Author - Sierra Fishman

Compensation Strategy. What is it & Why You Need It.

Compensation strategies help increase the motivation and retention of your employees. Compensation shows your employees and interested candidates that you value them. This may also be seen as an indication of how fairly they will be treated as an employee. 

Having an established compensation strategy allows you to predict costs for hiring new employees and providing salary increases along the way. It also helps avoid situations where pay decisions may be inconsistently applied. 

Compensation strategies can be used to: 

  • Hire and retain employees 
  • Increase your employees’ level of satisfaction with the job 
  • Reward and inspire peak performance 
  • Achieve internal as well as external equity 
  • Lessen turnover and boost company loyalty 

Keep your employee compensation strategy updated with current market data so you can stay competitive in the candidate market. A strong employee compensation offer shows prospective employees how enthusiastic you are about having them on your team, and helps you land. In turn, existing employees should benefit from the same salary range increase to ensure that you can retain them by providing fair compensation.  

Easy Steps to Create a Strategic Compensation Strategy: 

  1. Understand what matters most.Find out what benefits matter most to your staff. By asking for input, you can create an informed strategic compensation approach that fits with your talent management strategy and will satisfy most employees.
  2. Benchmark Against Competitors.To remain competitive in your industry and the locations where you conduct operations, take time to benchmark what your competitors offer their employees. You may not be able to match them item for item, but with this information, you will be able to address gaps during interviews. Get creative about other, lower-cost options you can include in your total compensation package.
  3. Allocate Budget.Take a realistic look at your company’s operational budgets. Identify the total amount you can spend on any one employee. Factor in all costs, including taxes, payroll costs, existing benefits, compensation, and bonuses. Include plans for performance or merit increases that will take place as part of annual reviews.
  4. Plan for Rewards.As you make your budget, consider how you can use total compensation to engage employees, increase performance, and entice them to stay.
  5. Determine Pay Grades.Having this framework allows an organization to define the amount of pay available based on the job’s requirements and level. Pay grades take the guesswork out of salaries and provide employees with a range of what they can expect to make.
  6. Communicate About Total Compensation.The gap between expectations and reality is one of the largest issues between employers and employees that creates dissatisfaction. When you clearly communicate your total compensation strategy, employees know what to expect and appreciate all the benefits you are providing, in addition to the pay.

Appropriately compensated employees feel that they add value to the company. When employees feel appreciated, they feel good about coming in to work. This raises the morale of all employees and people are encouraged to come to work with a good performance. 

Talent is your top competitive advantage, and compensation is how you show employees how valuable they are to your organization. 

Happy Planning! 

2022 Midyear Pay Increases: The Right and Wrong Way  

It is no secret that higher costs of living and rising inflation have affected the market. Just take your vehicle to the nearest gas station and squeal as you see the numbers spin. The U.S. inflation rate reached 8.6% in May, becoming a 40-year-high. Add in a dash of market competitiveness and retention concerns and the pressure for companies to keep up with rising prices is on. 

In a recent article, SHRM noted a survey of 337 U.S. companies by pay consultancy Pearl Myer finding that about one-third of organizations are considering or planning to provide mid-year salary increases in 2022: 

23 percent of companies are planning midyear salary adjustments in addition to their annually scheduled pay increases.  An additional 8 percent are considering this action.  "It is very unusual to see so many companies planning a second round of adjustments," said Rebecca Toman, vice president of the survey business unit at Pearl Meyer, based near Boston. "Normally, budgets are set well in advance for an annual rise. This is further indication that a shift is occurring—at least for now—when it comes to setting pay for the established workforce." 

Why are raises occurring?  

The most prevalent factors for wage increase in 2022 are retention concerns, higher cost of living and rising inflation, internal equity and salary compression, high turnover rates, shortage of labor and market competitiveness. This perfect storm resulted in organizations raising salaries and benefits to retain and attract talent within their industries.  

At The Richmond Group USA, we believe there is a right and wrong way to give a raise. When thinking about giving a raise, ask yourself:  

How do you decide who to give a raise to and how much? Do you have a compensation strategy plan for your employees? Are you reactively or proactively giving this raise? Are you adjusting salaries based on annual merit raises and COLA factors? Are you structuring your pay system and processes?  

