specifically, is not the best indicator of this year’s pay under compensation administration systems. It never has been.

And sometimes with the way we talk to people about performance particularly if you’ve got it tied in to a performance evaluation, we imply that salaries are this year’s adjustment as a reflection of last year’s performance. It just isn’t. You ought to quite it. It won’t help you.

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