1. DO IT YOURSELF COMPENSATION
Houston Compensation & Benefits August 23, 2016
Lane Transou, CCP, GRP, SPHR, SHRM-SCP
Lane Transou & Associates, LLC
Lane Transou & Associates, LLC

2. Todays Build will have 4 key steps
Blueprints
Identify what to build
How it will work
Data needed
Approvals needed
Assessing the foundation
The stability of the foundation is important to the strength of the structure
Knowing the jobs
Job families
Career Levels
Tools and Materials
Survey data
Market data
Building the structure
Benchmarking
Building your workbook
Lane Transou & Associates, LLC

3. Blueprint: Identify what to build
Market based compensation structure for base pay
Company information
Houston Imagination Company
Insurance Company
Small company with about 60 employees
Revenue $50,000,000 annually
Located in Houston
How will this be used
Pay decisions
Recruiting
Merit
Reporting
Easy to update
Grow with the company
Lane Transou & Associates, LLC

4. Blueprint: what information is needed -Job Information-
Job Title ID
Job Titles
Job Family
Career Level
Job Grades
Exemption Status
Last Benchmark Exercise
Lane Transou & Associates, LLC

5. Job Information Sample
Lane Transou & Associates, LLC

6. Blueprint: What Information Is needed -Employee Information-
Employee ID
Employee Name
Hire Date
Job Title ID
Job Title
Exemption Status
Gender
Age
Department ID
Department
Supervisor
Annualized Base Salary
Career Level (if available)
Job Grade (if available)
Lane Transou & Associates, LLC

7. Basic Census File Usually from HRMS
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8. Blueprint: what information is needed -Market Data-
Survey Name and Date
Job Code
Job Title
Job Level
Market Scope(s)
# Incumbents Reported
# Companies Reported
Market Base Pay 10th%/25th%/Median/Mean/75th%/90th%
Market Total Cash 10th%/25th%/Median/Mean/75th%/90th%
Lane Transou & Associates, LLC

9. Blueprint: identify your controllers
Job Level Data
Job ID (unique numeric identifier)
Job Grade
Career Level
Job Benchmark
This data will feed into HRMS at the employee level when job code is entered
Lane Transou & Associates, LLC

10. Blueprint: Approvals Who Makes the Decisions Avoid being red tagged
Approval to start building
Approval for project costs
Avoid being red tagged
Lane Transou & Associates, LLC

11. Assessing your foundation: Know your jobs
Identify the Following
Jobs to Benchmark
How many unique titles
Job Descriptions
Up to date
Reflect the work that the incumbent is doing
Job Families
HR, Administration, Finance, IT, Legal, Sales
Sub Families
Finance: Accounting/Tax/Finance
Career Levels
Basic education/experience
Job Grades
Lane Transou & Associates, LLC

12. The importance of Job Families and Career Levels
Organizes the jobs into their general discipline
Administration
Finance
Human Resources
Legal IT
Job Sub-Families
Further define disciplines
Accounting
Tax
Lane Transou & Associates, LLC

13. The importance of job families and career levels
Within a Job Family are Career Levels
Executive
Managerial
Professional
Technical
Administrative
These levels are further identified by education and experience
Lane Transou & Associates, LLC

14. Sample career level
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15. Assessing Your foundation: Know your company
What Is Your Industry
Company Revenue
What Is the Company Compensation Philosophy
Location of employees
What Jobs Provide High Impact To the Organization
Lane Transou & Associates, LLC

16. Assessing your Foundation: know your Market
What Industry
Identified by NAICS or SIC codes
Who Are Your Competitors
NAICS North American Industrial Classification System
SIC Standard Industrial Code
Lane Transou & Associates, LLC

17. Tools and materials Compensation Systems Market Data Excel /Access
Market Data Systems
HRMS
Enterprise Systems (modules)
Market Data
Survey Databases
Kenexa/ERI/PayScale
Participation and Purchased
Mercer/AON Hewitt/ Willis Towers Watson
Private Surveys
Industry Based
Lane Transou & Associates, LLC

18. Tools and materials What’s In a Survey Job Titles Job Levels
Does it have jobs that match most or all of your jobs
Is it specific to a particular population
Job Levels
Use your career levels to align
Job Summaries
Brief description of the job
Participant List
Lane Transou & Associates, LLC

19. Surveys What’s In a Survey
Scopes allow you to narrow down to your industry and size
Industry
Location
National to Local
Revenue
Employee population
Market Data
Base / Total Cash / Bonus / Long Term Incentive (stock)
10th% /25th%/ 50th% / Median / Mean / 75th% / 90th%
Number of companies reporting / number of incumbents
Lane Transou & Associates, LLC

20. Benchmarking Match to the job summary
Focus on core roles and responsibilities
Benchmarking is about the job not the person
Education/Experience in job matters
Level
Executives – measure from reports to top executive
Managers/Directors – years of managerial experience
Supervisor – does not manage people
Professional – years of professional experience, independence and education
Top of this realm is the lead or manager of a function
Clerical – years of work experience and job complexity
Technical - level of training
Lane Transou & Associates, LLC

