1. Compensation, getting it right for your practice!

2. Why is it so hard to get it right?
Compensation is emotional & factual
Is “getting it right” simply a matter of paying an individual what they want?
Five key elements needed to deliver effective compensation
Set Specific Goals & Objectives
Use accurate information
Clear integration
Effective communication
Regular re-evaluation
“getting it right” in the eyes of employees can be challenging in the best of situations. Handled poorly compensation can prompt lowered morale, increased turnover, increased costs and decreased productivity. Not exactly a recipe for success.

3. Specific Goals & Objectives
Organizational
Attract the best talent in the specialty?
Looking for innovation or “game changers”?
Looking to maintain present state?
Give autonomy to employees to improve the practice?
Concentrate the power in the responsibilities of a few?
Employees paid better/worse/same? Their view of “fair”?
The answers to the questions let you figure out “What does your practice need to accomplish through people?” And “What do we intend our people to be? Your practice can become stronger by having Compensation philosophy, which is a by-product of clear organizational goals & objectives.

4. Accurate Information
Should you make compensation decisions based upon information via discussion boards, cocktail parties, or industry conferences or employee threats in the midst of a big project?
Should you call your peer at another similar practice? How do you look in orange?
Outside consulting firms & trade associations produce credible salary surveys, which provide practices with a more reliable source of compensation for a position.
Don’t get involved in Collusion. Directly sharing pay information with similar practices could be viewed as “price fixing” and is illegal.

5. Clear Integration
If you use compensation as motivation, goals & objectives must be clearly linked to how employees are paid
It is easy for compensation to have unintended consequences
If you are re-evaluating your compensation philosophy and plans, have an inclusive approach.

6. Effective Communication
DO’S
Set clear goals, align the compensation system, communicate throughout the organization
Use an early, inclusive approach
Deliver “Live & In Person” Have two-way dialogue
Create & use FAQs
Follow up, let the grapevine process it
Think about the idea of “Total Time”
“How can we send this message so that the accurate, results-producing receipt takes the least amount “Total Time”? This is a very different idea than “How quickly can we get this over with,” or “What is the quickest way to get this to every member of the staff?” In an individual’s hands and accurately in an individual’s head so he or she can produce the desired results are two VERY different things! 

7. Effective Communication
DON’Ts
Let one or a few Executives design it in a vacuum
Use one-way communication “sell-in’ ain’t tellin”
Deliver exclusively through technology – , website, Twitter
Think everyone gets it the first time
Focus on “how quickly can we get this over with”

8. Regular Re-evaluation
Business & goals can change quickly
Be proactive – much higher level of organizational control
May not be convenient, but gives you more control
Unexpected repair happens at the least convenient times, requiring greater resources, and lower levels of control

9. Why view these elements as a system?
It’s critical to the success of your practice & it’s important to your employees
It does require both Art & Science
Increase your odds of compensation producing it’s intended results
Set Specific Goals & Objectives
Use accurate information
Clear integration
Effective communication
Regular re-evaluation

10. Decisions to be made Financial- cost/investment
Competitive positioning- lead, lag or average
Competitive advantage- same or different than competitors
Practice’s people strategy- long service or churn and burn

11. Typical components of a compensation program
Base pay
Pay increase options
Special pay (shift, step, location)
Variable pay
Benefited pay is always better

12. What is a salary range?
The range of pay allowed for each job, typically based on market & internal equity
Facilitates administration of
Job offers
Internal equity
Merit increases
Promotions
RangeMax
Range Midpoint
Range Min

13. Compensation Structures
How many types do we need?
Salary Ranges
Clinical Staff
Office Staff
Administrators
“All the same or different?”
Multiple structures can facilitate career growth, very important to employees.

14. Compa-ratio (pay vs. market)
Determines pay strength relative to market benchmark/midpoint
Indicates competitiveness or appropriateness of pay for a given set of facts
Compa-ratio = pay / midpoint (or market)

15. What is the FLSA?
A 1938 law covering minimum wage, pay for time worked, and child labor.
A bacterium that doesn’t respond to most antibiotics.
An organization that protects animals from cruelty.
A new grant program providing free tuition for students who love acronyms.

16. What is the FLSA?
A 1938 law covering minimum wage, pay for time worked, and child labor.
A bacterium that doesn’t respond to most antibiotics.
An organization that protects animals from cruelty.
A new grant program providing free tuition for students who love acronyms.
Child labor, minimum wage, pay for time worked

17. Classification Definitions
Non-exempt (classified/hourly)
Pay for all hours worked
Premium pay for hours worked over 40 in a workweek
Everyone is non-exempt unless proven otherwise!
Exempt (professional/salaried)
Actual duties (not title) must meet certain tests to qualify
Paid a minimum weekly salary for all hours worked
Primary FLSA exemptions: Administrative, Professional, Executive, Computer, Outside Sales
Comp time is not used
Key fact: FLSA status (exempt/non-exempt) does not indicate personal value, pay level, or importance to the organization’s mission!

18. Compensatory Time Also known as “comp time”
Allows for banking time in lieu of current pay
Used by some, but risky
Highly Recommended: pay non-exempt employees for all hours worked when they
were worked
Primary FLSA exemptions: Administrative, Professional, Executive, Computer, Outside Sales
Comp time is not used

19. What are typical manager responsibilities?
Ensure all hours worked by hourly staff are recorded when worked
Correct any mistakes in reported hours
Pay for, but do not permit, off the clock work
Do not offer comp time
Do not “dock” exempt staff- contact HR for help
If you/HR reclassifies a job’s status, explain and support the process
Radio Shack and Family dollar- supervisors. Hewitt Benefits Analysts
Costs of non-compliance:
$8.8M- Radio Shack (2007)
$4.9M- Hewitt Associates (2008)
$35.6M- Family Dollar (2006)

20. Job Analysis and Job Evaluation
Job Analysis: Establishing what the job is (= job description)
Disciplined and orderly way to think about job content
Purpose
Duties
Requirements
Skills
Job Evaluation: Establishing the relative value of jobs
Disciplined and orderly way to value job content
Focus on jobs not people
Key output: the relative worth of jobs- not the competence or value of the job holder

21. Basic Elements of Job Evaluation
Know-How
The total of relevant skills, however acquired, necessary for acceptable job performance
Problem Solving
The original thinking required by the job for analyzing, evaluating, creating, reasoning, arriving at and making conclusions & taking action
Accountability
The ownership of an action and its consequences. The measured effect of the job on end results

22. Why is this stuff important?
Gives the practice control
The practice is viewed as proactive, well managed
Helps employees understand the rules of your game, and how to keep score
Reduces the risk of people leaving due to pay

23. If not compensation, what’s most important to employee?
Having a vision, knowing why your practice exists, and buying in
The purpose of my company makes me feel my job is important. Sense of purpose, of belonging, enablement
Empathy – Managers listen
Fair financial rewards
Career advancement
Fun –life’s too short!
as a waiter I measured my success in cash, by the tips I had made. I rarely ended a poorly paid shift simply happy to have provided really good service. What’s more, because my job as a waiter offered nothing more than an opportunity to walk away with cash in hand, my connection to my employer was also monetized – a surprisingly weak connection.
Creating career paths that are well communicated and understood by employees is not something most companies do well. Even in the best-case scenario where managers are holding regular performance reviews with their employee, employees often don’t understand how to move either horizontally or vertically in an organization.