1. Aligning your
Compensation
Philosophy with
Business Priorities
Stacey Carroll, M.B.A., SPHR
Director of Customer Service & Education

2. PayScale is a market leader in global online compensation data.
With the world's largest database of individual employee
compensation profiles, PayScale provides an immediate and
precise snapshot of the job market.
Our patent-pending, real-time profiling system indexes custom
employee attributes (such as industry-specific certifications) and
specific job titles for every industry.
Our secure, on-demand business solutions, PayScale MarketRate
and PayScale Insight, provide employers with accurate, reliable
compensation detail never before available.
7,000 Positions. 50 Major Industries. 11 Countries

3. Do you believe . . . .
 How many of you think  How many of your companies
employees are the company’s have started buying cheaper
most important asset? products (less quality) in the last
2 years?
 How many of work for an
organization that has a pay for  How many of you gave at least
performance compensation 10% of your employees in your
philosophy? organization a increase of larger
than 8% last year?
 How many of you believe that
20% of your employees do 70%  How many of you have given a
of the work? “cost of living” increase to
employees?
 How many of you think your
compensation program is aligned  How many of you have RE-
with your business priorities? DESIGNED your compensation
program in the last 5 years?

4. Agenda
 Step 1 – get SMART
 Step 2 – Analyze your compensation program
 Not all jobs are created equal
 Common Myths
 Step 3 – Align your comp plan with the business
 Step 4 – Present your findings/reccomendations

5. Step 1 – Get SMART
 Know your business – what is the plan?
 Read your balance sheet, income statement and cash flow statement.
 Talk with your business leaders about where the business is going in the
next year, 5 years and 10 years.
 If you don’t understand something, ask someone (even if it’s google).
 Think through the implications on talent within the organization.
 Know where you stand relative to your current compensation
philosophy
 Benchmark
 Employee Feedback
 Meet with Senior Leadership
 to seek permission to align talent strategies with business priorities
 Ask for any resources needed to get the project started

6. Step 2 – Analyze your compensation program
 Have we accurately defined our compensation
strategy?
 Considerations include: industry, geography and
organizational size.
 Blog Post: Employee Compensation Plan Design
 Webinar: Defining Your Compensation Policy & Philosophy
 Pharmaceutical CFO Story
 Have we positioned ourselves well relative to the
market?
 How competitive do we want/need to be?
 Build pay ranges in alignment with competitive strategy

7. Not all jobs are created equal
 Where should you be spending your labor dollars?
 What matters to your company (competitive advantage)?
 Walmart vs. Nordstrom
 What positions are going to have the biggest impact to your
company’s bottom line?
 Google’s “ad word” salesperson vs. data miner
 What positions are the most difficult to fill?
 The more specialized the profession – the more creative you need
to be.

8. Common Myths
 People work for money - Money will never attract or retain
talent on it’s own.
 Pay is going down with the recession - Contrary to what we
hear about the economy, the market IS moving – dramatically in
some industries.
 Employees will never be satisfied with their pay - You can
improve an employee’s satisfaction with their pay by doing two
simple things.
 Communicating
 Designing a pay structure that is “fair”
 Access to pay information is limited- Employees know their
worth.

9. Step 3 - Align your comp program with the business
 Revisit your benchmarking strategy
 Marketing Client Story
 Revisit the design of your pay ranges relative to business goals
 Job are not equal – therefore, targets should not be either.
 Find out where you are
 Salary Budgeting Matrix
 Analytics - Budgeting
 Eliminate “across the board increases”
 Ask for the budget you need
 Prioritize requests (next slide)
 Design compensation plans (incentive plans) that are in alignment with
company goals
 Examples (next slide)

11. Example #1 – Plan Design
 You are charged with  Base incentives on:
designing a sales incentive  Increasing profits (more
plan for a company that is sales while holding costs
trying to grow fast and is down)
cash sensitive. What would  Renewal or customer
you base the incentives on retention
and how would you design  Customer payment terms
the program to be sensitive
to the company  Design
requirements?  Pay commissions upon
receipt of customer payment
and/or delay commission
payments (i.e. quarterly)

12. Example #2 – Design Considerations
 You are charged with  Trade-offs (i.e. quality,
designing a management safety)
bonus program that is  Build incentives into the plan
applicable across many that account for all company
different departments with goals.
a goal towards cutting  Cuts for the short term, not
operating costs. What the long term.
could be some potential  Limit staffing cuts
pitfalls and how could you  Impact analysis
design the program in  Cuts that have an impact
mitigating these issues? on other depts./divisions
 Have divisions work together
on cost cutting
 Make it proportionate to the
overall budget of each dept.

13. Step 4 – Present your findings/recommendations
 Get agreement from your executive leadership team that your
“competitive set” is right
 Get agreement from your executive leadership team that your
degree of competitiveness is right
 Recommend changes to improve the overall structure of your
compensation program
 Work with divisional heads to re-design incentive programs in
alignment with company goals
 Prepare budget proposals for salary increases

14. Questions?

15. Save Time and Money on Your
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