4 Ways to Improve Compensation Satisfaction in Your Organization
Are there grumblings at your institution about pay? Water-cooler talk lamenting a lack of raises, perceived inequities or other compensation-related issues? If yours is like the majority of organizations, the answer is probably “yes.” But how much of that chatter is based on fact and how much is born from speculation?
Robin Kegerise and Jim Kochanski from Sibson Consulting posit that when organizations take the “don’t ask, don’t tell” approach to compensation talk, they run the risk of perpetuating unease and discontent in their employees. On the flip side, organizations that take deliberate steps to address concerns and perceptions around pay practices can quash the rumor churn and improve compensation satisfaction among employees. At the CUPA-HR Southern Region conference earlier this year, Kegerise and Kochanski offered some tips on how to “talk” compensation on campus. Here’s what they had to say:
1) Listen to Perceptions
Employees’ perceptions about compensation in an organization can be very different from reality. How individuals regard, interpret or understand compensation is often based upon individual sources of information (or misinformation), personal biases, rumors and just plain lack of knowledge — and silence from leaders can perpetuate misconceptions and add to confusion around compensation and rewards.
So why do so many organizations take the ostrich approach and bury their head in the sand instead of acknowledging and addressing these perceptions (whether accurate or not)? The only way to increase employees’ understanding of pay practices is to ask, listen and be prepared to explain. Focus groups, exit interviews, surveys and even simply keeping an ear to the ground are great ways to learn how employees view compensation practices in your organization.
2) Test and Adapt for Patterns
Simply put, compensation patterns are trends in data which highlight a potential strength/issue. There are two categories of data assessments: market comparisons and internal assessments. Market comparisons measure compensation competitiveness (on an individual level, by job, by division and by salary level), as well as aggregate spend vs. market — just make sure to define desired market positioning and comparison markets prior to analysis.
Internal assessments can provide data on dispersion and inversion, performance and merit differentiation, pay compression and equity regression. Internal data quality is key to these analyses. You may need to drill down to find the rationale behind an apparent inequity.
3) Create Alliances With Key Players
Who are your key players when it comes to compensation information, and how do you leverage them? At most organizations, compensation information comes mainly from two sources: human resources (typically a key source for reliable information and sound discussion) and employees (who share “water cooler” information which, as mentioned above, tends to perpetuate misconceptions).
Oftentimes, managers steer clear of “pay talk” with their employees (because their leaders don’t discuss compensation with them; because they don’t fully understand the market data and thus don’t feel knowledgeable enough to talk about it; because they don’t want to open the door for employees to start asking for raises when there’s no money in the budget for salary increases — the reasons are many).
However, if an organization is looking to increase satisfaction around pay, HR can’t be the only group talking about it. The Mayo Clinic found that it was able to more than quadruple employee satisfaction with pay, as measured on an employee survey, by training and requiring managers to talk to employees accurately about pay.
An organization must leverage its leaders and its managers to ensure compensation understanding, and as experts in the compensation arena, HR should take the lead in training managers on how to talk with their staff about pay and rewards. Such training should include:
- The expectation that managers communicate about rewards;
- How to set accurate expectations around performance;
- How to set accurate expectations around rewards;
- An overview of total rewards; and
- How to have a dialogue without just saying what employees want to hear.
4) Share Compensation Data
Strong pay understanding is driven by the messenger (leader/manager), the degree of openness in sharing information and consistency in the level/type of information shared. When robust data is shared openly and regularly, it helps managers facilitate decision making; enables HR and managers to work together to identify problems and find solutions; builds trust; and allows managers to explain the rationale behind their decisions and to “own” them.
Looking for reliable higher ed-specific compensation data to inform your discussions on campus? Results are available for CUPA-HR’s 2014-15 salary surveys (data collection for the next round of surveys opens in October, so stay tuned for information on how you can participate). There are also several compensation-related toolkits in CUPA-HR’s Knowledge Center (see the toolkits listed under “Classification and Compensation”).