Canadian HR Reporter

CANADIAN HR REPORTER May 15, 2017 FEATURES 17 COMPENSATION Looking to build a better culture? Set compensation strategy accordingly By Mykkah Herner O rganizational culture matters now more than ever. It is the unique and varied personality that is associ- ated with each organization. It is the set of values and rules that unite those in the organization, guiding them toward a similar business goal. With five generations in the workforce, we're seeing more di- verse needs and motivators across employee populations. is has brought to the forefront the need for a clear organizational culture that allows employees to opt in to the organization. HR leaders have long been hip to the value of organizational culture in accomplishing busi- ness success. And executives are starting to see the importance of having a defined organizational culture, engaging employees and communicating with employees. And the way employers pay says a lot about them as organizations. Compensation should be a reflec- tion of and an extension of com- pany culture. More than half (57 per cent) of organizations agree compensation is becoming more important to their executives, ac- cording to PayScale's 2017 Com- pensation Best Practices Report based on a survey of 7,700 HR leaders, executives and compen- sation experts (including 641 in Canada and 5,316 in the United States).is has to do with the in- creasing value placed on culture and the growing link between compensation and culture. Often, companies put their mission statement or their values in writing on the wall. However, it typically matters more to employ- ees that organizations actually live their values, rather than proudly display them. One of the trickiest problems employers can run into is when employees feel a discon- nect between espoused values and actions. Compensation is one of the first things that falls under employee scrutiny. So, how do compensa- tion and values connect? If employees are the most valuable asset, pay fairly As we continue down the path into knowledge-based work, em- ployees are becoming more and more impactful to the success or failure of a business. Nineteen per cent of respondents to the PayScale survey said having tal- ented employees sets them apart from their competitors. at said, only 44 per cent of employers said employees feel they're paid fairly, and even fewer employees agreed (20 per cent). First and foremost, if an em- ployer is going to purport to val- ue employees, it should pay them and pay them fairly. at means making sure their pay: is market- competitive, rewards high per- formance, is more competitive for mission-critical jobs, and is consistently applied across the organization. In a fast-paced organization, examine pay frequently A lot of organizations are proud of their fast-paced environments. ey create a lot, they sell a lot and they engage customers a lot. When these same employers turn around and give raises annually, or even bonuses annually, their compensation is inconsistent with their culture. Fifty-four per cent of compa- nies have done a market study within the past year, according to the survey. irteen per cent reference market data for indi- vidual jobs at least weekly. When it comes to bonuses, six per cent offer project-based bonuses, 10 per cent do it monthly, and 16 per cent provide quarterly bonuses. With more frequent payouts, it is much easier to align to the speed of business and reward the be- haviours that are driving business results. If open communication is valued, prove it A lot of organizations tout an open-door policy, or say they val- ue communication. Often, they'll talk about transparency and share organizational goals. Sometimes, they talk about clear decision- making practices. Increasingly, organizations are turning to pay transparency. Some reject it outright, believing pay transparency is all or nothing. But there is a whole spectrum of pay transparency possibilities, and pay transparency often means sharing the rationale for pay, not necessarily actual pay amounts. Nearly half of all organizations aim to be transparent in 2017, ac- cording to the PayScale survey. As with other ways of fostering open communication, the end goal isn't transparency, but increased trust, buy-in and engagement from employees. If managers have autonomy, help them out At most organizations, managers are responsible for engaging their team. ey are expected to help them grow and develop, perform and deliver results. Often, they do this with one hand tied behind their backs as they're not always given the authority to allocate increases. Only 12 per cent of managers approve compensation, and only 42 per cent can even recommend compensation for their employ- ees, according to the survey. So it's no wonder that when it comes to communicating compensation, just 19 per cent of respondents trust managers to have tough pay conversations. And yet, only 30 per cent actually train managers on compensation. If an employer gives managers responsibility for engaging their team, it should give them some authority and training as well. What should be targeted first? With so many ways to emphasize organizational culture through compensation, there are a lot of helpful actions to take to begin to connect the dots. Here's a good place to start: Set compensation strategy: e compensation strategy is the brain of the compensation plan. So, get smart about how you al- locate compensation dollars. Fig- ure out what matters most and allocate dollars that way. Hint: It should fit the corporate culture. If you value teamwork, why not give a bonus to someone who goes out of her