Educate Your Managers About Your Salary Compensation Plan
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Educate Your Managers About Your Salary Compensation Plan

What Managers Need To Know About Salary Compensation

You actually may want to show the manager the salary structures. If you’ve got grades 1 through 15 or whatever that happens to be, let them see what the salary compensation structure looks like and what the minimums are and the maximums and the midpoint progressions and that sort of thing. They probably need to see the in-depth knowledge of how the incentive plan and the stock plan works.

When employees have questions, the research indicates they go to their manager first to see what the answer might be. So educate your managers on the incentive program, the stock program. If you want to get the absolute most that you can from your salary compensation plan, make sure your managers know how the game works. They also need to know things about what happens in certain specific situations, how to compensate new hires. When they hire somebody in, what are the things they need to look at in determining a hire rate.

If somebody is prompted, what are the possibilities, first of all, of getting somebody promoted and then what happens at that point. Do you do a pro-(rated) merit, do you have a promotional increase you add on to it, is there no dollars attached, how do I change the title, et cetera. They should probably know all that, and how to process all the paperwork associated with not only promotional increases but any kind of salary increase that’s being granted.

They also should know the important dates in salary compensation. And most comp people actually have a calendar. They run through the same kinds of things virtually every year. Stocks may be awarded at a certain time. And bonuses may be awarded at a certain time but they should understand what those dates are and what roles they’re going to play in that whole process.

The manager also needs to know information about their subordinates. The reason is that they need to know something about the salary compensation plan. If they don’t have up to date information on their employees, you really are injuring them in making fair and consistent salary compensation decisions. They need to know things like the title performance rating, salary rating, something about the salary history, incentive stock history for a particular employee. And what the job family looks like and what the progression could be for the individual. They should also know something about the employee to make fair and consistent decisions about salary compensation. You can communicate all of this through emails, internet, publications of one sort or another. You have lots of ways you can get the message across to your people.

You have to be somewhat flexible. Compensation at the HR level should be managed by budgets, managed by bottom lines. Here’s your pool of stock. Here’s your pool of incentive dollars. Here’s your merit increase budget. Manage within these budgets but pretty much let the managers do what they think they need to do.

As long as you provide them with the right tools and information and the training, trust that they’re going to make fair and consistent decisions. You should have a bias toward accepting what your manager’s decisions may be as long as they’re staying within their budgets.

Train your managers. Teach your managers about the salary compensation program. They’ll actually even be happier employees because of it and almost always when you do compensation training for managers, they buy into the concept. It’s not like you’re going to create problems by training them. And again, you really can’t train the managers enough.

Edited Remarks from “The Seven Deadly Sins of Employee Compensation Plans (and How to Fix Them)” by Rick Olivieri

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