COMPENSATION 201: DETERMINING APPROPRIATE SALARY INCREASES HR Tech Group May 15, 2013

Today Salary increase decision Salary increase matrix Communicating salary increases Q&A 2

Everyday Reward Questions Should restaurant tips be calculated before or after tax? Do you feel pressured to tip at a restaurant even if you feel you received bad service? Would you tolerate higher prices at a restaurant in order to do away with tips? 3

Group Exercise Job Ranges: $41,000 - $55,000 (Midpoint: $48,000) Budget: 3.5% (3.5% of $193,000 is $6,755) 4 Individual Current SalaryPerformanceNew Salary Salary Increase % Alex$57,000Exceptional performer Betty$42,000 Recently promoted, now fully meeting expectations Calvin$48,000 Been in role 2 years and not performing Diana$46,000Fully meeting expectations Total$193,000

Salary Increase Matrix 5 Salary Range Placement Performance RatingBelow MidMidAbove Mid Among the best – exceeds expectations Highly effective – meets expectations Needs improvement – does not meet expectations

Salary Increase Factors Salary increase budget Ability to fund Individual performance Salary range for the role and where the current pay is within the range Career progression and increase history Relativity to other employees’ pay Cost of living? Location? Years of service? 6

Compensation Communication Why is compensation communication critical? Huge opportunity – both to do good as well as harm Many messages in one discussion – culmination of all performance discussions to date Set the tone and expectations for future performance discussions What’s the payoff? Better relations with your team Build trust in the compensation process and your decisions Clarity for both parties as to expectations 7

Effective Pay Conversations 8 1. Set the stage2. Start with process and due diligence3. Discuss relevant factors and inputs4. Deliver the news and rationale 5. Circle back and look forward to the future

Scenario 1 Avery has been in her position for 2 years. She has exceeded performance expectations each year and has become the model employee in her team. She has been given the responsibility of mentoring junior employees as well as more senior level design and coding responsibilities. Avery is currently being paid right below the midpoint of the market range. Decision: Increase due to individual progression within the range 9

Scenario 2 (see handout) 10

Lessons Learned What works well? Any surprises? How are you going to apply this to your organization? 11

Thank You