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Kenexa top 10 compensation mistakes made by small businesses

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This document discusses the top 10 compensation mistakes made by small businesses. These include not communicating about pay decisions, adjusting pay structures without looking at market pay levels for each job, creating internal inequities, not using proper compensation tools and surveys, focusing on product rather than job responsibilities, having a narrow view of competition, assuming a 3% merit budget is too small, lacking manager training, and poor communication about the compensation system. The tips provided recommend improving communication, understanding market pay for specific jobs, fixing inequities, using appropriate compensation tools and data, focusing on employee contributions, knowing the relevant market, rewarding behaviors creatively, and training managers well.

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TOP 10 COMPENSATION MISTAKES MADE BY SMALL BUSINESSES Lena Bottos CCP, GRP – Kenexa Catherine Dovey CCP, SPHR – Compensation Works To us, business is personal
ABOUT US Lena Bottos CCP, GRP Catherine Dovey CCP, SPHR Vice President , Compensation Principal, Compensation Works Kenexa Copyright Kenexa®, 2011 2 Copyright Kenexa®, 2012 2
WHY THIS IS SO IMPORTANT Other costs Labor Costs Copyright Kenexa®, 2011 2012 3
HOW SOME COMP PLANS WORK… Copyright Kenexa®, 2011 2012 4
Poll Question: What is your company size? •<50 Employees •50-100 •100-200 •200-500 •500+
MISTAKE #10 Shh! Telling managers and employees not to talk about pay. Copyright Kenexa®, 2011 6 Copyright Kenexa®, 2012 6
TIP #10 Work on what you can control – your communication about how pay decisions are made. Copyright Kenexa®, 2011 2012 7
PAY TRANSPARENCY CONTINUUM Complete Transparency Complete Transparency (Public Sector) (Closely held) Copyright Kenexa®, 2011 2012 8
What How Why Copyright Kenexa®, 2011 2012 9
MISTAKE #9 Adjusting pay structures without looking at pay levels for each job. Copyright Kenexa®, 2011 10 Copyright Kenexa®, 2012 10
TIP #9 Pay attention to the market movement of individual jobs Copyright Kenexa®, 2011 2012 11
IT’S MORE THAN JUST THE AVERAGES Making assumptions based on 3% averages can cause you to miss the market for specific jobs. Job Change Head of Anesthesiology 24% Banking Operations Manager 22% Materials Control Manager 14% Private Label Manager -9% Health and Safety Manager -10% Program Manager -13% Copyright Kenexa®, 2011 2012 12
MISTAKE #8 Living by exception. Creating and enabling internal inequity. Copyright Kenexa®, 2011 13 Copyright Kenexa®, 2012 13
TIP #8 Fix the problem, don’t just move it around. Copyright Kenexa®, 2011 2012 14
MISTAKE #7 Going it alone. Copyright Kenexa®, 2011 15 Copyright Kenexa®, 2012 15
TIP #7 Learning how to do it right will help you expand your skills. Copyright Kenexa®, 2011 2012 16
Poll Question: I am confident I know all the technology and software available to me to help me do my job best. •True •False
MISTAKE #6 Not using the proper tools and assuming you are paying at market. Copyright Kenexa®, 2011 18 Copyright Kenexa®, 2012 18
TIP #6 Ask for a price appropriate for your company size. Copyright Kenexa®, 2011 2012 19
MISTAKE #5 Being cheap – saving money on survey data. Copyright Kenexa®, 2011 20 Copyright Kenexa®, 2012 20
RELATIVE SURVEY COSTS Example: for every $10,000,000 in salary you spent $10,000 survey costs = .1% of salary costs Copyright Kenexa®, 2011 2012 21
What companies use free or very inexpensive survey data? Copyright Kenexa®, 2011 2012 22
TIP #5 Saving dollars on compensation data or design is an expensive way to save money. Copyright Kenexa®, 2011 2012 23
MISTAKE #4 Diva syndrome. Copyright Kenexa®, 2011 24 Copyright Kenexa®, 2012 24
TIP #4 Focus on what your people do, not what your product or service is. Copyright Kenexa®, 2011 2012 25
MISTAKE #3 Thinking small – not understanding the competition. Copyright Kenexa®, 2011 26 Copyright Kenexa®, 2012 26
TIP #3 Know your relevant recruiting market. Copyright Kenexa®, 2011 2012 27
MISTAKE #2 Assuming a 3% merit budget is too small to use for differentiating pay. Copyright Kenexa®, 2011 28 Copyright Kenexa®, 2012 28
VARIABLE TIMING INCREASES Copyright Kenexa®, 2011 2012 29
TIP #2 Focus on the behaviors you want to reward and think outside the box. Copyright Kenexa®, 2011 2012 30
Poll Question: We have a training program to train existing and future managers on the necessary skills to be good managers. •True •True, but not enough •False
MISTAKE #1 Communication. Communication. Communication. Not teaching managers and employees how the system works. Copyright Kenexa®, 2011 32 Copyright Kenexa®, 2012 32
TIP #1 All your work hinges on managers being able to communicate the message. Copyright Kenexa®, 2011 2012 33
Kenexa top 10 compensation mistakes made by small businesses
DON’T BUILD THIS COMP PLAN! Copyright Kenexa®, 2011 2012 35