Raises are customary, though we believe having a thorough discussion and tying a raise to agreed-upon goals is more rational and less arbitrary. Don’t put yourself in a compensation mess just to compete with the market. This will negatively affect you and your employees. Ensure you have a strategy and plan to give deserved raises to employees systematically. 

Disconnection throughout your organization creates conflicts, if you are paying your employees what they deserve and giving raises routinely based on performance – you won’t find your company needing to compete.  

We base our practices on being proactive, not reactive – resulting in a greater overall impact. 

Have a plan so that the reasons you adjust salaries are creating impact and value among your employees and business. Use pay increases to set targets, goals and objectives, don’t just check off a box and add a number. Create a roadmap together. 

Are You Aware You are Making Assumptions?

Do you ever stop yourself and ask, “How do I know? or do you jump to conclusions? 

Assuming really can make an ass out of u and me. Assuming can also be the reason you do not consider an opportunity or idea.  

There are two sets of assumptions when working with another person: yours and theirs.  

Our team discussed how important it is to engage and take a step back during conversations to examine any assumptions. There are many ways to be aware of others making assumptions during conversations, asking assumption discovery questions like, “My sense is that you may not be all that interested in this opportunity based upon…”  “Why do you think or feel this way?”  “On what basis do you believe … and how do you know this is the case?”  

At The Richmond Group USA, we practice having the confidence to challenge assumptions that may hinder motivations and desires to pursue, perceive and obtain great opportunities. 

In the book Unleashing the Power of Unconditional Respect: Transforming Law Enforcement and Police Training, authors Jack Colwell and Chip Huth write: 

We automatically tend to assume the following: 

The way I see something is the way it is. 

The way I feel about someone is the way he or she is. 

The way I remember an event is the way it was. 

If you disagree with me, you are stupid, a liar, or psychotic (disconnected from reality). 

The irony is that this assumptive thought base (all problems and misunderstandings are external to me) IS the apex of self-imposed ignorance, deception, and even psychosis. Probably the only reason it is not considered pathological is that it is endemic. 

Why do we naturally make assumptions? Assumptions are an efficient way to process the world. Our brain saves energy by making assumptions. Analyzing each situation without any bias or assumptions takes a lot of energy, attention and self-awareness. Our brains look to our experiences to find patterns in how the world works (Or how we have perceived the world in former times). When we encounter new situations, we apply these patterns or assumptions to the new environment.

Next time (because there will absolutely be a next time) you find yourself assuming something, stop and ask yourself:

“What do I really know for sure and what don’t I know?”  “What assumptions am I making that have led to my decision?”

The more you evolve your thinking and become conscious of your assumptive thinking the better informed you will be in all areas of your life.

Becoming aware of your assumptions is the start of limitless opportunities.

Are You in Control of Your Day?

Have you heard the saying if you want something done give it to someone that is busy”? Well, its true success is connected to action, however, it is not necessarily connected to staying busy. A better version of the saying is if you want something done give it to someone that is productive.”

Are the most successful people in the world really the busiest? Or are they the most productive and least distracted?  

Being busy and being productive can often be confused with one another. If you are busy, you may have a lot on your plate, but this doesn't necessarily mean you are productive or using your time efficiently. Being productive means being able to complete a task or get something done. You do not need to be busy to be productive. 

Being busy has to do with how you spend your time, whereas productivity has more to do with what you accomplish. 

BUSY

Busy

[Busy is defined as having a great deal to do. ] 

PRODUCTIVE

Productive

[Productive is defined as achieving or producing a significant amount or result. ]  

So, do you just have a great deal to do or are you actually producing a significant amount of results?

A lot of people are great at “looking and feeling busy,” but not so great at actually being productive. Having a busy mindset can feel disorganized and fast-paced, resulting in you working harder, not smarter. Having a productive mindset is more action-oriented and result-driven, keeping you organized, steady-paced and working smarter, not harder.  

Those with higher emotional intelligence (EQ) are typically less busy and more productive. Busyness can lead you to overextend yourself with varied obligations, appointments, commitments, and responsibilities leading to less success overall. Being productive versus being busy will be the reason you hit your goals. 

How do you become more productive and less busy? The answer is to be in control of your focus. Naturally, we will have many distractions and attention grabbers throughout the day. The most productive people can filter through the noise adjusting their attention to result-driven actions.  

The Organized Mind: Thinking Straight in the Age of Information Overload, a book by Daniel Levitin, has an interesting section on cognitive overload and how it correlates to productivity. Levitin points out an interesting fact on how highly successful people (HSP) differ from the rest of us when it comes to attentional filters. 

