The ultimate fair compensation checklist for HR professionals
Compensation decisions are critical in any organization. It is essential to ensure that the decisions made are fair, transparent, and equitable. Making the wrong compensation decisions can lead to employee dissatisfaction, low morale, and high turnover rates.
In this blog post, we'll share our checklist of the eight actions you should take to ensure that you are making fair compensation decisions for your employees:
Using market data
Aligning your team & training managers
Setting a compensation philosophy
Ensuring employees are aware of compensation elements
Monitoring the gender pay gap
Communicating decisions effectively
Creating salary bands
And make sure you read to the end to have a fun bonus activity to play out with your team...
Here are the 8 actions you should be taking to ensure that you are making fair compensation decisions for your employees
#1 Using market data
One of the essential steps in ensuring fair compensation decisions is by using market data. Market data helps you understand how much other companies are paying employees in similar roles. By gathering and analyzing market data, you can ensure that your employees are being paid fairly and competitively. This information is crucial in developing your compensation strategy.
#2 Aligning your team & training managers
It is essential to align your team and train managers to ensure that they understand your compensation philosophy and strategy. Managers need to be trained on how to make fair compensation decisions and how to communicate those decisions effectively. By aligning your team and training managers, you can ensure that everyone is on the same page and working towards the same goals.
#3 Setting a compensation philosophy
Developing a compensation philosophy is crucial in ensuring that you are making fair compensation decisions. A compensation philosophy outlines your company's strategy, values, and goals. It helps you determine what you want to achieve with your compensation strategy and how you will achieve it. A well-defined compensation philosophy helps ensure that all employees are treated equitably and fairly.
#4 Providing transparency
Transparency is key in ensuring that you are making fair compensation decisions. Employees need to understand how their compensation is determined and what factors are considered. By providing transparency, you can build trust with your employees and promote a positive work environment. Transparency also helps ensure that you are adhering to your compensation philosophy. For now in some places this is optional or not (like in the UK) but soon with the EU Pay Transparency Directive coming into effect soon, the time to act is now.
#5 Ensuring employees are aware of compensation elements
Employees need to understand the various elements of their compensation package. It is essential to educate employees on their compensation package, including base pay, bonuses, and benefits. By ensuring that employees are aware of their compensation elements, you can prevent confusion and misunderstandings.
#6 Monitoring the gender pay gap
The gender pay gap is a significant issue that affects many organizations. Monitoring the gender pay gap is crucial in ensuring that you are making fair compensation decisions. By analyzing the gender pay gap, you can identify any disparities in pay and take corrective action. Monitoring the gender pay gap is not only the right thing to do, but it is also essential in ensuring that your organization is compliant with equal pay legislation.
With salary bands, you can make sure that your employees are paid in a fair and competitive way based on their role, level of experience, and performance. This way, you can reduce the risk of pay disparities and ensure that your compensation decisions are consistent.
Maybe you're reading this and questioning where your company stands. Consider this the perfect time to do a mini team activity.
How to play?
Print off this bingo below & share with your team.
Go around the table/video call and have everyone write down their thoughts on each action.
Collect their thoughts and share together.
Identify where you can improve & implement those changes.
Let's see if your compensation really is as fair as you think it is:
Looking for more resources, tools and content?
That's why we created Figures, you don't need to be a compensation expert, we are. With our an all-in-one compensation platform updated in real-time, expert HR and People insights, we want to make your job more efficient and power more fair decisions.
We sat down with HR expert Jason Waterman, current CPO at ProSapient, and Co-Founder/Advisor, at People Club. He shared with us his journey & challenges, moving beyond the stereotype of HR and what's cooking in his kitchen!
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