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Handle Questions About Your Comp Decisions

Are You Ready to Explain Each Employee’s Pay? How well can you explain your compensation plan to your employees? What if you were asked detailed questions by a valued employee about their pay? Would you be ready to respond?

Are You Ready to Explain Each Employee’s Pay?

How well can you explain your compensation plan to your employees? What if you were asked detailed questions by a valued employee about their pay? Would you be ready to respond?

Imagine questions like:

“Why do I make $52,000 a year and not $55,000?”
“What can I do to get up to $60,000?”
“What is the upper limit of the salary range for my position? How did you come up with that number? It sounds low to me.”

If you have been questioned like this about your company’s salary practices in the past, how did it go? If not, would you be ready to respond to each question with full confidence?

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Depending on if you use trusted data sources or are picking numbers out of the air or basing them on what the “guy across town” is paying, you may end up having a tough time convincing that employee that their pay makes sense. From rewarding hard work to avoiding internal pay inequity, missing calculations and mushy answers lead to long-term trouble.

Compensation Plan Health Check

1. When was the last time you completed salary benchmarking? If your answer comes up any longer than one year ago, it would be wise to consider updating your data. The markets have been changing rapidly, between our dramatic recession and now small improvements. Further reading: Employee Compensation Plan Design

2. Do your executive leaders value compensation planning? If you sense that they don’t, you are not alone. We hear complaints from people at all levels of compensation planning that their company leadership pays minimal attention towards their biggest cost: labor. Further reading: Align Your Compensation Strategy with Business Goals

3. How strong is your own compensation planning knowledge? Compa ratios, medians, midpoints and geographic differentials are all topics you need to know. PayScale’s products and team can help educate you, plus we have plenty of resources on this blog, in our whitepapers and through out webinars to provide you with a solid basic education in compensation planning. Further reading: How to Play a Key Role in Setting Compensation Budgets

Keep at It

If you dread specific questions about your compensation strategy, it’s probably time for you to spend more time on it. Having a plan that you can support with data and solid reasoning will benefit you and your entire company.


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