What is an “attentional filter?”

Simply put, our attention is limited. To pay attention, the brain uses a filtering system known as the attentional filter.  

This passage from Levitin’s Book explains it well:  

In order to understand one person speaking to us, we need to process 60 bits of information per second. With a processing limit of 120 bits per second, this means you can barely understand two people talking to you at the same time. Under most circumstances, you will not be able to understand three people talking at the same time. …  With such attentional restrictions, it’s clear why many of us feel overwhelmed by managing some of the most basic aspects of life. Part of the reason is that our brains evolved to help us deal with life during the hunter-gatherer phase of human history, a time when we might encounter no more than a thousand people across the entire span of our lifetime. Walking around midtown Manhattan, you’ll pass that number of people in half an hour.  Attention is the most essential mental resource for any organism. It determines which aspects of the environment we deal with, and most of the time, various automatic, subconscious processes make the correct choice about what gets passed through to our conscious awareness. For this to happen, millions of neurons are constantly monitoring the environment to select the most important things for us to focus on. These neurons are collectively the attentional filter. They work largely in the background, outside of our conscious awareness. This is why most of the perceptual detritus of our daily lives doesn’t register, or why, when you’ve been driving on the freeway for several hours at a stretch, you don’t remember much of the scenery that has whizzed by: Your attentional system “protects” you from registering it because it isn’t deemed important. This unconscious filter follows certain principles about what it will let through to your conscious awareness. 

Not giving your full attention is a sacrifice made on the quality of your thoughts and your work. To be more productive and less busy learn to be more present and in the zone with anything you're trying to finish or accomplish.  Practice focusing on one thing at a time and fully completing one task before jumping to the next. 

Use your attentional filter to your advantage. Filter out the less important things and give 100% of your focus to tasks that drive value and productivity. Being in control of your day will not only help you obtain your goals but will also increase your confidence, decisiveness, and self-esteem by knowing you run your life and your life does not run you.

The work you were meant to do… (Or perhaps debunking that statement entirely)

Have you ever felt like you do not know your purpose professionally? Perhaps you are a professional with a broad skill set that could work within a multitude of jobs or industries. Having several areas where your skills are valued is a wonderful thing, however, it can cause a sense of overwhelm or stress when it comes to finding “what you were meant to do.”   Great news, there is no need to worry, your career is not linear. A career path is often the opposite, and most people don’t know what they like until they try it. In fact, no one really knows this answer until they have experienced it themselves.  When it comes to finding your purpose within a career, there is no right or wrong path as it will likely change course. You will change, your skills will change and what you want to do for a living will most likely change. For that reason, being open to exploring new opportunities may be the best tip to achieving what you “were meant to do.”   According to a recent survey done by The Bureau of Labor Statistics, 53% of college-degreed professionals use half or less of their education, and 15% use none of their education in their current job. You may be gawking at these statistics thinking, “How is this possible?” The answer is experience. Of course, education and a sharp skill set are needed to be a top-notch employee, yet work experience is always at the top of a job description. Knowing this should create an eagerness to be open to new opportunities and explore different areas.  Tips to find “the work you were meant to do.” 
  • Don’t be hesitant or reluctant to take on new opportunities. Rather, be curious. 
  • Explore the unknown, you may find that it is much better suited to you.  
  • If you are unsure, ask more questions.  
  • Don’t turn down an opportunity because it doesn’t fit in the box you may have created around your career. Expand the box, destroy the box!
  • Act as if your skill sets are unlimited and see what happens.  
Around 70% of all working-age people are actively looking for a job change.   Don’t limit yourself and make assumptions about opportunities that could potentially have a significant impact on your life. Explore all the opportunities presented to you, accepting an interview could be the most valuable 60 mins of your life.   The world is your oyster, go out and experience all it has to offer. 

Improve your Employer Brand

Your employer brand impacts a candidate's interest in working for your organization and you. Organizations that understand this and take action position themselves as an “employer of choice.” In this week's tip, we provide three ways you can positively #impact your employer brand.
  1. Treat candidates like customers
  2. Respond to both negative and positive comments on social media 
  3. Use anonymous employee satisfaction surveys  to learn why people work for your company & use that in your social media content. 
See what others are saying about this. Check out our LinkedIn Post!