Mgmt 383 Chapter 13 Variable Pay & Executive Compensation Spring 2009.
Webinar-Exploring Variable Pay
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Transcript of Webinar-Exploring Variable Pay
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Exploring Variable PayFair isn’t equal
Mykkah Herner, MA, CCPModern Compensation Evangelist
Paige Hanley, CCPManager, Customer Operations
A copy of the presentation and recertification credit will be sent out within a couple of business days
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15,000 Positions 3,500 Customers 11 Countries
250 Compensable Factors54 Million Salary Profiles
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www.payscale.com
Paige Hanley, CCPManager, Customer Operations
https://www.linkedin.com/in/paige-hanley-ccp-26599716
Mykkah Herner, MA, CCPModern Comp Evangelist
https://www.linkedin.com/in/mykkahherner
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www.payscale.com
Protections for equal pay
Fair pay isn’t equal
Linking Fair Pay and Variable Pay• Variable pay basics• Creative variable pay
Where to start
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www.payscale.com
Less than 100 Employees100 - 1,000 EmployeesMore than 1,000 Employees
Nearly 7600 Respondents
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www.payscale.com
73% of employers consider employees fairly paid
36% of employees feel they are paid fairly
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www.payscale.com
Protections for Equal Pay
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Legal Disclaimer: this is intended to be informational, not to serve as legal advice. If you think you have a potential pay discrimination issue, seek out a lawyer.
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www.payscale.com
Definition what counts
as a job?
Secrecynon-retaliation
for talking about pay
Burden of Proof 100% of difference demonstrated from
1 of 4 reasons
California Fair Pay ActWHAT’S THE BIG DEAL?
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As California Goes…
…so goes the nation.
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48/50 States have some version of a pay equity law on the books
x x
9/10 Provinces* have some version of a pay equity law on the books
x
xxx
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www.payscale.com
Other legal protections
Federal, State, and Local laws
Minimum WageFair Labor Standards Act
Other laws
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Fair isn’t equal
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www.payscale.com
Fair doesn’t
necessarily mean
equalEqualFair
https://hbr.org/2016/03/when-unequal-pay-is-actually-fair
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There are some
really good reasons
to differentiate pay
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Appropriate differentiation byPerformance
ResultsExperience
SkillsEducation
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Linking Fair and Variable Pay
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www.payscale.com
Prevalence of bonuses has steadily increased over the past 4 years
2013 2014 2015 Current50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
68.5% 69.3%73.4% 74.3%
Do You Give Bonuses?
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www.payscale.com
Is your bonus budget bigger in 2016 than 2015?
41% of all companies, 50% of top performing companies
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Variable Pay Basics
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Linking Pay to Performance
Culture and perks that reward high performers
Higher increases for top performers
Results-based variable pay
Performance-based rewards & recognition
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The variable pay umbrella
Incentive Project Bonus Retention Bonus Signing Bonus Perks
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So you need to put together a variable pay plan
Hint: keep it simple
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www.payscale.com
Mix of pay
What ratio of base to variable?
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Aligned goals
Company goalsTeam goals
Individual goals
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www.payscale.com
Incentive Plan Incentive Level Mix of Base to Variable
Mix of Company to Individual
Overall, it may look like this…
Bonus Level Possible Org Level(s) Bonus Payout as % of Base
Bonus Percentage(Individual)
Bonus Percentage
(Organization)
Level 1 Individual Contributor 5% 75% 25%
Level 2 Lead, Supervisor 10% 60% 40%
Level 3 Manager 15% 40% 60%
Level 4 Director 20% 25% 75%
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www.payscale.com
Consider budget
org culturejob level
job functioncompany life cycle
…
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Overall pay structure may differ based on pay goals
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www.payscale.com
Mix of pay by life cycle
High Rewards & Recognition
High Rewards & Recognition
Moderate Rewards &
Recognition
Moderate Rewards &
Recognition
Moderate Variable High Variable Moderate
Variable Low Variable
Low Base Low Base High Base Moderate Base
High Equity Moderate Equity
Moderate Equity Low Equity
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www.payscale.com
What other kinds of variable pay should we consider?
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www.payscale.com
What type of bonus?
15.8% 18.1%
61.8%
25.7%40.0%
14.4%
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www.payscale.com
Who gets bonuses?69.0% 75.2% 69.3%
47.0%
12.6%
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www.payscale.com
How frequently?
Monthly Quarterly Biannual Annual Ad-hoc4.9%
12.6%6.4%
66.6%
9.4%
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Get CreativePasses to sporting eventsCatered lunches for winning teamsDays off after big deadlinesChoice of work assignmentDevelopment opportunities Lunch with the CEORemote work
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www.payscale.com
Need help getting started?
• If you don’t already have one, find an affordable legal resource in your state
• Get to know the makeup of your workforce
• Survey employees, formally or informally, to identify what motivates them
• What is your current mix of pay? Do you offer something in all four tiers?
• Evaluate your readiness for variable pay – what training is necessary?
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PayScale Delivers Where Other Compensation Providers Fall Short
PayScale leads the world in compensation knowledge with the freshest and most detailed data from over 54 million salary profiles. More than 3500 organizations use PayScale’s software and intelligence to get the greatest return on their talent. Smart businesses use PayScale Insight to recruit, retain and motivate their people.
Visit our blog: www.payscale.com/compensation-todayJoin our Group on LinkedIn: Compensation Today: HR Best Practices
Paige Hanley, CCPManager, Customer Operations
Mykkah Herner, MA, CCPModern Compensation Evangelist
www.payscale.com