Just how important is a transparent compensation strategy in today’s competitive workplace?
Glassdoor’s Global Salary Transparency Survey recently found that 70 percent of employees believe salary transparency is good for employee satisfaction and an even greater number globally (72 percent) believe salary transparency is good for business.
While it’s clear workers understand the merits of open pay processes, the survey found only 65 percent of U.S. men and 53 percent of U.S. women believe they have a good understanding of how pay is determined at their company.
And that’s what Emily Allen was up against when she became Seer Interactive’s first HR hire–Director of People Operations–and was tasked with creating a transparent comp strategy for the digital marketing agency with more than 200 employees and offices in Philadelphia and San Diego.
Prior to Allen’s arrival, comp decisions were made on a case-by-case basis, she said in a recent podcast interview with Bruce Marable, co-founder and CEO of the HR dashboard Employee Cycle.
The offers back then, were “competitive and fair,” she says, “but different people make different offers. We also dropped the ball a couple of times, where someone had gone a year, year and a half and we didn’t bump them from a comp standpoint, and they were doing great work. And we lost a couple people because of that mistake.”
So the executive team decided it wanted to create a process that Allen said “could scale how we make decisions, as well as to make sure we were fair across the board and eliminate human error.”
And that also meant sharing the philosophy behind how Seer thinks about and executes assigning salaries to team members, Allen said: “Every single team member should understand, based on their role, what their earning potential is, why their earning potential is what it is, and how and when they are eligible to increase their compensation. Essentially, where they stand and why they stand there.”
Allen, who said she’s not a “numbers person,” started her quest by getting together with peers at companies with similar cultures and simply asking them “What do you do for comp? How do you manage and communicate this?”
Those queries led to another fundamental question for anyone with a budget to consider: What resources do I want to use to do this?
The best options were either to hire an expensive consulting firm or a site like Salary.com to do the heavy lifting, Allen said, or she could take the more financially feasible DIY approach, which the path she ended up choosing with the help of Payscale’s free version..
Then it was all about “crunching the numbers,” with tasks including the creation of a bank of roles, corraling all titles and divisions, then “shopping” those roles for minimum and maximum ranges. During that time it became clear that acquiring the correct data and then interpreting it correctly were paramount goals.
For example, Allen said, “Linux folks are much more expensive from a market perspective than someone who is in SEO or paid search. The skills are harder to find and procure. Our analytics team is one of our smallest divisions but we’re growing it very quickly. So what does that mean from a compensation standpoint? We are just making sure we are interpreting the data relevant to division revenue within the organization.”
During the yearlong process of creating and then rolling out the new comp strategy, Allen relied on a focus group of five dedicated employees who were willing to voice their skepticism and point out areas for improvement, such as ensuring a standard level of privacy when it comes to sharing comp data.
“If I have a division of one person–and we actually do at Seer–and I’m saying ‘Here’s the comp range for this role,’ then that kinda stinks for that person because I’m sharing with the whole organization what this one person is making,” she said. “And that isn’t really fair.”
(Listen to the podcast at the 27:00 mark to find out how Allen and her team overcame that challenge.)
After a successful rollout of the transparent pay strategy–including a well-received slide presentation and video explaining how it all works–the next step for Seer is linking its new comp strategy to quantitative performance reviews.
“There’s always room for improvement. I want to keep evolving this and making it better for the team,” Allen said. “As long as you have the desire and the willingness to do the research and be willing to fail and own it and improve it moving forward, you’re going to be successful.”
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