AFOA HR CONFERENCE 2015 Compensation 101 The Jouta Performance Group

Agenda Introduction Compensation 101 – Art or Science? What is your compensation philosophy? Next steps Going to talk about what prompted this session to occur, and what they hope to get out of today. Employee survey – said comp review is important to do.

Compensation 101

Overview of Compensation Philosophy Policy Base Pay “Add On” Pay Incentive Pay Benefits and Perks Administration

Philosophy The “guiding principles” that drive decision making about compensation. Spells out why the company makes decisions it does about how to pay an employee One size does not fit all Internal: What business are we in? What stage of growth are we in? ( start up vs maturity ) What are our values? What are the values of our workforce? Internal political sensitivities (Community members) External: What is happening in the market – competition, political environment, economy

Policy Derived from the philosophy. Outlines specifics such as: Lead, lag or meet the market? Market based or classification based system? How is compensation comprised (base pay, incentive pay) Determining base pay – geographic location, supply/demand of talent, internal equity (measuring job differences and the value of positions to the organization) Determining increases – performance, tenure, COLA, profitability, competition for talent etc. A compensation system takes into account Internal Equity, External Equity and the ability to pay. Ability to Pay in First Nations where you are heavily funded by external organizations (ex. AANDC). Also think about future revenue streams and how that may impact your policy. Need to speak about a person being red circled, green circled…

Base Pay – Market Based Start with good data (internal job descriptions, external surveys – AFOA BC 2015) Determine progression from lowest to highest job Determine current place in the market Compare to desired market position Develop pay bands and salary ranges Surveys – compare apples to apples – use credible data sources Job Descriptions – KSARR’s

Anatomy of a Salary Band 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile Min Q2 Q3 Max Surveys – compare apples to apples – use credible data sources Job Descriptions – KSARR’s Mid Midpoint is typically market “weighted average” or “median” (50th Percentile)

“Add On” Pay Overtime, on call, shift differentials, working stat holidays etc., Understand the legislative environment and how it applies to your organization Add-ons can potentially increase costs 30-50% above base pay.

Incentive Pay Not new! Oldest form of compensation in the world. Specific pay for specific output. Today incentive pay is usually based on reaching performance targets tied to organizational goals. Other forms of incentive pay include profit sharing, retention or sign-on bonuses. Organizations reward different things: performance, skills, innovation, tenure etc.

Benefits and Perks Are benefits cost shared or employer paid? Group benefits (medical, dental) Income protection (Life, AD&D, STD, LTD, C/I) Employee Assistance Programs Paid time off (vacation, stats, other) Retirement (pension plans, RRSP) Perks – tool reimbursement, education, discounts

Administration Based on your philosophy and policy Timing of employee compensation reviews Timing of market reviews How employees move through their salary ranges Clarity, Transparency, Ease of Administration

Movement through a Salary Band Min Q2 Mid Q3 Max Inexperienced New in job Unskilled Low Performers Competent Solid over time Fully successful Experienced Meets requirements Very experienced Top performers over time Exceptional Surveys – compare apples to apples – use credible data sources Job Descriptions – KSARR’s Merit Pay

Philosophy How to create one?

Your Total Compensation Today What is “compensation” Why is it important? What do you think your current compensation “philosophy” is? What is working right now? What is not? Do staff understand your compensation philosophy and plan? Think about Maintenance Employees and the funding that you receive – how does this scenario affect your philosophy.

HR Strategy + Compensation Culture +Protection + Productivity _____________ = Organizational Performance Compensation touches all of these areas

Defining your Philosophy Link to business strategy Reward behaviors that drive results Measure return – define and track

Defining your Philosophy Start with creating a mission statement for Total Compensation The WHY!

Considerations for Policy Base Pay “Add On” Pay, Incentive Pay, Benefits and Perks What is in play currently? Does the current state support the new/revised philosophy statement? What needs to change?

Next Steps

Next Steps Develop the Policy to support your Total Compensation Philosophy Create the work plan for developing your compensation structure. Work plan will include: Ensuring you have up to date position descriptions Rank positions from lowest to highest in the organization Obtain current and relevant market data Compare and contrast positions to market and identify initial gaps in internal equity and external equity Develop salary bands/compensation grid and place positions within grid Final “sore thumbing”

Next Steps Develop action plan to bring incumbents to desired place within range, when and where possible. Document your administration process in order to operationalize the policy Develop the communication strategy to staff. What will you communicate? What can they expect in the future? Stick to it!

Presented By: The Jouta Performance Group Inc. www.jouta.com Invest in your people today, and protect your investment tomorrow. 604.488.8885