way to help a peer? If you value performance, don't give ev- eryone the same raise or year-end bonus. Measure employee engage- ment: Increasingly, the link be- tween employee engagement and business results is becoming clear. Many employees who feel they are underpaid, whether they actually are or not, intend to look for a new job in the next six months. If you want engaged employees, ask them what works best with an engagement survey. Just about half of organizations agree compensation drives en- gagement at their organization, but only 26 per cent have changed their compensation strategy as a result of engagement survey feed- back, according to the PayScale survey. Improve communication around pay: Decide how trans- parent you want to be and start sharing more information about compensation with the organi- zation. A total compensation statement is a great start — many top-performing companies share these with employees. e one caution to increasing communication is to develop clear compensation objectives and the plan to accomplish them before communicating too much to em- ployees. Once you start sharing, you'll get more questions. An- other tip: Get all your managers in sync with clear talking points so responses are consistent across the organization. Pay for performance: Link performance with pay in some way, if you are legally able to. Only 11 per cent of respondents to the survey don't reward performance. Although organizations provide both monetary and non-mon- etary rewards for performance, monetary rewards topped the list: 54 per cent give bigger base pay increases, 35 per cent give a bonus with no formal plan, and 29 per cent give goal-based incentives. ey say when you really care about something, you should put your money where your mouth is — and I totally agree. To be com- petitive, get the best talent and really be a great place to work, organizations have to put their compensation where their cul- ture is. Mykkah Herner is a modern com- pensation evangelist at PayScale in Seattle, Wash. For more information about the study, visit www.payscale. com/cbpr. If you value teamwork, why not give a bonus to someone who helps a peer? If you value performance, don't give everyone the same year-end bonus. Canadian Payroll Reporter is designed to keep you up to date on legislation, regulations, court decisions, technology advances and other developments that affect payroll departments. STAY ON TOP OF PAYROLL LEGISLATION To order your subscription call 1.800.387.5164 | 416.609.3800 www.payroll-reporter.com/subscribe Subscribe today for only $179 Order No. 20186-17 Payroll Reporter Can R Can R adian adian a www.payroll-reporter.com September 2016 see BRITISH COLUMBIA page 7 PM #40065782 Legislative Roundup Changes in payroll laws and regulations from across Canada News in Brief pg. 4 Feds still working to fi x Phoenix payroll problems|B.C. Tax Commission to issue report in October|Little change in average weekly earnings in May Ask an expert pg. 5 Reporting fake SINs|Successor employers and vacation entitlement |Maintaining benefi ts while on leave Alberta Reminder: Minimum wage rates going up The general minimum wage rate in Alberta will rise from $11.20 an hour to $12.20 on Oct. 1. The rate will now apply to liquor servers since the government is eliminating a separate minimum wage rate for them on Oct. 1. Other minimum wage rates are also going up at the beginning of October. The rate for certain salespersons specified in provincial regulations will rise from $446.00 per week to $486.00. The rate for domestic employees who live in their employer's residence will in- crease from $2,127 per month to $2,316. Labour Minister Christina Gray says the government will keep an see CONSIDER on page 6 Credit: Adwo/Shutterstock New folio pg. 3 The CRA has retired its Employee Fringe Benefi ts Employer Interpretation Bulletin and replaced it with a new Income Tax Folio chapter. Advocacy leads to changes Canadian Payroll Association works with government to ensure payroll's voice is heard BY SHEILA BRAWN CODES NOW replace footnotes on the T4. There are now higher thresholds for Can- ada Revenue Agency (CRA) and Revenu Québec accelerated remitters. There are now graduated penalties for late remittanc- es. The timeframe for issuing electronic ROEs now better aligns with pay cycles. These are just some of the changes the Canadian Payroll Association (CPA) has successfully advocated for governments to make in recent years. From source deduc- tions to year-end reporting to employment standards and workers' compensation, CPA president and CEO Patrick Culhane says the association regularly works with government officials and civil servants to make payroll-related laws more efficient and effective for employers, government, employees and the general public. "Advocacy is important to us," says Culhane. "Our core purpose is payroll compliance through education and see GRADUATED page 2 Payroll technology changes don't have to cause headaches Research, well-defi ned plan and stakeholder inclusion help transition BY KIM GROOME BECAUSE PAYROLL plays such a critical role, it can be easy to jus- tify keeping your existing solution even when it means managing work-arounds, manual processes and maintaining external spread- sheets. In spite of this, to provide the best possible experience for em- ployees and to make a more strategic impact in your organization, The Canada Revenue Agency in Ottawa has worked with the Canadian Payroll Association through the years in making changes to payroll-related laws. Credit: MJgraphics (Reuters)

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