Everything you need to know about Total Compensation Review

Bartłomiej Podolski

In our practice, we often implement Compensation & Benefits processes that aim to review the compensation of employees and set the new levels for the upcoming year.

Typically, the process is connected with Performance Review (which we sometimes implement, other times we just use the existing outcome of another process), Budgeting, Matching Data to the Market & Benchmarking, Quartiles Calculations, Merit Matrix, Recommendations, Managerial Input and so on.

Often the Review process aims to review not only the Base Salary but also the level of Bonuses and Long Term Incentives.

In larger organizations, especially those that are regulated, it is a common practice to deffer part of the variable compensation. In that case, a deferral matrix that gathers deferral rules and produces outcomes is often used. These outcomes are then an entry point to Deferred Compensation & LTI processes, which I will focus on in another article.

In this article, I would like to share our experience related to the Remuneration Review process that I described above. I will aim to describe an ideal case, although the practice is that each company handles these things in a slightly different way, and not always all the elements are present. Also, sometimes there are special elements that don’t seem to be a standard Comp & Ben practice, and we need to add them separately to the process. An example of such exceptions could be a usage of Swarm or Tribe hierarchies, or preparation of the systems for HRBPs sessions held with selected populations only.

Salary Review Process

Let's start from a plain salary review process.

In theory, it is simple and it looks rather easy from the managers’ perspective (who are supposed to enter the system and do the job).

Salary Review Process from Managers' Perspective

From managers’ perspective, what the IT system does is that it allows them to seamlessly log in (this is important, a system with logins and passwords discourages people from doing their job) and:

  • check comp and performance information,
  • fill in the new comp level for subordinates (according to the system guidelines),
  • check if things are within the budget and if there are no warnings and errors,
  • submit for approval,
  • log -out & forget.

Only the Comp & Ben people (and us:) ) know how much effort it takes from the HR / Administrators’ perspective to prepare this process, which seems so simple from the end users’ perspective.

Salary Review Process From HR / Comp & Ben’s Perspective

The process, and especially its preparation part, is far more complex from the Comp & Ben’s perspective.

What the Comp Team needs to prepare is:

  • define and check if the hierarchy is right (so that the correct people review the right people),
  • define populations of employees (exclusions from the process, who is subject to what and when),
  • set up the budget according to the guidelines (together with exceptions, warnings),
  • calculate the quartiles per person (according to a job family, grades, positions, roles or titles),
  • set up merit matrix,
  • check increase recommendation ranges,
  • check the increase fields (mandatory or legal increases, merit, promotions, lump sums)
  • assign new grade / level in case of promotions,
  • set up approvals workflow,
  • check the profiles and security access rights,
  • kick off the process,
  • oversee the process:

    • check the % of reviews done dashboards,
    • check the budget consumption,
    • react to warning, requests and exceptions,
    • make final approvals,
  • prepare payroll and HCM feeds,
  • prepare and deliver remuneration statements,
  • report the outcomes to the Board.

The below visualization shows an example of a screen that would cover just some of the needs that I described above:

Salary Review Process From HR Perspective

In the next steps, I will focus and extend each point mentioned above and explain how they are typically managed, based on our experience.