There’s no one-size-fits-all compensation philosophy, and developing a compensation plan that is equitable and competitive can be hard work. A successful plan requires:

• Understanding where your compensation program fits within your organization’s overarching business strategy
• Identifying market data and insights that can be leveraged to stay ahead of your competitors
• Tying in internal communication tactics

Terms to Know

There’s a lot of different pay-related terminology to keep track of. Here are a few key phrases to know.

Pay Transparency

Pay transparency is the practice of disclosing information about employee compensation standards to others internally and externally. It’s a spectrum on which employers can choose varying degrees of transparency. Based on state and local mandates or their own pay strategy.

Laws about pay transparency differ from state to state. Some require employers to publish pay ranges for all open positions while others require employers to provide the pay range by the final interview or upon the applicant’s request. Other states require businesses to file annual reports showing company wages broken out by race, gender, ethnicity, age, and other categories.

Be sure you know about and abide by any pay transparency regulations in your state!

Pay Equity

Pay equity is the concept that equal work deserves equal pay regardless of the person, race, gender identity, age, etc. Equal pay for equal work has been legislated since 1963 with the Equal Pay Act.

Pay Equality

Pay equality is the concept of equal access to opportunity, ensuring there are no barriers keeping employees from earning the same pay.

Gender Pay Gap

The gender pay gap occurs when two employees who are alike in every aspect except their gender are paid unequally.

Creating Your Compensation Philosophy

Step 1: Ask Questions

The first step in creating your organization’s compensation philosophy is assessing the total rewards and pay programs you currently have in place and how well these programs support your needs. Ask yourself these questions:

• What’s the goal of your pay program?
• How will you competitively reward employees?
• What does competitive pay mean in your organization?
• Who makes compensation decisions?
• Who do you compete with for talent?
• What other benefits do you offer?

Step 2: Dig In

Once you’ve assessed your current compensation and total rewards strategies, you can dig into your compensation data.

You might start by:

• Conducting a job analysis
• Documenting or updating job descriptions
• Developing a job-worth hierarchy
• Identifying jobs to benchmark
• Analyzing relevant market data and/or establishing pay ranges

More Tips on Compensation

Looking for more advice on your compensation strategy? Check out these episodes of The JoyPowered® Workspace Podcast:

Do you need assistance analyzing the data or building your compensation strategy? Learn more about our consulting services here! Or send us a message here, and we’ll guide you to the right path.