Are you looking for a tried and true methodology for designing or updating your compensation plans? Join us for an exclusive presentation with global compensation consultant John Rubino who will present a successful approach for developing an effective and competitive base salary program.   In this webinar you will learn how leading global organizations are designing compensation plans to better utilize available budgets with a more strategic and streamlined approach.  All of the necessary components will be discussed, including:   ·  Effective & compliant job descriptions that actually work; ·  The best approaches and compensation metrics for analyzing pay & making decisions ·  Quantitative tools for creating a competitive base salary structure; ·  Incentive pay plan essentials - designing plans that drive productivity & retention ·  Variable pay: how it works and are you ready for it.

1. TalentTakeaways
webinar & podcast series
COMP PLANNING PROS
How To Design A Cash
Compensation Program
For Global & Growing
Organizations

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4. Comp Planning Pros: How To
Design A Cash Compensation
Program For Global & Growing
Organizations
John A. Rubino
President, Rubino Consulting Services
rubinoconsulting.com
rubinoconsulting@aol.com

5.  Internally equitable
 Externally competitive
 Affordable
 Understandable
 Legal/defensible
 Efficient to administer
 Capable of being
reshaped for the future
 Appropriate for the
organization
 Attract, retain and
motivate employees
 Create alignment of
employee efforts and
business objectives

6. Job Content
Evaluation
Data Collection
and Analysis
Job Content
Evaluation
Base Pay Structure
Job Worth Hierarchy
Data Collection
and Analysis
Reconciliation of Internal
and External Considerations
Market Data Emphasis Job Content Emphasis
Job Documentation
Job Evaluation
Job Analysis

7. Job AnalysisJob Analysis Job EvaluationJob EvaluationJobJob
DocumentationDocumentation
Job WorthJob Worth
HierarchyHierarchy
Base Pay
Structure

8. Job
Descriptions
• Developing a job worth hierarchy
• Identification of performance
standards
• Organizational design uses
• Salary survey exchanges
• Legal defenses
• Job assignments
• Selection/recruitment
• Establishment of career paths
and succession planning

9. *These are components which should be included or implied
in all job descriptions used for job evaluation and market pricing.
Job titles
Job group category
Reporting relationships
General summary*
Principal duties and
responsibilities*
Job specifications*
Working conditions*
Disclaimer statement
Dates and approvals

10. Job
Component
Job Content Evaluation
Nonquantitative
or Whole Job
Quantitative or Factor
Ranking Classification Point Factor

11.  Why are salary surveys used?
• Price jobs and determine market positions
• Diagnose compensation problems
• Analyze pay trends
• Establish job worth hierarchies

12.  Individual company data should not be identified
- aggregate data is the norm
 Includes an executive summary
 Match your organization’s benchmark jobs
 One benchmark job is not matched to two
different job titles

13.  Factors
Sample size, participant base, statistical analyses,
survey methodology, job-matching procedures
 Acquiring data
Published surveys, utilize third parties, design and
conduct custom surveys, acquire web-based data

14.  Commonly found and defined
A benchmark job is a job that is commonly found in
many organizations and used to make pay
comparisons
 Data available in surveys
Pay data for these jobs are readily available in
published surveys

15.  Internal jobs that serve as anchor points
At least 70% match of duties to the market
 Characteristics
◦ Easily defined
◦ Representative of all levels
◦ Important to internal hierarchy
◦ At least 50% of jobs in an organization should be
identified as benchmark jobs

16. Data Collection
Method Cost Time Reliability Confidentiality
Published Low Fast
High/
Medium
High
Third-party
custom
High
Slow to
Medium
High High
Conducting
your own
Low Slow
High/
Medium
Low
Free None Fast Low ?

17.  Pay range
◦ Maximum
Most paid for the job
◦ Midpoint
Competitive rate
◦ Minimum
Least paid for the job
Max
Mid
Min

18. Maximum
Midpoint
Minimum
+20%*
–20%*
90,000
75,000
60,000
50%
range
spread
* ± 20% of the range midpoint

19. = Individual Compa-Ratio
(actual to structure)
= Market Index
(actual to market)
= Unit/Organizational Compa-Ratio
(actual to structure)
Salary
Midpoint
Weighted Avg. Salary
Midpoint
Weighted Avg. Salary
Weighted Market Avg.

20. 1,200
1,000
800
1,200
900
800
Pay Rate – Minimum
Range Penetration =
Maximum – Minimum

21.  Provide information about the center
of a distribution
 Mode, median, mean
 Three different approaches

22. 1st
2nd
3rd
4th
quartile quartile quartile quartile
P25P25 P50P50 P75P75
Q1Q1 Q2Q2 Q3Q3
MedianMedian
25%25% 25% 25%

23.  A tool to help visualize
the distribution of data
 Based upon P10, P25, P50,
P75, P90 and the mean (x)
 Can indicate the shape
of the distribution
57.20 (P90)
45.50 (P75)
33.35
30.00 (P50)
65
60
55
50
45
40
35
30
25
20
15
10
5
0
21.50 (P25)
16.80 (P10)

24. 509509
1,7231,723
902902
1,0111,011
1010
127127
9595
3232
2,1392,139
4343
2,2002,200
1,9001,900
2,0002,000
2,1002,100
1,4001,400
1,1001,100
1,2001,200
1,3001,300
1,8001,800
1,5001,500
1,6001,600
1,7001,700
1,0001,000
800800
900900
GradeGrade
MonthlySalaryMonthlySalary
4444 4545 4646 4747 4848
Salary Structure and Market Salary Data
Market Data
Company Data

25. y = a + bx
y = dependent (criterion) variable
x = independent (predictor) variable
a = intercept
b = slope

26. PayPay
Job ValueJob Value
The simplest mathematical model is the straight line.The simplest mathematical model is the straight line.

