Have you ever been asked by an employee how you decided what they would make? Or perhaps tried to identify whether a role should be classified as Exempt or Non-Exempt? Or created a new position and had to determine how much to pay the new employee?
One of the most overlooked, yet impactful processes a company can implement on a regular basis is to conduct an annual Compensation Review, in which you will easily be able to answer all of the above questions.
What is a Comp Review?
In its simplest form, a Compensation Review looks at your overall company comp structure and current pay scales to evaluate whether your employees are paid in accordance with FLSA guidelines and the Equal Pay Act, and whether there is internal equity within the employee structure.
A comp review doesn’t necessarily require a big time commitment or investment, but the value in doing a regular audit will mitigate any potential gender pay inequities or legal difficulties your company might face.
How frequently should a Comp Review be done?
It is our recommendation to conduct an audit no less than every two years. With shifting markets, heightened scrutiny, as well as new laws regarding fairness in pay, it will eliminate any opportunity for bias within your pay scales if you evaluate your structures regularly.
What are the benefits of conducting a Comp Review?
The benefits include employer peace of mind, as well as transparency with your employee base, as you are able to effectively measure and defend your pay decisions with a systematic approach.
How do I begin a Comp Review?
At JB Consulting Systems, our focus is on our clients’ needs, and as a boutique firm we can tailor our process to fit your needs.
Things we will evaluate when we begin a Comp Review is to first identify and gather all the current job descriptions for each role within the company. If you don’t have current descriptions, we will work with you to create and establish these job titles and descriptions, including the qualifications and duties for each role. Accurate descriptions lead to accurate pay scales.
From there, we will work with you to establish the compensation and salary bands and ranges, based on those descriptions, and determine the classifications for each and salary scales for each.
Once those have been evaluated, the next step is to review each existing employee roles’ and their current wages. Are they misclassified? Are they within the acceptable target range? Is there inequity between a female and a male employees’ pay who are in the same role?
Immediate action and adjustments should be taken if there are glaring discrepancies in order to remedy the error.
And finally, we will help create a Total Rewards Statement for each employee to provide a quick and easy overview of the individual employee’s pay, including benefits, salary, bonus structure, 401k and other financial plans available to the employee. This information is calculated and used as a transparent value statement that will have impact on their long-term retention.
Is this something that your company needs or would like to consider implementing?
JB Consulting Systems is ready to help start your Compensation Review. Simply contact us at HRhelp@jbconsultinsystems.com to get started.