We Need to Talk about Compensation

By Sally McCutchion and originally published on medium.com

Almost every client I’ve ever worked with, has said to me at some stage:

“We need to talk about compensation…”

It’s never the lead-in project, but once you start unpacking how things are working (or not working) within your business, it’s inevitable that the subject of compensation appears on the radar.

How we pay our people sets the standard for value, fairness, transparency, viability and trust.

…But it can also be a much feared and avoided subject on account of its innate power and emotion.

So I wanted to break down the principles that I bring to conversations about compensation because it doesn’t have to be a headache.

All we need to do is take one step at a time.

Two Key Principles

There are 2 key principles that are my go-to’s when it comes to how we pay our people:

1. Consider what your business would look like if all your salary data was made transparent.

2. Stop paying people based on their job titles and start paying people based on the impact of their roles on your purpose, mission and vision.

So let’s break this down…

Is Salary Transparency Right For Your Business?

Making your salary data transparent is a bold move to make, one that requires considerable thought and preparation.

It may or may not be a viable pathway for you in your business but regardless of whether you are considering going ahead with salary transparency or not, there are some really interesting points that are worth thinking about…

If your salary structure is fair and reasonable considering the nature of your business, why would you choose to hide that data?

  • Your people are inevitably making their own guesses as to what others earn so why not put the real facts out there?
  • Give your people the opportunity to understand the whole system, not just their own perspective.
  • If your salary structure is not fair or reasonable, take the opportunity to rectify this, even if you aren’t planning to make salary information transparent.
  • Create the opportunity to have honest conversations around money within your business.
  • Stay grounded in the realities of your industry and the current market conditions. If your salary structure doesn’t conform to a neat and tidy framework, that’s okay. Provide viable data around why there are sometimes exceptions to the rule.

The Status Quo

The current status quo of privacy around salary data and money matters is a long-standing one.

There is a clear link between our attitudes around money today, and the attitudes of the aristocracy for whom money matters were kept wholly private. There is an historical precedent that says…

Talking about money is uncouth, impolite and improper.

My view is this precedent is outdated.

However, we cannot underestimate the impact that decades of money secrecy has had on every level of our lives and businesses.

Gently Does It…

If you get to a place of wanting to make your salary data transparent, there are some really important steps to take before you push the button.

In this video created by my friends at Woo Hoo Inc, Alex Kjerulf sets out the path that leads to salary transparency.

“By the time you are ready to make your salary data transparent, it should be a non-event.”

Watch the full YouTube video here…

Stop Paying People Based On Their Job Titles

The second key principle that I bring to conversations about compensation is untangling people’s job titles from what they get paid.

Here’s the lowdown:

  • Attaching someone’s salary to their job title creates a vacuum around their experience, limiting their engagement based on the connection between their job description and their pay.
  • Connecting salaries to job titles creates a hierarchy whereby certain jobs, tasks or projects are deemed more valuable than others.
  • There will always be a disconnect between your people and your purpose if what you pay doesn’t directly link the two together.

Carving Out Another Way

The alternative to paying people based on their job titles is to pay based on the impact they have on the purpose and mission of your business.

Here’s how:

  • Impact levels make a direct connection between what someone is doing within your business and the impact that their work has on your business fulfilling its purpose.
  • Untangling salaries from job titles provides the opportunity for greater role fluidity because your people will know that they can shift roles without concern for their pay.
  • Your people will be able to contribute to tasks and projects based on what is needed instead of what their job title dictates.
  • A step is taken towards removing the hierarchy of job titles.
  • Job titles such as ‘manager’ can be broken down and turned into specific and transparent accountabilities.

Where To Start

Here’s my guide for mapping out your salary structure against impact rather than job title.

1. Gather the data around salaries and sort them in ascending order.

2. Identify any discrepancies or unfair anomalies and do what you can to fix them.

3. Group the salaries together into clusters that are within a range of each other.

4. Define the impact that each level has on the purpose, mission and vision.

5. Review the levels with key team members for sense checking.

6. Identify what the current process is for people to receive a salary increase/review.

7. Define a process for salary reviews that enables your people to be part of the process.

8. Communicate the levels with your team including the process for someone’s salary level to be reviewed or changed.

Insider tips on this process:
Each impact level can have a salary range.

Don’t change someone’s salary when you introduce the impact level system (unless you need to correct an unfair discrepancy).

Performance does not alter someone’s level or salary. Instead, performance is handled separately by review and adhering to HR legal process.

Your business purpose, vision and mission are critical to this process. Make sure you’ve got them locked down before you start.

Let’s Work Together

I would love to support your business in the areas of compensation, emotional intelligence at work, autonomy, leadership or any of the other subjects that I cover. You can contact me via my website.

And Finally…

Playing For Change is a Certified B Corp, created to inspire and connect the world through music. Born from the shared belief that music has the power to break down boundaries and overcome distances between people.

It’s in the same spirit of overcoming distances between people that I create these newsletters. Finding the opportunities to connect and work together towards a shared purpose.

So what better way to close this month’s newsletter than with a short concert from Keturah, a Malawian singer songwriter whose melodic beats have been dancing for me whilst I’ve been writing today.

Enjoy this one.

Republished with permission.

Featured Image and some paragraph spacing added by Enlivening Edge Magazine. Photo by Ivan Samkov