Here is the fourth in a series of five short articles addressing some of the more common compensation issues facing HR professionals today.

The fourth of the Five Biggest Mistakes is Poor Pay Delivery.

Direct Deposit?
Poor pay delivery has nothing to do with whether or not you mail checks or use direct deposit.  It has to do with paying people an appropriate wage or salary to keep them productive and engaged in your business.

Companies spend lots of time and money to ensure their pay ranges have the desired relationship to market.  However, having your midpoint dialed in to market does not mean you’re actually paying properly.

Answer these questions:
Let's assume that your pay range midpoint represents market.  Now, ask yourself two questions: (1) How long does it take for an employee with the minimum requisite skills to become fully competent in the job?  (2) How long does it take the employee to move from the hiring rate to the range midpoint (market)?  If the two answers differ by more than 12-18 months, you've got the potential for high turnover!  And, don't give yourself a false sense of security by pointing to a poor economy.  When things turn around, employees who believe they're underpaid will be first in line at your competitor!

How many employees do you have with good skills (according to your own performance appraisals!) and who are well below your midpoint?  These are the people your competitor will gladly hire if given the opportunity

How to correct this problem?
Budget sufficient dollars so that when an employee can do the job, you can pay them the money!

Next month, we'll focus on mistake #5 - performance management.