21. How Career Levels map to survey data
Company Career Level
Willis Towers Watson
Mercer
Administrative 1
U1/T1 - Entry
Entry
Administrative 2
U2/T2 - Intermediate
Experienced
Administrative 3
U3/T3 – Senior
Senior
Professional 1
P1 – Entry Professional
Associate
Professional 2
P2 – Intermediate Professional
Experienced/Intermediate
Professional 3
P3 – Senior
Manager 1
M1 - Supervisor
Supervisor
Manager 2
M2 - Manager
Manager
Manager 3
M3 – Sr. Manager
Director
Lane Transou & Associates, LLC

22. Benchmarking Review the job summaries: Job Title: Accountant
Does it match:
The primary duties of the job
Survey summary will not capture all duties
The career level for the job
Managerial/ Professional / Technical / Administrative
One benchmark per job per survey
Job Title: Accountant
Mercer
Accountant B Budgets
Accountant B Financial
Accountant B General Accounting
Accountant B Credit
Lane Transou & Associates, LLC

23. Benchmarking When is it a benchmark? Weighting a job benchmark
80% description match is a good match
Less than that is not a match
Weighting a job benchmark
Used when a job benchmark is close but not quite
Apply -20% or +20% when applicable
Weight a job and not an incumbent – include in benchmark summary worksheet
How many benchmarks
One job match per survey
Final step: Review Benchmarks with managers
Lane Transou & Associates, LLC

24. Benchmarking: Golden Rules
Benchmark the job and not the person
Match the job role not the job title
Focus on primary duties and responsibilities
Exact matches are rare
Be consistent with levels
Benchmark to manager only if the role manages people
One benchmark per job per survey
Market Data is the Output not the Input
Lane Transou & Associates, LLC

25. Survey Job Summary Sample
ERI #
Title
Description
4003
Administrative Assistant
Supports an organization or department by performing administrative services. Assists management with administrative tasks such as tracking and compiling information of interest. Prepares various reports detailing the administrative information handled by the position. Reads and answers correspondence. May handle confidential information. NOTE: This is not a secretarial position. 91
Customer Service Manager
Manages by directing and coordinating subordinate customer service staff in connection with any product or service offered. Manages workers who investigate complaints, such as those concerning rates or service. Analyzes reports of findings and recommends response to complaints, considering nature and complexity of complaints, requirements, and actions of subordinates to ensure settlements are made correctly. Studies schedules and estimates time, cost, and labor estimates for services, and/or completion of job assignments. Develops and implements methods and procedures for monitoring work activities, such as preparation of records of expenditures, progress reports, etc., in order to inform management of current status or work activities. Analyzes department budget to identify budget needs and/or reductions, and may allocate operating budget's funds. Interprets company policy to employees and enforces company policy and practices. May authorize retention of data and preparation of documents for use during governmental or customer inquiries. May recruit, hire, train staff, evaluate employee performance, and initiate promotions, transfers, and disciplinary action.
19998
Human Resources Manager
Manages Human Resources staff and plans, develops, recommends, and implements human resources activities, policies, procedures, and programs for an organization, assisting upper management as requested. Manages activities relating to staffing, employee education and training, management development, labor relations, affirmative action, benefits administration, and salary administration.
Lane Transou & Associates, LLC

26. Benchmark Worksheet
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27. Survey Market Datasheet
Lane Transou & Associates, LLC

28. Pull it all together Multiple Data Sheets
Job Data
Employee Data
Benchmarks
Survey Job Summaries
Survey Market Data
Settings:
Aging
Drop Down Lists
Tenure
Create Employee Market Data Worksheet
Excel =vlookup as the primary command to pull data from other worksheets
Updates to the data sheets will carry over to this worksheet
Lane Transou & Associates, LLC

29. Pulling it all together
Lane Transou & Associates, LLC

30. Employee Market Data pulls from other worksheets
Lane Transou & Associates, LLC

31. Analysis By using a =vlookup command you can insert analysis columns.
Lane Transou & Associates, LLC

32. What to measure Variance of base pay to market median
Shows how far off base pay is to the market middle
Less than 75% is a concern for paying too low
More than 125% indicates pay is too high
Before adjusting pay review the job and benchmark.
Employees in the same job title should be reviewed.
Use hire date to compare compression issues
Use market median to build grade structures and ranges
Those positions that have close market median may be in the same grade
Can move up and down a grade
One job for each job title (no jobs in multiple titles)
Lane Transou & Associates, LLC

33. What to measure Market Data Distance between 25th% to 75th%
Indicator of data reported
Median/Mean difference
Year over year changes
Speaks to the market movement
Lane Transou & Associates, LLC

34. Ongoing measurement
The Database is built your analysis opportunities are endless
Updates are fast
Update each data sheet in the same format and copy paste into workbook
Primary Market Data File will update
Errors are minimized
Compensation should be reviewed once a year
Every two years at the least
Companies in high transition no less than once a year.
Lane Transou & Associates, LLC

35. Considerations Before Building a compensation system
Plan Before You Start
Time
Benchmark all jobs or job groups together
Not one at a time
Its about the job and not the person
Discipline
Consistency
Maintenance Plan
Lane Transou & Associates, LLC

36. Thank You Questions? Lane Transou, CCP, GRP, SPHR, SHRM-SCP
Lane Transou & Associates, LLC
Lane Transou & Associates, LLC