4 ways to communicate compensation that drive strategic outcomes

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4 Ways to Communicate Compensation to Drive Strategic Outcomes

4 ways to communicate compensation

that drive strategic outcomes.



Rusty LindquistV P S T R A T E G I C H R I N S I G H T S

B A M B O O H R

Mykkah HernerD I R E C T O R O F I S X S E R V I C E S

P A Y S C A L E



Value Perception CrisisIt’s time to blow up HR and build something new

Rethinking HR

Why we love to hate HR

What will it take to fix HR

It’s time to split HR

HR faces a crisis of credibility in the boardroom

HR is our “favorite corporate punching bag”



Evolution of HR

BusinessValue

H

L

Strategic

Micro Small Mid Large

Operational

HR viewed as a cost centerTransactional HR High-Impact HR

HR as a strategic investment

Basic Operations

Strategic Operations

HR HIERARCHYOF NEEDS(Culture, Performance, Engagement, Satisfaction, Employment Brand, AdvisingTalent Management, SuccessionPlanning, Learning & Development…)

GeneralOperations

Business Value

(Operational Efficiency: HRIS, Records, Talent Acquisition, Compliance Tracking, Etc.)

(Payroll, Benefits, Time &Attendance, etc.)



Payroll is, by far, a company’s biggest expense; the cost of

getting it wrong is tremendous.



1

Creating Pay Transparency in the Workplace

1



Defining Transparency



Transparency Spectrum



Pay Transparency gets everyone in the same

boat, paddling in the same direction.



Why Would Anybody be More Transparent about Pay?

Pay Transparency

Trust

Better Business Outcomes!

Engagement



Employees who perceive a ‘fair and transparent pay practice’ have lower

intent to leave and higher satisfactionPERCENT OF RESPONSES

LOW AVERAGE HIGH

50% 31% 19%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

1 2 3 4&5

% Responses with Intent to Leave % Responses with High Satsifaction

Intent to leave

Satisfaction



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Communication Roles

ExecutivesCommunicate program to organization at a high level

ManagersCommunicate compensation details to employees

EmployeesBring questions to manager or HR

HRPrepare communication, consult and inform Executives, train Managers



How Compensation Discussions Impact Your Organization

CulturePerformanceEngagement

Retention



Performance

Loyalty

Satisfaction Engagement

RetentionCULTURE

Greater Business Output

CULTURE



CULTURE

Impact?

CULTURE



Everything you dobecomes part of that story…

The story of what you value



Compensation:

The story of how much you are valued



Compensation:

The Keystoneof Culture



Making the CompensationConversation a Culture Builder

Don’t be offended

Be open

Take it seriously Be objective

Be proactive

Be Positive

Communicating with Executives

2



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• Understand the executive audience

• Align compensation with business objectives

• Incorporate leading edge practices

• Keep executives up to date

Exec communication tips



What do your Executives Care About?



Benefits of Comp Plans

25



Prepare Talking Points

• Compensation philosophy and purpose

• Compensation plan changes at the highest level

• Market study and results• Next steps—talk with

managers



Report High Level Info• Get them familiar with a dashboard (Compa Ratio, Market Ratio, etc.)• Report these on a regular basis

Communicating with Managers

3



Compensation is about an exchange of

value, not money.



Value Exchange

Experience in industry

Experience in market vertical

Experience in adjacent markets

Experience in field of discipline

Experience in adjacent disciplines

Experience with competitors

Product knowledge

Competitor knowledge

Time and experience in company

Education

Discipline training and certification

Supply and demand

Employer Value DriversEmployee Value Drivers

Base payPerformance Pay

Paid time offBenefits

TravelCulture and environment

Work flexibilityWork/Life balance

Meaningful workWho you work with

Challenging workOpportunity to impact

Job security

Shared purpose / missionCareer advancement opportunities

Autonomy

Senior leadership



of company leaders do not feel confident in their managers’ ability to effectively communicate with employees about salary issues.

2014 PayScale CBPR

73%



Agents of the Organization



Equip Managers• Set expectations• Educate them• Give them the big picture• Give them tools



34

Identify Creative SolutionsConsider Workplace “Currency”

Know what motivates your employees Additional/Alternative Perks FTE preference Staggered increase or offer PTO Work assignments Development opportunities



The Compensation Review Meeting

1. Prepare for the meeting

2. Deliver feedback and listen

3. Follow up



Provide Talking Points

• Compensation Philosophy

• Market Study / results

• Structure Overview

• Position in range

• Adjustment

• Rationale

• Open the door



Prepare Manager Toolkits• Compensation Plan Talking Points• Compensation Plan Information• Details for each employee they supervise• Tips for each type of conversation they may

haveo Pay is low or perceived to be lowo Pay is higho No increase due to performanceo “I found this on the internet”



Report Relevant InfoGive them tools for success:

• Flight Risk report & the inverse report

• Disparate Pay report

Give them insight into what employees care about

• Am I making enough money to cover my basic needs (entry level)

• Am I being paid fairly (professional level)

• Am I being paid enough to deal with managing people (Mgrs/Dirs)

Give them talking points for comp conversations with employees



Communication Tips• Know your audience

• Watch the jargon

• Don’t present issues without a way forward

• Prepare, prepare, prepare

• Be direct and also empathetic

• Communicate early and often



Align With Strategy



Focus on Outcomes

Who are our key partners?

Who are our key suppliers?

Which key resources are we acquiring from partners?

Which key activities do partners perform?

What key activities do our value propositions require?

Our distribution channels?

Customer relationships?

Revenue Streams?

What value do we deliver to the customer?

Which one of our customer’s problems are we helping to solve?

What bundles of products and services are we offering to each Customer Segment?

Which customer needs are we satisfying?

What type of relationship does each of our Customer Segments expect us to establish /maintain with them?

Which ones have we established?

How are they integrated with the rest of our business model?

For whom are we creating value?

Who are our most important customers?

Through which Channels do our Customer Segments want to be reached?

How are we reaching them now?

How are our Channels integrated, and which ones work best, or are most cost-efficient?

How are we integrating them with customer routines?

What Key Resources do our Value Propositions require?

Our Distribution Channels?

Customer Relationships?

Revenue Streams?

What are the most important costs inherent in our business model?

Which Key Resources are most expensive?

Which Key Activities are most expensive?

For what value are our customers really willing to pay?

For what do they currently pay?

How are they currently paying? (How would they prefer to pay?)

How do we report on this “revenue” to the rest of the organization?



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4 ways to communicate compensation that drive strategic outcomes

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