When was the last time you measured how competitive your compensation program was? Over the past year the compensation landscape has changed drastically in Alberta due to the economic climate, and the impact has undoubtedly affected pay across Canada. Many organizations are cutting costs and eliminating positions to make it through this tough time – with so much change occurring, do you know if your organization is staying competitive from a compensation standpoint? Or paying too much…or not enough?
Today more than ever it is important that organizations access reliable compensation data to ensure that total pay is at a level that allows them to compete but not overpay. In Alberta over the past year we have seen organizations cut base pay by 10% across the board, and slash bonus and incentive plans in an effort to reduce labour costs and keep their doors open. As the economy slowly begins to recover (and there are hopeful signs that this is happening) it will be crucial for organizations to understand and measure how competitive they are and how to administer a compensation program that looks very different than it did last time this analysis was done. We are encouraging our clients to make certain they proactively manage their compensation programs and specifically undertake the following:
- Participate in salary surveys so you get access to salary data that you would otherwise have to pay for. If you don’t have the internal resources to complete the surveys then contract someone to do if for you – the intelligence gained is definitely worth the investment.
- Contact the major survey companies to understand deadlines for completing the survey and when information will be available. Develop your compensation review plan once you know when information is available and, if the information is not available when you need it, discuss and explore how to properly acquire and age data.
- Understand how to properly interpret salary survey data and draw accurate comparisons to measure and benchmark your competitive positioning.
- Develop a plan to address issues – situations where you may be over paying and/or gaps where you may be underpaying.
- Get expert advice on the design of your compensation program – how much of pay should be at risk (incentive pay) and how much should be base salary. This is particularly important for Alberta-based oil and gas companies who have made changes over the past year.
- Develop administrative guidelines for your salary administration program that ensures you are paying fairly and mitigating risk of potential claims of discrimination or inequity in your program.
- Develop a communication plan around your compensation program so your employees understand the full benefit of what you provide as part of their total compensation package.
The development, administration and maintenance of a well-designed compensation program requires accurate and reliable data as well as expert knowledge of how to fit the components of the program together in order to achieve the expected outcomes and behaviors. Salopek & Associates is currently helping our clients review their compensation programs to ensure levels of compensation are not too high or too low and are properly designed to attract and retain the talent they need for the future. Call us today if you need help to review your compensation program and/or get support with administering a program that has undoubtedly changed over the past year.