27. a
d
e
C
f
b
Base Pay
Policy Line
Job Value
g
Pay

28. Discussion Exercise Example
Example
Benchmark Job Internal Value Current Pay Market Wage
Receptionist 140 21,900 23,000
Admin. Asst. 194 30,400 27,300
Staff Accountant 217 34,100 34,900
HR Generalist 281 44,100 49,000
Payroll Supervisor 310 48,700 43,000
Marketing Mgr. 432 67,900 62,100
Employment Mgr. 480 75,300 73,200
Dir. Of Operations 627 98,400 102,700
Dir. of Finance 925 145,200 138,000
Sr. VP of Sales 980 153,800 152,000

29. Wage Survey Trend Line
Current Company Trend Line
Internal Job Value
Average company rate for job
Average market rate for job
MonetaryValue

30. y = pay
x 1 = experience
x 2 = performance level
x 3 = education
etc.
a  intercept
x 1,x 2,x 3  critical factors
b 1,b 2,b 3  slopes (i.e., regression weights)
of critical factors
kk332211 xbxbxbxbay ++++= 

31.  Establishing job worth
 Examining how supervisors make
decisions
 Projecting funding needs
 Evaluating budget increase trends
 Modelling decisions

32. Percent Pay Increase
as a Function of Both Performance and Compa-Ratio
(3-Dimensional Scatterplot)
PayIncrease
10
9
8
7
6
5
4
3
2
1
Performance
6.0
5.0
4.0
3.0
2.0
1.0
Compa-Ratio
1.2
1.1
1.0
0.9

33. Can this be accomplished by
using a Base Salary “Merit”
Increase Program?

34.  It’s a zero-sum game - and the budget is small
 Performance evaluation scores are all relative
 All employees exceeded their performance objectives
- now what?
 Base salary increases are now and forever!
 Is Old Joe motivated?

35. But Are You Ready ?
THE SUCCESS CRITERIA…

36.  Organizational culture and values must support a
performance/reward framework: instilling a ‘sales mentality’
 Compensation policies and programs must be aligned with
the organization’s strategic objectives
 Senior management must allow the variable pay program to
work
 Should have ‘pay by example’ at the top of the organization
 Must be internally equitable and externally competitive
 Variable pay program must deliver what is promised on time
and fairly

37.  Plan design should guard against ‘windfall’ payments
 Performance criteria must be discernible, valid and
understandable
 Variable payouts must be aligned with performance criteria
achievement
 Variable opportunities must be perceived as ‘valuable
enough’ to motivate performance.
 Timing of payout allocations should be as close as possible
to the qualifying event
 If designed and implemented properly, variable payouts to
employees will yield ‘slices from an expanding financial pie’

38.  Middle managers will make or break the variable pay
program.
 Should involve managers in variable pay program design and
performance criteria identification
 Must build trust and get buy-in from managers and
employees through effective training and communication
 A well-designed and executed variable pay program can
improve the organization’s bottom line
 Measurable benefits can include improved: morale,
productivity, quality, customer service, on-time performance,
work methods, etc., etc., etc.

39.  Remove performance considerations from base salary increase
decisions – pay for performance within the variable pay
framework.
 Re-define base salary increases as across-the-board market
adjustments only, determined by competitive position analyses.
 The difference between the base salary “merit” budget and the
market adjustment factor can be used to partially fund the
incentive program. (Will not be fully-funded the first year;
requires an “investment” on the part of the organization)
 On-going “fixed” expenses can be considerably reduced due to
the compounding effect of base salary increases.
 Variable compensation is paid in lump sum only when
performance warrants: “pay at risk”.

40. RANGE: PERFORMANCE
TARGET 0 – 150% WEIGHTINGS
TIER OPPORT. OF TARGET CORP. DEPT. INDIV.
-----------------------------------------------------------------
1 – Officers 35.0% 0 – 52.5% 70% 20% 10%
2 – Directors 25.0% 0 – 37.5% 40% 50% 10%
3 – Managers 15.0% 0 – 22.5% 30% 50% 20%
4 – Profess. 10.0% 0 – 15.0% 20% 20% 60%
5 – Support 8.0% 0 – 12.0% 10% 20% 70%

41.  Without question, comprehensive variable pay
programs will continue to be the U.S. and global
trend (for those organizations that are culturally
ready).
 An increasing number of organizations will adopt a
simplified market-based salary approach to
determine base salary control points and pay
increases.
 Employee performance objectives will be removed
from base salary determination, and placed
entirely within the comprehensive variable pay
program, paid in lump sum.

42. Comp Planning Pros: How To
Design A Cash Compensation
Program For Global & Growing
Organizations
John A. Rubino
President, Rubino Consulting Services
rubinoconsulting.com
rubinoconsulting@aol.com

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How To Design A Cash
Compensation Program
For Global & Growing
Organizations