According to a recent Payscale survey, the primary goal of compensation for most companies in 2011 is retaining top talent. More than 60% of survey respondents said this was the most important compensation objective.
Pay is usually not the primary reason people first start looking for a new job. But having a foundation of externally competitive and internally equitable pay is the cornerstone of a comprehensive rewards package that will keep your top talent happy and productive.
The key to external competitiveness and internal equity? Structure. What kinds of structures are companies using?
Data courtesy of Payscale Compensation Practices Survey
The most commonly used structure is a salary range, where the ranges are either grade-based or job-based. But I'm most interested in the "other" category- Payscale describes it as neither salary range nor broad banding. Anywhere from 8% to 24% of organizations are using some "other" structure, depending on industry and company size. "Other" could include hybrid structures, proprietary structures, or no structures. We just don't have enough information to know for sure.
From my perspective, the fact that most companies are using salary ranges means they're on the right track for external competitiveness and internal equity. While problems can still occur if the structure is designed or executed sloppily, having a salary-range structure gives the best chance of being competitive and equitable.
Once the cornerstone of base pay is in place, it's time to think about incentive pay. In my next post, we'll talk about the kinds of incentive pay companies are using to keep their top talent happy and productive.
Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. For more than a decade, she's been working with businesses and government agencies providing expert EEO analysis. Stephanie has published several articles on examining compensation systems with respect to internal equity, and has appeared on NPR to discuss the gender wage gap. She is the host of The Proactive Employer, and is the founder of Thomas Econometrics. Follow her on Twitter at ProactiveStats.
Salary ranges, what a novel concept. Guess I fit into that "other" category.
Posted by: J | 02/17/2011 at 06:51 AM