Here is the fourth in a series of five short articles addressing some
more common compensation issues facing HR professionals today.
The fourth of the Five Biggest Mistakes is Poor Pay Delivery.
pay delivery has nothing to do with whether
or not you mail checks or use direct deposit. It has to do
people an appropriate wage or salary to keep them productive and
Companies spend lots of time and money to ensure
their pay ranges have the desired relationship to market.
your midpoint dialed in to market does not mean you’re actually paying
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
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
first in line at your competitor!
How many employees do you have with good
(according to your own performance appraisals!) and who are well below
midpoint? These are the people your competitor will gladly
hire if given
to correct this problem?
Next month, we'll
focus on mistake #5 - performance management.
Budget sufficient dollars so that when an
employee can do the job, you can pay them the money!