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.
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).
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:
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.
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:
oversee the process:
The below visualization shows an example of a screen that would cover just some of the needs that I described above:
In the next steps, I will focus and extend each point mentioned above and explain how they are typically managed, based on our experience.