Development of Compensation Philosophies

We ensure that the larger coalition has a clear line of sight between the “intentions to do something”, the “purpose to achieve something”, and the “measures to determine success against those things”.

Elena Mason, CEO Prudential Global Network

Every initiative that involves compensation, wages, salaries, and variable pay, has motives and intentions behind it. They run the gamut of well intentions, from establishing a pay plan that will better address the complexities of their organizational culture, to situating their organization for continued growth and success, to incorporating sound compensation practices into their day-to-day operations.

However intentions or motives are set according to organizational needs, one thing is certain; a presence of a written narrative considered as "the bible" for executing compensation strategies can foretell the level of success in engaging employees so that every mission towards the fulfillment of organizational goals are accomplished.

Review of Current Practices

As part of our assistance in establishing compensation philosophies, we review our client's current practices and identify any areas that have become out-of-compliance or mis-aligned with the client's compensation guidelines. We document instances where the organization had to apply exceptions to the rule.

Vulnerability Identification

PGN HR identifies and defines our client's compelling business reasons for deviating from the guidelines and for making exceptions to the rule. There are vulnerabilities inherent upon the act of matching wages so that an employee who have been offered a job at a competitor's organization can be convinced to stay. Another form of vulnerability is the forced raising of wages for a group of skilled workers because their representatives were successful in lobbying for licensure, which the State now mandates that everyone in that particular job position should be licensed prior to hiring.

Examples of Compelling Business Reasons

  • Salary compressions because of hiring practices that deviate from the guidelines
  • Smaller candidate pool for specific job opening
  • Longer hiring time
  • Talent competition with private sector
  • Hard-to-fill jobs

Working With The Larger Coalition To Build Consensus

Our efforts to develop compensation philosophy is supplemented by a communication strategy that precedes our entry into the technical part of every compensation initiative. We strive to obtain 100% employee buy-ins and carry out implementation of various components of projects as we acquire the support of employees with high motivation to help.

But we also understand that there is no substitute for thoughtful judgment by the leadership in matters of total compensation. We canvass the opinions of the “larger coalition” which consists of employees in general, their union representatives, team leaders, supervisors, managers, professional and technical staff.

We ensure that the larger coalition have a clear line of sight between the “intentions to do something”, the “purposes to achieve something”, and the “measures to determine success against those things”.

Our goal for information-sharing is to create conversations that will help in the eventual development of compensation philosophy. We provide on-site and web-based regular meetings with the project team, on-site town halls with general employees, on-site meetings with labor union representatives, briefings with executives, focus groups, and desk audits on-site or web-based.

How To Define A Labor Market

The ultimate goal of PGN HR’s market study is to know the external competitiveness of each job within a defined labor market, not against the universe.

Wage Structuring Strategy

With best practices in mind, we endeavor for pay structure designs that are 100% synonymous to the market midpoint. This is an admirable maxim, but one difficult to observe.

Compensation Philosophy Development

A compensation philosophy is one of the most powerful statements an organization can have. It dictates the strategy for how salaries are to be administered and governed.

State of Washington Changes FLSA Rules by January 1, 2021

Because of the state’s decision to change the threshold for FLSA, many employers (including our clients) will be forced to either raise employee salaries to maintain exemptions for overtime pay or reclassify employees as non-exempt and pay overtime, offer paid sick leave and of course meal breaks.

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