Canadian HR Reporter Weekly

3 Canadian HR Reporter, a Thomson Reuters business 2018 September 26, 2018 e cost piece always comes up in surveys — it's a competitive reality — but employers are having a harder time getting a handle on costs, said McLellan. "ey're adapting to a world where people do move more often than they used to between companies, so even as part of their transparency agenda, (it's about) how they're going to manage base pay, really thinking about how to better simulate the pay progression that people have in the external market in their careers as they might have internally… managing the cost of that with balancing the reality of that to encourage people to stay longer with them." And with legislation barring employers from asking too many questions about prior compensation, starting salaries are that much more important, she said. "Striking a balance between fairness and affordability is a big part of transparency because we all know one of the biggest predictors of pay is what it was when you're hired. So, starting salaries start to become a really important levelling ground in making transparency happen from the very beginning." Boosting transparency When it comes to boosting transparency, one of the key decision points is whether to make pay ranges public, or just the one for the individual involved, said McLellan. It's about deciding what and when to communicate. "e other question is: How are you designing programs in a way that supports what happens when people talk to each other?" she said. "One example is if you have a salary increase program, does it always make sense to have managers agonizing for hours over whether to give someone a 2.1 or a 2.2 per cent increase, where that difference when communicated is a difference that may not even be intentional? So, when we have differences in bonus payouts, are we really clear about the length between the amount in the pay, and really stepping back and thinking about… how can we put the design of the program through a transparency test before rolling out a new program?" It's about the structuring the compensation so people understand it, said Salopek. "(Employers) develop structures, pay grades, incentive programs that they can go out and, in general concepts, explain to their people, so then they can get it and see where they fit within that design," she said. "You're still seeing in the workplace individual compensation is confidential, because of privacy (concerns), but the structure around how you arrive at that compensation level is what is becoming more public, so organizations do that through their intranet, through leaders getting in front of their people. And it's direct communication right from the leaders on 'what's important to us with respect to compensation and what that looks like, and what we value and what we pay for.'" Incentive plan changes Decisions around pay are more complex, and many em- ployers say base pay and short-term incentive programs are falling short of expectations, according to McLellan. "Not surprisingly, changes to these and other related programs are on the horizon." Forty-three per cent of employers are planning on or considering redesigning annual incentive plans, while 37 per cent are planning on or considering changing criteria for salary increases. "Some of the more macro design changes around companies' business models are changing so fast, are we even using the right measures to measure company performance? It's more at the individual level, as maybe we stop using ratings or we change our approach to measuring performance, are we paying for the right things? If people work more in teams, are we still rewarding people for going it alone or are we rewarding team contribution?" she said. It's about deciding whether or not to have a big portion of the bonus tied to individual performance, or isolating some of the top performers to make sure they are differentiated, said McLellan. "ese are the kinds of conversations that folks are starting to have, and it is a bit linked to that transparency question as well, the 'What are we paying for?' question." Employers are taking a more future-focused approach to managing performance, according to the survey, as 45 per cent are planning on or considering changing the focus of performance management to include future potential and the possession of skills needed to drive the business in the future. "(Employers are) looking at not only what the employee has done but what they can bring to the organization, and they're compensating them accordingly," she said. "It's (also) what can an employee control and what do they have control over, and that's what they're basing incentives on. So, you're seeing less of team bonuses and things like that. It's 'What can an individual control and effect?' And they're basing bonuses on that." The structure around how you arrive at that compensation level is becoming more public." Credit: StunningArt (Shutterstock) Fifty-seven per cent of employers said fair pay is a priority for the next three years, and 82 per cent intend to conduct a gender pay or pay equity diagnostic, according to a Willis Towers Watson survey.

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