Not everyone loves their job, but everyone loves getting paid. But establishing who makes what and why can be confusing.
Even the human resource professionals who craft salary structures find the task daunting, says Kerry Chou, a practice leader at WorldatWork, a non-profit association for compensation professionals.
The findings of a recent WorldatWork study of pay practices at 1,001 firms of various sizes sheds light on the salary subject:
• Keeping up with the market. Pegging salaries at what other firms in the same market pay for workers with similar skills has become the predominant gauge for setting salary ranges for specific jobs. While individuals can look up questions like, “What do customer service reps earn?” and find websites reporting such information, firms don’t usually use these websites, says Chou. Instead, “They pay for their own specific surveys,” Chou notes.
• Paying for performance. Most firms assess workers’ performance, usually against specific goals set for that individual, says Chou. When workers meet goals, they can advance in the pay range set for their job.
• Sharing the secrets. Nearly 80 percent of surveyed companies report that they communicate pay to employees, using brief written or verbal communications, at least once a year. Some firms, particularly larger ones, says Chou, also have a written “compensation philosophy,” which details objectives in salary setting. A firm may have the philosophy to pay very competitively for top talent, for instance. Some firms include their philosophy in the employee handbook, he adds.
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