When it comes to Pay Review and setting pay policy, HR can lose valuable time in complex manual processes and end up making do without the kinds of tech tools they now have access to for helping crunch the data to inform important decisions. Here Senior Reward Consultant Holly Coe identifies four main areas of concern, and outlines how Innecto's Advance tool can help mitigate.
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Data gathering – internal and external
Step one is to understand your pay profile by digging into the data for all employees: current salary, location, start date, internal range, performance rating, job family, market comparison. This is one of the most time-consuming elements of Pay Review, typically taking many man hours, but the detail enables the entire process.
By connecting your internal data analytics with a firm understanding of the market you can be more targeted in determining pay review, flush out high-risk departments, positions, grades or individual outliers.
Common pitfalls: proceeding to the decision-making phases without doing this properly. This is also the time to consider whether you need to buy in external market data to understand competitors’ pay positions and how employee salaries compare against the market. Without doing this how do you identify your flight risks, your under-valued and over-valued roles and any unfair practices with regards to tenure, level, gender or ethnicity?
How Advance helps: As part of the onboarding process with Advance, we show clients what the platform does, the data it needs and when it needs it. Some is needed up front and some later, so while Advance doesn’t specifically help with data harvesting, it provides a checklist to collate the data in one place.
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Model Pay scenarios and define your budget spend
These days, flat across-the-board increases are rare. More commonly, pay policies need to consider the nuance of ranges, bands, internal equity and how people compare against the market: Who is getting what? What does pay compression look like? Is it possible for workers to receive more than those a level above them? How would the budget be impacted by a change in pay for large numbers of workers in low- or high-paid positions? How low are our salaries for the lowest-paid employees?
With this data at your fingertips, you should be able to identify the potential pay pot you need as a useful starting point for deciding the immediacy of your pay review and putting in place an ongoing pay policy to address any issues.
The most complex part of the process is calculating how to distribute your budget against your new or existing policy criteria. We know from experience that this modelling and remodelling can take time and a lot of collaboration between HR and Finance.
Common pitfall: realistically, spreadsheets are no longer feasible or sensible for this.
How Advance helps: Advance facilitates this process by harnessing the data and enabling HR and decision-makers to dynamically remodel Pay Review scenarios by showing how certain changes could impact the budget at the click of a button, whether applied to one employee, the top 10% performers or an entire department. Provisionally allocating budget by department or grade also allows you to understand the wider impacts on internal equity, keep tabs on external equity by integrating market data comparisons and assess staff performance within the organisation and against the market.
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Ensure fairness and equity
Driving fairness and equity throughout the Pay Review process is an increasingly hot topic, as it should be, and balancing what the organisation can do and what employees want can be challenging.
Common pitfalls: Striking the right balance is essential to the employer-employee relationship. It is increasingly difficult to prove an evidence-based approach without using the right kind of technical platform.
How Advance helps: By overlaying a company’s gender and ethnicity data and policies to the system, Advance help you review the ‘before’ and ‘after’ impact of a particular scenario on certain populations of a workforce, and address it where necessary.
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Administering the process – gaining manager buy-in
After the gathering of the data, the second most time-consuming element of Pay Review is the overall administration: chasing managers, amending employee records, resending to managers.
Common pitfalls: If you have a manual, paper-based process for this things can get messy.
How Advance helps: With separate logins for each manager, they can log into the system to access their specific employee population and review suggested pay increases, adding comments and sending back to HR. HR can either amend for reappraisal or simply amend and finalise. Either way, the changes are synchronised and the data has one source of truth: quicker and easier for managers and providing HR with an oversight of all managers’ progress.