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Kenexa top 10 compensation mistakes made by small businesses

  • 1. TOP 10 COMPENSATION MISTAKES MADE BY SMALL BUSINESSES Lena Bottos CCP, GRP – Kenexa Catherine Dovey CCP, SPHR – Compensation Works To us, business is personal
  • 2. ABOUT US Lena Bottos CCP, GRP Catherine Dovey CCP, SPHR Vice President , Compensation Principal, Compensation Works Kenexa Copyright Kenexa®, 2011 2 Copyright Kenexa®, 2012 2
  • 3. WHY THIS IS SO IMPORTANT Other costs Labor Costs Copyright Kenexa®, 2011 2012 3
  • 4. HOW SOME COMP PLANS WORK… Copyright Kenexa®, 2011 2012 4
  • 5. Poll Question: What is your company size? •<50 Employees •50-100 •100-200 •200-500 •500+
  • 6. MISTAKE #10 Shh! Telling managers and employees not to talk about pay. Copyright Kenexa®, 2011 6 Copyright Kenexa®, 2012 6
  • 7. TIP #10 Work on what you can control – your communication about how pay decisions are made. Copyright Kenexa®, 2011 2012 7
  • 8. PAY TRANSPARENCY CONTINUUM Complete Transparency Complete Transparency (Public Sector) (Closely held) Copyright Kenexa®, 2011 2012 8
  • 9. What How Why Copyright Kenexa®, 2011 2012 9
  • 10. MISTAKE #9 Adjusting pay structures without looking at pay levels for each job. Copyright Kenexa®, 2011 10 Copyright Kenexa®, 2012 10
  • 11. TIP #9 Pay attention to the market movement of individual jobs Copyright Kenexa®, 2011 2012 11
  • 12. IT’S MORE THAN JUST THE AVERAGES Making assumptions based on 3% averages can cause you to miss the market for specific jobs. Job Change Head of Anesthesiology 24% Banking Operations Manager 22% Materials Control Manager 14% Private Label Manager -9% Health and Safety Manager -10% Program Manager -13% Copyright Kenexa®, 2011 2012 12
  • 13. MISTAKE #8 Living by exception. Creating and enabling internal inequity. Copyright Kenexa®, 2011 13 Copyright Kenexa®, 2012 13
  • 14. TIP #8 Fix the problem, don’t just move it around. Copyright Kenexa®, 2011 2012 14
  • 15. MISTAKE #7 Going it alone. Copyright Kenexa®, 2011 15 Copyright Kenexa®, 2012 15
  • 16. TIP #7 Learning how to do it right will help you expand your skills. Copyright Kenexa®, 2011 2012 16
  • 17. Poll Question: I am confident I know all the technology and software available to me to help me do my job best. •True •False
  • 18. MISTAKE #6 Not using the proper tools and assuming you are paying at market. Copyright Kenexa®, 2011 18 Copyright Kenexa®, 2012 18
  • 19. TIP #6 Ask for a price appropriate for your company size. Copyright Kenexa®, 2011 2012 19
  • 20. MISTAKE #5 Being cheap – saving money on survey data. Copyright Kenexa®, 2011 20 Copyright Kenexa®, 2012 20
  • 21. RELATIVE SURVEY COSTS Example: for every $10,000,000 in salary you spent $10,000 survey costs = .1% of salary costs Copyright Kenexa®, 2011 2012 21
  • 22. What companies use free or very inexpensive survey data? Copyright Kenexa®, 2011 2012 22
  • 23. TIP #5 Saving dollars on compensation data or design is an expensive way to save money. Copyright Kenexa®, 2011 2012 23
  • 24. MISTAKE #4 Diva syndrome. Copyright Kenexa®, 2011 24 Copyright Kenexa®, 2012 24
  • 25. TIP #4 Focus on what your people do, not what your product or service is. Copyright Kenexa®, 2011 2012 25
  • 26. MISTAKE #3 Thinking small – not understanding the competition. Copyright Kenexa®, 2011 26 Copyright Kenexa®, 2012 26
  • 27. TIP #3 Know your relevant recruiting market. Copyright Kenexa®, 2011 2012 27
  • 28. MISTAKE #2 Assuming a 3% merit budget is too small to use for differentiating pay. Copyright Kenexa®, 2011 28 Copyright Kenexa®, 2012 28
  • 29. VARIABLE TIMING INCREASES Copyright Kenexa®, 2011 2012 29
  • 30. TIP #2 Focus on the behaviors you want to reward and think outside the box. Copyright Kenexa®, 2011 2012 30
  • 31. Poll Question: We have a training program to train existing and future managers on the necessary skills to be good managers. •True •True, but not enough •False
  • 32. MISTAKE #1 Communication. Communication. Communication. Not teaching managers and employees how the system works. Copyright Kenexa®, 2011 32 Copyright Kenexa®, 2012 32
  • 33. TIP #1 All your work hinges on managers being able to communicate the message. Copyright Kenexa®, 2011 2012 33
  • 35. DON’T BUILD THIS COMP PLAN! Copyright Kenexa®, 2011 2012 35