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How do we put a price on what our employees do at work?

This is a question that the executive team at HPM Building Supply, a 95-year veteran of the building material industry in Hawaii, was asking itself in 2013. Economic recovery had resulted in sales growth and associated hiring, but competition was also fierce for an already limited labor pool. Multiple locations across the state, ranging from rural to metropolitan, added a level of complexity to compensation as part of a recruitment and retention strategy for HPM’s 300 employees.

HPM did not get where it is today – 100% employee-owned, fifth-generation family run, and a leader in the Lumber/Building Material (LBM) industry in Hawaii – by treating either its customers or employees as numbers on a spreadsheet. And while Hawaii may be an isolated location, HPM does not operate in isolation. So the HR team, headed up by Jeracah Lawless, Director of HR, decided to undertake a project to make sure we were doing right by our employees.  We partnered with PayScale, a cloud-based compensation software, to help HPM first devise a compensation philosophy and then access current market data to assign fair and objective pay to HPM’s jobs.

In September, Jeracah was invited to speak at PayScale’s Compference 2016 in Seattle, Washington, to a group of HR and compensation professionals. On the process of implementing a pay structure at HPM, she says, “We are using technology to comp smarter not harder.  With market data and the easy to use interface of the PayScale platform, we have been able to move beyond explaining complicated spreadsheets to having meaningful conversations with managers on what the right pay is for each of their team members.” Educating managers to be able to talk about pay is key. Data shows that the majority of people, regardless of the position of their pay in their market, believe they are underpaid. Having real-time access to market data has, along with HPM’s compensation philosophy, allowed for a system that helps managers have truthful, transparent pay conversations with employees.

“Our core values are integrity, respect and continuous improvement in pursuit of excellence,” says Jeracah. “At HPM, compensation isn’t isolated in HR – we listen to manager and employee feedback and use it to continuously improve our pay structure. We have to be able to have a pay structure with integrity. People talk about pay at work. It’s just a fact of life. We need to be able to educate our people about pay, to feel confident we are paying people fairly, and to show them the true value of their entire compensation package.  Payscale helps us do that.”

Gretchen Magnuson
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Dr. Payal Nikumbh-Jawale Recent comment authors
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Dr. Payal Nikumbh-Jawale
Dr. Payal Nikumbh-Jawale

This is a much needed exercise and planning that every organisation should pay importance to. Compensation as a matter of fact should be skills,experience and industry based and not based on adhoc reasoning or with fear of losing the employee. A global and new age business is the one who treats compensation and benefits as an integral part of the HR Ecosystem and does not shadow box this problem of disparities in compensations across the board ….

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