No industry is immune to the ill effects of poor remuneration, including higher education. Compensation studies can help you retain and attract highly talented faculty members in an employee-driven labor market. They can provide valuable insights on the market value of each position and benchmark salary ranges. By compiling a compensation best practices report every three years, you can easily determine the best salary ranges for managers to ensure equity and eliminate pay compression at all job levels. Keep reading to learn more about the benefits of carrying out compensation studies.
What Is a Compensation Study?
A compensation study is an in-depth comparison of your current pay practices against the best practice benchmarks for your industry and location. Any employer looking to establish competitiveness in the market conducts such studies regularly to ensure pay equity and fairly managed compensation. Based on the reports you compile, you can accomplish the following in your organization:
- Harmonize your staff salaries with existing state and federal employment laws
- Assess the fairness of your staff and manager pay and benefits
- Revise your current compensation program accordingly to ensure that it’s sustainable and equitable over the long haul
- Determine a proper budget plan to support the gradual realignment of compensation schemes
Salary equity studies have numerous advantages over alternative approaches. These include:
1.Efficiency
There are many free compensation resources all over the web, but these don’t usually constitute a well-constructed pay study. Pulling data from various disjointed online sources poses an interpretation challenge and can create more problems for your team. This way, you may end up exhausting your research resources before you can extract enough meaningful industry insights. Tiny bits of inconsistent data may not capture all the key compensation patterns and trends you need to see. Redesigning your pay structure based on such information may result in weak internal salary equity. Also, the risk of paying more or less than you should for staff in certain positions is high. However, a well-structured study provides a baseline view of your compensation ideology. It’s a much more efficient process to work out equitable pay for personnel in various positions.
2.Fairness
Fair compensation is a balancing act to avoid losing your best talent or spending more than you have to on salaries, hurting your bottom line. Only a well-constructed study can provide the in-depth industry insights needed to avoid overpaying or underpaying any of your staff. Compensation studies can reveal what your competitors are paying for each role, serving as a reliable benchmark for a revised pay structure. It isn’t always easy to justify shared pay levels for CEO or CFO roles, but a market report can help you make a case for it. Most human resource professionals rely on compensation studies to accurately determine salaries for specific positions and ensure fairness across all ranks. This approach is appreciably objective as it provides a third-party perspective on your compensation program without bias or sentimental influences.
3.Transparency
Compensation shouldn’t just be fair and equitable—it should be deemed so by your employees. Your pay scheme will seem fair and be more acceptable when you’re transparent and consistent about the strategy and criteria behind it. This is important to attract millennials in the workplace, who demand transparency around salaries. By conducting a compensation study, you can establish a justifiable formula to inform your pay decisions. This way, your managers or HR executives can have an easy time explaining your pay strategy and decisions to all impacted staff.
Are you looking for a consulting firm with extensive experience in compensation and other human resources matters? Contact our seasoned experts at McKnight Associates, Inc. today.