Is your organization striving to pay its employees more equitably? If so, great! This series teaches the basics of analyzing employee pay, conducting a wage comparability study of surrounding markets, and developing a new pay schedule based on the results.
Once a comparison tool had been created by staff, leadership and board members can have meaningful discussions about what the internal and external pay data reveals, and take steps to improve pay equity.
At the board level, think and act strategically. What are the primary goals of this exercise for your organization? What outcomes do you hope the staff will achieve? Keep that front and center.
Regarding the scope of work, do you want to make lasting and significant change to employee pay and classification, or just verify you’re on the right track and tweak the pay scale as indicated by the wage comp study?
Don’t get hung up on the costs until the “why” and “how” conversations are undertaken by staff. Budget analysis and feasibility are the next steps, after 2-3 paths forward have been identified.
Who is involved and when?
Once the board has determined the purpose of the project and directs the staff to implement changes, it’s time to undertake confidential and candid discussion among a small group of leadership team members (Executive Director, Finance Director, HR Director and/or Operations Director). Keep detailed meeting notes and assign follow-up tasks to keep the work moving.
Talk values, ideals and possibilities first. Dream big about how you want to change things for the better. There’s plenty of opportunity to scale back and face reality.
To lead inclusively and improve results, involve your program managers in at least one of the staff discussions. The wage comparability study can also be shared with them.
Best practice says the leadership group would present its initial findings and recommendations to a board committee that manages personnel/HR matters. That committee would take final recommendations to the full board. The finance committee will also likely be involved as they consider the financial impact of changes.
The pay scale document should be limited to the executive staff and board members. This will minimize employees comparing their salaries to peers and other departments. (Everyone talks about salaries, don’t fool yourself – but it’s a different thing to see them all on a single sheet of paper.)
Potential Topics for Discussion
This discussion process will likely require several weeks to complete, depending on the scope of work, size of the organization, and its capacity to mange this type of project in addition to daily operations.
Changing Pay Rates – First Pass
Organizations must develop justifiable and consistent methods for adjusting wages across an organization. Keeping detailed notes supports this activity.
From a purely data-driven perspective, how will you make adjustments noted in the previous post for the wage comp study’s different geographic areas, sector representation, and positions?
When addressing pay disparities, if employees believe their wages have been changed arbitrarily, with peers achieving higher gains (or smaller cuts) based on personal preference, you’ll have personnel and morale issues to manage in addition to a pay scale adjustment.
Clear, consistent, transparent communication with staff is vital to the success of this and any HR-related projects.
Thanks for reading! Check back next week for tips on analyzing the financial impact of wage adjustments.