Description

First, review the module resources and consider the following scenario: You have been asked to evaluate whether your organization’s current pay structure makes sense in view of what competing organizations are paying. In your initial post to the discussion, address the following:

  • How would you determine what organizations to compare your organization with?
  • From an internal perspective, what are the potential consequences of having a pay structure that is out of line relative to those of your competitors? Consider the impact of pay and incentives on employees’ motivation, engagement, and retention? Provide supportive examples.
  • What recommendations would you provide to ensure improved motivation, engagement, retention, and competitive advantages in the marketplace?

Response

When preparing for a pay structure analysis, the first step I would take is to determine what the appropriate organizations are to compare data with. It really depends on which source the company decides to utilize as data can come from either published, customer third party review, or free survey sources (Chou 2017). Most of the time, an organization will begin by comparing data between companies within the same industry; for example, it will not be a beneficial exercise if a Life Sciences organization compared their data to a Hospitality organization because there are completely different roles required for each organization. The next step after gathering data from companies within the same industry is to look at where the data comes from geographically, as there may be ‘skewed’ data sources from different cost of living indexes. For example, if I am looking at survey data for a company, and majority of the sources are coming from CA or the states in the Northeast, and my company is located in Oklahoma, I might want to do an adjustment to align the correct salary for the cost of living index in OK.

Internally, if an organization does not have a pay structure is competitive to the market, then the risk of low morale, motivation and retention rates are high. No one ever wants to be underpaid for the work they are doing, especially your high potential and high performing employees. Take into consideration a Sales Representative. If this individual is used to receiving a certain amount of base salary, along with a competitive Incentive Compensation plan for sales performance and they join a company with sub-par base salaries and below market bonus plans, they will likely not be with that company for long-term and would not be highly motivated to perform and push product. Companies that do offer competitive base salaries along with competitive bonus plans can easily recruit this individual on from the base-salary perspective alone.

One recommendation to provide to ensure competitive advantage in the marketplace is to put in place a compensation benchmarking plan every 2 years or so, and a benefits benchmarking every year to ensure that the organization is keeping up with the market and competitors. Another strategy I would implement immediately is to utilize the data you already have by looking at past resignation reasons and seeing if there are any patterns or trends. For example, if 30 employees left the company in the past year and 46% of the reasonings were solely from dissatisfaction from take home pay, then it is definitely time to benchmark and research where your company should be to improve retention. I would also take a look at the latest employee engagement survey feedback to see if any comments or what type of ratings looked like from a ‘take home pay’ and ‘benefits’ perspective.

Reference:

Chou, K., SNHU COCE Assistive Technology. (2017, August 9). OL-600: Salary Surveys Series Part 1: Uses CC [Video]. YouTube. https://www.youtube.com/watch?v=46c-5GCtZKc

The company I currently work for works mostly with immigration law firms and offer credential evaluation services for work visa applicants. Before I interviewed for this position, I had never heard a company doing anything like this before. It took me a few weeks to actually understand what it is we do and it’s always an interesting conversation trying to explain what I do for a living. What this boils down to is that I work for a niche company in a niche industry. We do have competitors, but not many. However, because we do not have many competitors, it would be not be too difficult to find information pay structures and pay rates for a position like mine. Since my company provides services for applicants looking to work in the United States, this narrows the field to domestic competitors.

Because I work for a company with a limited number of competitors, it is extremely important for the owners to be mindful of pay structure relative to our competitors. Once an employee learn the nuances of the industry, it is safe to assume that that person becomes marketable for our competitors. Though some of the basic skills required for this company (organization, project management, client relations, writing skills) can be applied to any number of jobs, the industry-specific knowledge is what is marketable. For a company like mine, it is more important for owners to consider pay structure. Pay too little and employees could leave for a competitor or even a company in a different industry where they can skill use their skill sets.

So far this year, the owners have put more of an emphasis on employee engagement than I have seen in the past and has put more effort and support into our training programs for new employees. What I think my company lacks is continued education in the form of internal training for employees to learn more out the immigration industry. The one thing I tell me directors at most of my reviews is that I want to stay with this company long term because where else could I go to do the things I do here. I enjoy working for this company and in this industry and I would like to learn more about it from my fellow associates. I believe that when you work for a company you like, you want to stay and grow with that company.