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11/24/2015

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Jim,

Following the logic regarding Maximums, would you then put more emphasis on measures like the compa-ratio (Market Value) as the reference point rather than the "range penetration" measure (Max as the reference point)?

Have you sometimes advised clients to use the Minimum as the reference point for pay analysis?

Have a fulfilling Thanksgiving!

Jack

Yes and yes, Jack. One fortune fifty multinational global comglomerate used Job Values (the central blended MRP internal equity norm by location and industry rounded to the nearest $100 or $500) with minimal attention to parameters beyond occupation-specific guidelines. Each job could have a unique JV with ranges customized to class needs.

Another national retail chain used the Entry Rate as the focal pay point. All jobs started at no less than 100% C/R and went upwards from there. A lowly clerk might get "capped" at a 120% C/R while managers might rise to 150% of the min hiring rate before an additional executive level had to approve a higher increase. It was loved by supervisors and great for morale, with no one paid "below the target rate."

Thanks for reminding me of those practical applications, Jack. I honestly wasn't thinking of them when I wrote this yesterday and thus owe you a beer for the unsolicited set-up!

The idea of a 100% CR being a minimum is really interesting, and not something I've ever come across before.

Was it a centerpiece of the pay communication program to employees?

Yes, you bet'cha, Tony! Was quite nice, being able to assure every new hire they got at least 100% of the Pay Program Target Rate while all veterans had even higher Compa-Ratios. Easy to confirm, too.

Their job evaluation plan therefore also embodied an annually-updated weighting for current year dollars required for the Replacement Time factor scale. You can imagine how that worked to either raise or lower the job's Entry Rate per normal recruitment fulfillment time requirements. Eliminated the need to re-evaluate all jobs simply due to a present occupational-specific candidate shortage or surplus.

Nice - I like the idea of both not being tied to Max of the range (red circles) and I love the idea of a start out pay level of 100%. That is one idea I will store away for part of a future review / reward change project sometime. Thanks for that Jim. :-)

The Min is indeed critical - I presume too that you might also have equal concern around the 'shape' of comp ranges. That is the degree to which they overlap, the degree to which they can support (or at least not be a barrier to) left and right moves, rather than just up and down? While having a "range" (80 to ??? around Mkt. Median for example) helps with cost containment and to manage expectation, the OD / Talent nirvana, once the relationship to market is established, seems to be the degree of overlap between roles that may have different market MPs. So the shape of the 'range of ranges' if you will. It seems to me we can / could / should design ranges that also suggest career or role development and enrichment, perhaps more than just market relativity. In my more recent experience I am not sure we get the reward effort right around this aspect - perhaps in the days of competency based or even skills based pay we started to play here.....but today I hear little on this aspect of pay design.

Quite right, David, in your observations about the lack of depth (pun intended) in most grade range design constructs. Subjectively imposed symmetrical limit assumptions create artificial barriers to sensible occupational career pay trajectory mechanisms. That's one of my favorite and most-repeated topics.

Voices cry out in the wilderness for decades before their concepts are "suddenly discovered" when some PR-conscious employer flaunts their success with a "new" approach that has vastly improved the productivity and engagement of their human talent. Makes some sense, unfortunately, because by the time everyone is doing it, the competitive advantage of keeping your "innovation" secret has disappeared and it has become a standardized traditional practice.

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