Compensation management questions are some of the most difficult questions you may have to answer as a manager
- Questions about compensation management and salary policy
I’m a 25-year old engineer. And I do the exact same thing as a colleague who’s 50. How come she makes more? The longer you are in a salary grade, the easier time you have moving over the high side. So, a 25-year old is moving up fast, he’s probably going to be paid less than senior engineer
Oftentimes, we have multiple grades with the same job category. It is often referred to as salary grade in compensation management circles. Some companies make a differentiation in title, others don’t. It’s a not age discrimination or the opposite here, age favoritism. It’s probably a reflection of time in grade and maturity.
- Why does the compensation management structure set me up so I only get 80% of my bonus instead of the whole thing?
Once you study the compensation management formula, it’s going to be pretty easier to figure out why you got 80%. There’s probably some factor and it may not be all you, it could be the fact that, you know, we didn’t fund it fully or you know, something you didn’t have control over fed into it. But bonuses are pretty easy to calculate. They’re based on formulas. Look at the formula, you’ll figure out your 80%.
- Why does the guy who reports to me make more money than I do?
That would be a situation where the employee has been moving up quickly. Maybe he just made the jump and somebody reporting to you has probably been around for a long time.
Now, that won’t last forever. Now, if there’s some other explanation, maybe the guy who reports to you got demoted and they froze his salary and they’re just trying to be kind to him or whatever. They’re a number of different explanations, you’re entitled to have one. By the way if this is a direct report of yours. I think that would be only fair to talk about the pay disparity between boss and subordinate
- Everybody knows what everybody else makes around here. How come I didn’t get as big a raise than the guy in the cubicle next to me?
The amount of your raise is not the most important indication of how much we like you. The percentage of your raise is not the most important indication of how we like you. We like everything we’re paying you, okay? This year’s increase is not the most important thing. The raise is just an adjustment about paying you fairly for what you do. It all depends on what that person’s compensation ratio, what’s your compensation ratio, how long you’ve been there, where are you in the range compared to them.
If your employees knew those things, answering questions about compensation management would be pretty easy. There could be a performance factor or a potential factoring in that. If the other guy is going to move up, you’re not, all those things could factor in. It depends.
- Am I ever going to be making as much in this job as my brother makes in his?
My brother is a periodontist and that means he makes a lot of money. I’d love to make as much as my brother.
In order to become a periodontist, I’d have to go back to school probably for at least six to seven years. And I’d have to get as good a grade as he got and I’d had to be doing things that I’m not particularly fond of. So, I don’t know what your brother does and it all depends. So, if the two of you do the exact, same thing and you work for the same company, the answer is a little different than if your brother is a schoolteacher. Compensation management formulas differ by the organization and depend on what job you do in the organization.
Edited remarks from the Rapid Learning Institute webinar “How to Drain the Drama from Salary Reviews: A Conversation Roadmap” by Gary Markle
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