Some Simple Steps “Traditional” Employers Can Take to Modernize Their Pay Practices

Article main image
Jul 19, 2016

At PayScale, we strive to help all kinds of organizations embrace modern compensation practices to engage their workforce and drive results. Even employers that think of themselves as more “traditional” than “modern” can take a few steps in this direction, and the good news is that you don’t necessarily have to spend a lot of money or change your entire culture to do it. Check out these modern comp practices that any organization can adopt and why they matter.

“We’re not the kind of company that can share everyone’s pay”

Your employees want you to be more transparent and talk to them about pay. Transparency doesn’t mean that you have to share everything but you should consider sharing something. Last year, PayScale surveyed 71,000 employees and found that satisfaction is very closely linked to employer transparency about their pay practices. Even if your company’s business goals don’t warrant a market-leading compensation strategy, the survey found that simply talking about pay in the first place can positively impact employee satisfaction. A whopping 82% of employees who are paid below market said they’re okay with it when their employer explains why

The 2016 PayScale Compensation Best Practices Report found that nearly half of top performing companies embrace transparent communication around pay, so open up that old-school compensation black box and de-mystify your pay practices for your employees.

Pay equity has been a huge topic of conversation lately, from Silicon Valley to Hollywood and beyond. And with the government proposing to keep a closer eye on employers’ pay practices, it’s sure to remain front and center. Stop for a minute, though, and consider ways your organization may already be doing great things in this area, and then brag about it to your workforce as part of your more modern, transparent approach. For example, highlight the diversity of your company’s leaders. Still have work to do there? Share what you’re doing as a company to increase diversity in your upper ranks.

Not doing much of anything yet? Try leveraging other internal resources to pull together a cross-organizational group to start working on it — and then tell your workforce what you’re doing and why it’s important for your business.

“We’re not big enough for career paths”

While you’re talking to employees about pay, why not also talk to them about growing their career with your organization? Partner with your managers to develop viable career paths within different job functions and then encourage them to proactively engage their team members in conversations about their career goals. Think your organization is too small for career paths? Try developing paths across different job functions. With 86% of top performing companies agreeing that “our people are our best asset,” showing your employees a career path within your company sends the message that you value them. It also helps you avoid being a training ground for other companies when your employees take their skills and experience and leave because they don’t see a future with you.

Allow your employees to test out the next step in their career path by providing opportunities for special project work to gain experience and skills. Even if your organization has a large hourly workforce and you’re concerned about productivity when employees are not focused on their primary job, try to take the long view: you’re getting these special projects done relatively inexpensively while developing your internal talent — and you may even see a net productivity gain through increased employee engagement. Taking this approach helps you identify talent early so you can start taking the steps necessary to move them up in their career path and also paves the way for succession planning.

Learning and development opportunities are also a great way to engage employees and help them grow. In fact, 58% of companies plan to offer learning and development opportunities this year as part of their recruitment and retention strategies. No money to spend on training? Why not offer a mentoring program? They’re great because they benefit all involved; the more senior employees get to share their career histories and knowledge, and the more junior employees get exposed to company leaders with a variety of perspectives and experiences. If the idea of developing a mentoring program sounds daunting, consider offering job shadow opportunities to give employees another way to explore potential career paths within your company well before you’d actually promote them into a new role.

“We can’t do anything beyond base pay”

Have you thought about modernizing your company’s total rewards mix lately? Top performing companies offer more of a compensation mix than average companies. Even if many of your jobs only pay minimum wage, you can still get creative here. Look at ways you can introduce small discretionary bonuses to recognize stellar employee performance and then publicize it when you do. Even if individual incentives aren’t appropriate, consider opportunities to incentivize group performance through achievement of team-based SMART goals that will drive your business forward. What about non-cash items? Something as small as a ham or turkey come holiday time or the free use of a prime parking spot as a recognition award can show your appreciation and make a difference to your employees.

Another area within your comp mix to look at are employee perks. I know, I know, perks cost money, which is why I encourage you to get to know your workforce and then get creative. Find out what kind of perks would make your employees’ hearts sing (and while you’re at it, stop paying for perks that don’t; remember it’s only a “perk” if your employees actually value it). Things as diverse as flexible scheduling, free lunches every once in a while, discounted gym memberships, or bring Fido to work Fridays can appeal to your workforce and paint you as a more modern employer. And if you do offer variable pay or perks on top of base pay, don’t forget to tell your employees; total rewards statements are a great way to do this.

Embarking on the journey to modern compensation practices doesn’t have to be an all-or-nothing proposition; even if your company culture still leans more traditional or you don’t have a lot of extra money to spend, taking just one or two steps down the path can put you on the fast-track to positive results for both your employees and your business.