Value End-of-Year Implementation — Turn Down the Heat on the CEO Pay Ratio

The CEO Pay Ratio announcement qualifies as a hot topic, don’t you think?

Employee pay specialists, how much empathy do you feel for your executive comp colleagues who are racing to be ready for the Pay Ratio announcement next year? Or are you in a company where executive pay and employee pay get solved in the very same cubicle? Are you starting to feel like focal review and merit pay take away from the time you need to work on Pay Ratio planning? Step back a minute.

I’m here to suggest that, if you are wise, you are planning to treat 2017 merit pay communications as a step in your Pay Ratio communications — perhaps the first step in a lengthy strategy. Every company’s communication strategy about the Pay Ratio should be carefully customized to your culture, but there is one thing that will be common. If you try to handle the information as once and done, you will turn this difficult conversation with employees into a much bigger deal than it is.

On the other hand, if you align your Pay Ratio communication goals with what we know about human behavior, you’ll acknowledge that your goal this time is to persuade employees, rather than just inform. Everyone is going to have to address employee feelings, attitudes and beliefs about “fairness,” “competitive pay,” and more. And persuasion, as we all know who have spouses, children or even pets, takes a number of tries. Now is the time to start, as part of your company’s expected annual end-of-year communications.

Here are a few tips to get you thinking. Don’t take them as absolute recommendations because you could end up with something that just doesn’t suit your situation. Instead, think about turning the ideas into authentic efforts at persuasion for your employees.

Your CEO needs all of the positive publicity that he or she can get. No matter what the actual Executive Pay Ratio turns out to be for your company, you need employees to become willing to have an open mind about it. That’s much harder to achieve if your CEO is not well known or respected by employees. Positive visibility should help, and one reliable channel is end-of-year communications about pay practices, bonus awards, company results, team achievements and so on.

Invite your “median employee” to help finalize merit increases. If you ask me, the median employee has the potential of becoming as much of a scapegoat as your CEO. By that I mean, if everyone in the company is going to compare themselves with the median pay profile, many are going to feel some type of a negative comparison. (And if I’m at or near the median, how good do you think I’m going to feel about myself?)

Even if your team hasn’t tied down the exact median employee salary yet, you certainly must have a plausible range by now. Who are those employees? What have increase practices in the last three years done to jobs whose salaries are, let’s say +/- 25% or so of that proposed median employee salary (since this is the group that is bound to have the most to itch about). Is there anything in the analysis of their salaries that should inform their 2017 increases? What would their managers say if you asked them that question?

Build confidence in your current pay rates. If your salaries are competitive, make that clear. If you are a little woozy on the point, do more work and consider whether your findings should lead to any 2017 adjustments. Be sure your managers can speak confidently and accurately on pay rates and practices. And if you haven’t yet, now is the time to help them answer questions about crowd sourced pay data. Make your goal to help managers handle performance management and increase discussions exceptionally well this year.

You know you’re good, but are you a great communicator? This is Episode 6 in a series on improving employee loyalty through better, uncomplicated end-of-year compensation and performance management communications
Episode 1 = Expect More (From Yourself) This Year
Episode 2 = Value End-of-Year Implementation–How to Make It Important, Worthwhile and Useful
to help you get started
Episode 3 =Tips for Improving Manager Meetings to give you new strategies
Episode 4 =The Tip That Will Change People’s Minds
Episode 5 = Avoid the Parent Trap when you are creating this year’s communication strategy

Margaret O’Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.

 

This post originally appeared on Compensation Cafe
Author: Margaret O’Hanlon