Compensation 101

Krystal PraastCompensation Professional

Michaela AyersCustomer Training Specialist

www.payscale.com

• Introduction

• Compensation Concepts

• Relevant Ranges

Agenda

PayScale Collects and Analyzes the Largest Database of Salary Profiles in the World

Compensation Concepts

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What is a Benchmark Job?

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What is a Labor Market?

To define a Labor Market means to choose a “cut” of

the compensation data based on where you compete for talent – organization type, company size, geography,

and/or industry.

LocationMarket

Labor Market

Industry

Company

Size

Org Type

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Finding your Market

When it comes to compensation, is there a strong need to

target some areas of the organization differentlythan others?

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Workforce Segmentation

Industry: IT ServicesSize: 400 EEsLocation: Seattle, WA

ONE-STRATEGY-FITS-ALL SEGMENTED WORKFORCE

HR IT

SALESOPS

Industry: IT ServicesSize: 400 EEsLocation: Seattle, WA

HR

OPS SALES

Industry: IT ServicesSize: 10,000 EEsLocation: Seattle, WA

IT

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How competitively do you want to pay?

What’s your target market percentile?

50TH

PERCENTILE

LAG THE MARKETMEET THE MARKET LEAD THE MARKET

90TH

PERCENTILE10TH

PERCENTILE

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Understanding Market Data

Relevant Ranges

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Definition: Job-Based Ranges

Ranges are built around the market value for the job, at the targeted percentile

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Components of a Base Pay Structure

STRATEGY

Labor Market + Target Market Percentile = Compensation Strategy

Benchmark Job + Compensation Strategy = Market Data

STRUCTURE

Market Data + Internal Alignment = Base Pay Structure

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Definition: Grade-Based Ranges

Jobs with similar level of responsibility and value to the organization are grouped together in a grade

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Using Pay Ranges

Range MidpointMinimum Maximum

$50,300 $74,400$62,400

Range Midpoint:Range Minimum: Range Maximum:

• Employees new to the role• Employees with lower

performance or proficiency

• Employees proficient in their role • Employees with good performance• Aligns with the market

• Employees with high performance• Employees with demonstrated

high proficiency and experience

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Comp Plan Benefits

Business Alignment: • Business goals guide compensation strategy decisions

Internal/External Equity: • Clarifies market and internal value for each job • Provides a way to manage EE pay effectively

Communication: • Creates a tool for managers to talk with EEs about development• Provides room to reward EEs based on performance, experience, etc.

Confidence: • Quantifies compensation costs and helps with budgeting• Gives all EEs confidence that pay decisions are fact-based

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Rita Patterson, CCPManager, Customer Education

https://www.linkedin.com/in/rita-patterson-ccp-5b039812

Mykkah Herner, MA, CCPModern Comp Evangelist

https://www.linkedin.com/in/mykkahherner

First thing1

2 Second thing

3 Third thing

Questions?

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• Are your jobs benchmarked?

• Is your labor market set up to reflect your talent competitors?

• Do you have formal pay ranges?

• What is your next step to get this moving forward?