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Exploring Variable PayFair isn’t equal
Mykkah Herner, MA, CCPModern Compensation Evangelist
Paige Hanley, CCPManager, Customer Operations
A copy of the presentation and recertification credit will be sent out within a couple of business days
15,000 Positions 3,500 Customers 11 Countries
250 Compensable Factors54 Million Salary Profiles
www.payscale.com
Paige Hanley, CCPManager, Customer Operations
https://www.linkedin.com/in/paige-hanley-ccp-26599716
Mykkah Herner, MA, CCPModern Comp Evangelist
https://www.linkedin.com/in/mykkahherner
www.payscale.com
Protections for equal pay
Fair pay isn’t equal
Linking Fair Pay and Variable Pay• Variable pay basics• Creative variable pay
Where to start
www.payscale.com
Less than 100 Employees
100 - 1,000 Employees
More than 1,000 Employees
Nearly 7600 Respondents
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73% of employers consider employees fairly paid
36% of employees feel they are paid fairly
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Protections for Equal Pay
Legal Disclaimer: this is intended to be informational, not to serve as legal advice. If you think you have a potential pay discrimination issue, seek out a lawyer.
www.payscale.com
Definitionwhat counts
as a job?
Secrecynon-retaliation
for talking about pay
Burden of Proof 100% of difference
demonstrated from 1 of 4 reasons
California Fair Pay Act
WHAT’S THE BIG DEAL?
As California Goes…
…so goes the nation.
48/50 States have some version of a pay equity law on the books
9/10 Provinces* have some version of a pay equity law on the books
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Other legal protections
Federal, State, and Local laws
Minimum WageFair Labor Standards Act
Other laws
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Fair isn’t equal
www.payscale.com
Fairdoesn’t
necessarily mean
equalEqualFair
https://hbr.org/2016/03/when-unequal-pay-is-actually-fair
There are some
really good reasons
to differentiate pay
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Appropriate differentiation by
Performance
Results
Experience
Skills
Education
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Linking Fair and Variable Pay
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Prevalence of bonuses has steadily increased over the past 4 years
68.5% 69.3%
73.4% 74.3%
50.0%
55.0%
60.0%
65.0%
70.0%
75.0%
80.0%
2013 2014 2015 Current
Do You Give Bonuses?
www.payscale.com
Is your bonus budget bigger in 2016 than 2015?
41% of all companies, 50% of top performing companies
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Variable Pay Basics
Linking Pay to Performance
Culture and perks that reward high performers
Higher increases for top performers
Results-based variable pay
Performance-based rewards & recognition
The variable pay umbrella
Incentive
Project Bonus
Retention Bonus
Signing Bonus
Perks
So you need to put together a variable pay plan
Hint: keep it simple
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Mix of pay
What ratio of base to variable?
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Aligned goals
Company goalsTeam goals
Individual goals
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Incentive Plan Incentive LevelMix of Base to
VariableMix of Company
to Individual
Overall, it may look like this…
Bonus Level Possible Org Level(s)Bonus Payout as % of
Base
Bonus Percentage(Individual)
Bonus Percentage
(Organization)
Level 1 Individual Contributor 5% 75% 25%
Level 2 Lead, Supervisor 10% 60% 40%
Level 3 Manager 15% 40% 60%
Level 4 Director 20% 25% 75%
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Considerbudget
org culturejob level
job functioncompany life cycle
…
Overall pay structure may differ based on pay goals
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Mix of pay by life cycle
High Rewards & Recognition
High Rewards & Recognition
ModerateRewards &
Recognition
Moderate Rewards &
Recognition
ModerateVariable
High VariableModerate Variable
Low Variable
Low Base Low Base High BaseModerate
Base
High EquityModerate
EquityModerate
EquityLow Equity
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What other kinds of variable pay should we consider?
www.payscale.com
What type of bonus?
15.8% 18.1%
61.8%
25.7%
40.0%
14.4%
Retentionbonuses
Hiringbonuses
Individualincentivebonuses
Teamincentivebonuses
Spot bonusesor other
discretionarybonus
programs
Other (pleasespecify)
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Who gets bonuses?
69.0%75.2%
69.3%
47.0%
12.6%
Executives Directors andManagers
Professional,Technical andAdministrative
Exempt Employees
Non-ExemptWorkers
Other (pleasespecify)
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How frequently?
4.9%12.6%
6.4%
66.6%
9.4%
Monthly Quarterly Biannual Annual Ad-hoc
Get Creative
Passes to sporting events
Catered lunches for winning teams
Days off after big deadlines
Choice of work assignment
Development opportunities
Lunch with the CEO
Remote work
www.payscale.com
Need help getting started?
• If you don’t already have one, find an affordable legal resource in your state
• Get to know the makeup of your workforce
• Survey employees, formally or informally, to identify what motivates them
• What is your current mix of pay? Do you offer something in all four tiers?
• Evaluate your readiness for variable pay – what training is necessary?
PayScale Delivers Where Other Compensation Providers Fall Short
PayScale leads the world in compensation knowledge with the freshest and most detailed data from over 54 million salary profiles. More than 3500 organizations use PayScale’s software and intelligence to get the greatest return on their talent. Smart businesses use PayScale Insight to recruit, retain and motivate their people.
Visit our blog: www.payscale.com/compensation-today
Join our Group on LinkedIn: Compensation Today: HR Best Practices
Paige Hanley, CCP
Manager, Customer Operations
Mykkah Herner, MA, CCP
Modern Compensation Evangelist
www.payscale.com
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