Around half of U.S. employees do not have good visibility when it comes to employee pay and what they could earn after joining a company. These days, though, there is now a growing movement to support transparent salary bands for all workers, no matter where they are. If you find yourself needing to develop such compensation policies, would you know where to start?
Below, we investigate how to go about setting and discussing levels of compensation in your organization. As you read through, you will uncover more about common mistakes companies make during this process and also how to avoid them.
Setting Salary Bands For the Right Reasons
We live in an ever-connected world where employees are more likely to move from one corporation to another. Because of this, it is important to develop a culture of openness and trust between management and their workers.
If you create salary bands and inform your teams of them, this can build a level of open and honest discussion in the workplace. This often ensures employees remain around for longer, as they will have the agency to hit definable goals, receiving rewards when they do.
One of the other reasons salary bands are popular is due to their ability to remove discriminatory pay gaps. As the bands, and any roles associated with them, are set based on specific criteria, it becomes easier to define a person’s contributions. If someone then does not get the compensation they deserve, they have a precedent with which to argue that something is amiss.
Communicating salary bands outside of the company also allows you to gather new hires easier. Showing your competitive compensation to top-tier talent can attract better workers. These people will then do their best to earn the highest salary possible.
What Influences Salary Bands?
When you create salary bands, remember it is not only local salary positions that will need definition. You also need to consider the following:
Skills and Professional Experience
Your bands should take into account how a person aligns with an internal skills matrix. Those who have worked in the role for longer should also move up on a band to the higher echelons of compensation.
Cost of Living
Ensure you equate local salary bands with economic factors for different regions. While geographic pay policies might seem unusual to some, they mean you pay fair amounts based on what people working in those places expect.
Company Revenue
It may seem obvious, but you should only seek to compensate people with what you can afford. You need to ensure you can offer everyone the highest level of their band at any time, based on their performance.
Crafting a Fair Pay Policy
When you create salary bands, it is important you establish guidelines on what fair pay and competitive salaries mean. You should look to your company culture to help guide this. One of the first things you should do is ensure that all roles that have similar levels of competency receive similar compensation.
Addressing Equity in Remote Workforces
One of the most progressive things about bands is how they ensure workers receive pay using a method that makes it much harder to discriminate. Over time, this can reduce unconscious bias and enable managers to make salary decisions without fear of liability.
As this compensation adapts to match the cost of living in different areas, it also ensures everyone has the same potential quality of life. Over time, you can even adjust this as the cost of living in an area changes to match a region’s evolving nature.
Setting Salaries for Different Job Roles
When you create salary bands, make sure to clearly define what is required of each level. As you set the scope of every band, you will be producing a clear document that allows people to see what it means to be in every role.
As people improve in their careers, salary bands allow you a measurable way to move people from Junior to Senior. You can also use the bands to make sure people understand what different responsibilities entail.
When you choose the different salaries for each of these roles, make sure you also take current industry standards into account. You need to ensure that people will consider the band competitive and be able to visualize how to improve themselves.
Performance Evaluation and Salary Bands
Another thing salary bands should communicate is how one’s performance impacts compensation. When a worker receives a performance evaluation, they should have a way of comparing their measurable and specific goals with a band. This allows people to have objectives in mind they can aim for, and helps prevent arguments related to payment.
Salary Bands for Remote Workers
Discussing global compensation for remote workers demands the same steps as with internal teams. Though, you should also make it clear that remote teams will receive different compensation based on factors like:
- Geographic location and quality of life
- Tax implications of other regions
- Empowering remote workers with the tools they need
The more you make it explicit why some people receive specific pay, the easier it will be to prevent discontent.
Compensation Planning With Global PEOs
Not every company has the time or ability to research local compensation standards. Even less know how to handle international salary regulations. For this reason, many companies look to professional employer organizations (PEOs).
PEOs can help you create salary policies and ensure you do not make mistakes common with developing remote salary bands.
Communicating Salary Bands to Employees
Before updating the payroll system, you should discuss any changes with employees and ask for feedback. Continue paying current salaries if they are more than current bands would offer, and do not renege on promises that exist in writing.
When you receive feedback, make sure to respond to it swiftly and in a professional manner. You should prepare for the fact not everyone will agree with the bands. Still, talking will ensure people feel more comfortable with any changes you make moving forward.
Seeking Help With Global Salary Bands
Managing salary bands may seem simple, but there are many different factors that could cause disappointment. It is important to do it right the first time, and communicate it in a way that does not cause consternation. If you need help with either of these, get in touch.
We have a vast array of expertise in helping create global salary bands and remote pay policies. So, send us a message to learn more about how we can help you create internal policies that help your organization as it grows.
