Compensation Strategies: Finding the right balance between rewarding individuals and spending wisely

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Compensation and Your Battle for Talent

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Assumptions - Technology Industry

•  People biggest asset

•  People cost $$$

•  Top talent in demand

•  Change affects whole team

People Knowledge & Skills Success Products &

Services

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Is Pay Important?

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Absolutely … If you get it wrong!

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Are you sure……

1.  ……that your pay decisions are:   Fair internally?   Competitive externally?   Not discriminatory?

2.  ….. that you are managing your compensation investment well?

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Goal for Today

Get prepared to answer YES!

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“Not Just the Money”

Sick leave?

Vacation?

Incentives?

Stock Options?

Sales commissions?

Mileage?

Pension/RRSP?

Maternity leave?

Disability?

Personal leave?

Relocation?

On-Call?

Overtime?

Referral Bonus?

Signing Bonus?

Shift premiums?

New Grads?

Students?

Work/life balance?

Health/Wellness?

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Salary is the Foundation

 For most candidates and staff:  Perceived sense of personal value  Perceived sense of fairness affects trust  Drives commitment and productivity

 For some people (ie. Sales)  Drives short-term behaviour  Drives immediate activities  Drives or detracts from results

 Drives value of other benefits

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Potential Exposures

 Underpaying:  Difficult to hire and keep good

people  Increased costs of turnover and

unhappy staff  Overpaying:

 Cost/value?  Can take years to correct  Budget restricts headcount

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The Ad-hoc Intuitive Approach

 Difficult to recover  Mismanaged compensation

investment  Loss of employee trust

Growth More

Decision Makers

CHAOS Inconsistency

Might work for now….

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Signs You May Have a Problem

 Good people leaving  Absenteeism  New people “not working out”  Good people won’t join  Missed deadlines  Lots of knowledge gaps  Employee problems take up too much of

your time

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Ask Yourself…

  Are you paying enough? Too much?

  Are recruiting and training costs too high?

  Are people leaving or complaining? Do they trust management pay decisions?

  Can you defend changes to your board of Directors?

  When and how should you use incentive plans?

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Developing a Philosophy

 Focus on overall compensation package:  Who do you compete with for skills (not

product)?  Lead? Match? Lag?  What’s more important - Internal or external

equity?  What compensation mix?

 Communicate!

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Philosophy should include…

 Big Picture  Nondiscriminatory/competitive,  Consider financial condition,  Consider supply and demand  Consider individual performance.

 Specific  (What)median salaries  (Where) local marketplace,  (How) industry surveys and labour statistics.

 Protection  Company reserves the right…..

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Check out the competition….

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Assessing Competitiveness

 3 key ingredients  Follow your philosophy  Benchmark the relevant market  Differentiate “jobs” and “people”

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Competitive Context

 Big Picture  Compensation Philosophy  Business Reputation and Financial

Situation  Other factors (benefits/perks/flexibility)

 Details  Define the jobs

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…How do you do this?

Assessing Your Position…

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Assess your Current Position

 Sources of information:  Reputable, relevant surveys  Industry articles, websites  Association networks, social media  Recruitment experience & feedback  Attrition rates & feedback  Employees who express concerns

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Selecting Surveys

 Job matching  Integrity of data  Methodology  Relevance of data  Affordability

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Benchmarking

 Jobs  Match your jobs to the market data that fits

your company’s philosophy  Identify & research trends, variances  Establish competitive salary ranges based

on all inputs

 Employees  Review how employees in each job are

currently paid against salary ranges  Identify exposures

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Make a Plan

 How to determine "the right price" for an individual  Range reflects market data for the job and

company strategy  Positioning employees within the range

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Reviewing Compensation

 Moving target – be pro-active:  Upon Hire  At least annually  Upon Promotion/transfer

 Consider:  Internal equity  Competitive position

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Build Consistency into Growth

 Develop a philosophy  Benchmark objectively  Create ranges, assess performance  Use decision-making guidelines  Review situation regularly

 Rollup reviews  Peer Reviews  Management Coaching/training

 Communicate!

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Improvements You’ll See

 Improved performance because….  Hired the right people at the right price!  Reduced absenteeism = Increased

productivity Improved retention  More time for running the business

 Remember…  Success depends upon overall Employee

Engagement

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Key Take Aways…….

 Compensation is a moving target – know where you stand

 Take the time to do it right the first time  Make a plan  Consider the entire package

  Invest a little to save a lot

 Communicate – transparency creates trust!

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Questions?

Lynn Cameron, Managing Partner lynn@tech-edge.ca, 613.794.7166 Helen Robert, Managing Partner

Helen@tech-edge.ca, 613.798.3505

Toll Free: 1-877-848-0499