Pay Grades and Job Value
Compensation is a reward system and that reward system’s goal (should be) to recruit, motivate and retain employees to perform at their peak. However many employers are stuck in a traditional “time served” pay system which rewards an employee for length of employment rather than what the market for the position pays, or what the employee has accomplished (or not) while employed.
Top management does not want to underpay their employees but as a company’s largest expense, leaders are charged with administering the reward system to accomplish its goals. Top management also wants to reward their high performers and in such a way to differentiate the difference between high and low performers.
But often merely scrutinizing a reward system causes so many differing opinions, and confused definitions that even the most cursory of reviews muddies the waters to the point of failure. These differing definitions while seemingly a simple problem in theory often cause damaging confusion to the construction and certainly communication of even a carefully constructed system. Lastly, leaders who can’t communicate the basic components of employees’ compensation packages can cause employees to understandably push back, and push back hard. Push back, even from employees who would be advantaged by an improved reward system.
Reviewing your reward system can be guaranteed to spark a little if not a lot of uncertainty. Employees are understandably apprehensive about any changes to pay, even positive ones, as they are very sensitive to changes. Even a system that does not satisfy employees will often appease them when faced with the possibility of a change. Fear of change causes most employees to think they’ll become somehow disadvantaged and as the old adage goes, “If you wanted to work for free; that’d be called a hobby.”
The course will show you how to construct a market based pay system to align rewarding your employees for accomplishment of your company’s goals.
Part 1: Basic Reward Systems
- Types of reward systems.
- Determining what to reward.
- The importance of determining your jobs’ comparative value – internal equity.
- The job market – Making decisions for determining external equity.
- The part benefits play in a reward system.
Part 2: Incentive Reward Systems
- Performance pay
- Incentive pay
- Anticipating problems
- Having difficult conversations.
Part 3: Linking Your Reward System with Your Performance Management System
- The key components of an effective performance management system.
- What you measure, notice or reward happens – writing business goals that link to your reward system.
- How to link performance appraisals with pay.