I've been worrying about salary ranges lately. It's not an OCD fixation but it may be an existential crisis. I keep thinking the tremors from the recession may have damaged our Compensation foundation, but no one has taken the flashlight and gotten under the house to find out.
Here's what I mean. Salary ranges communicate the deal we offer employees.
- Opportunity to earn more as we perform and learn.
- Recognition for skill development and job mastery.
- Faster earnings growth for better performance.
- Increased status for having earned repeated high performance awards.
Salary ranges are the finish work of our compensation structure. But can we claim they still perform the way they have in the past? I think that salary ranges in most companies could benefit from an inspection -- and that employees may have cottoned on to the problems already.
Below is the industry-wide model explaining what position-in-range means. We've all agreed that the employees' current pay, in relation to the market, should represent their level of mastery of their job through their position-in-range.
In the past most ranges delivered movement to the midpoint in three to five years, as performance warranted.
Here we are in January 2013. No matter how well behaved you and your managers have been about hiring into the first third -- or not -- most employees still expect to be paid at a point in the range that represents their demonstrated level of ability.
But given five years of lean merit budgets and limited distribution of increases, can we claim salary ranges still work this way? And if they don't, what does position-in-range mean in 2013?
Can I still be hired in the first third of the range and expect my increases to land me in the second third of the range once I've developed a full skill set? Or will I have to wait in a part of the range that undervalues my professional growth and contribution over time? If I have to wait, how long will it go on? And how should I feel about recognition for my level of contribution?
I think we need to know the answers to these questions, and employees deserve our guidance if the ground has shifted under their feet. What if your fundamental compensation philosophy really has changed without you knowing it? To figure it out, organize your data and do the analysis.You won't know for sure until you replace the batteries in your flashlight, sort through your data and check out your foundation.
Margaret O'Hanlon is founder and Principal of re:Think Consulting. She'll join Ann Bares and Dan Walter of the Compensation Cafe to speak the unspoken -- Everything You Do (in Compensation) Is Communication -- in an upcoming book. Margaret brings deep expertise in compensation, career development and communications to the dialog at the Café. Before founding re:Think Consulting, she was a Principal with Towers Watson. Margaret is Deputy Director of the International Association of Business Communicators (IABC) Pacific Plains Region. She earned her M.S. and Ed.S. in Instructional Technology at Indiana University, Bloomington. Creative writing is one of her outside passions, along with Masters Swimming.