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Compensation (a discussion) Lane Transou, CCP, GRP, SPHR, SHRM-SCP Lane Transou Consulting, LLC South Texas SHRM November 5, 2015 Lane@LaneTransou.com
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Lets Focus Our Conversation How to use compensation as a business tool to help grow profitability and efficiency in the organization. Lane@LaneTransou.com
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The Dynamics of Compensation Lane@LaneTransou.com Influencers EconomyFederal Legislation TechnologyMarket Sector Business GrowthLocation Business Consolidation
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Compensation Impacts Over the Last 10 Years 2005 – Up Market Hunt for talent in energy & technology sector jobs Salaries escalating; internal equity issues Merit increase 5%, Bonuses significant 2008 – Down Market RIF’s and Bankruptcies Cost reduction initiatives across all business areas, consolidations Hold on merit; bonuses paid only to key positions 2012 – Up Market Turnover Energy sector salaries increasing in all operational areas Merit held at a conservative level for non operations roles 2014 to date– Down Market Lane@LaneTransou.com 2005 2008 2012 2015
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Last 10 Years of Board of Director Focus Earnings Per Share Executive Compensation focus Pay for Performance Say on Pay Transparency on executive pay Succession Planning Compliance Safety Cybersecurity Operational Safety Lane@LaneTransou.com
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What is the CEO Asking How to engage the workforce to: Grow products and services Innovate new products and services Engage customers Be accountable Grow with the company Lane@LaneTransou.com
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Three Steps to Effective Compensation Planning Step 1: Align, Measure and Report Identify measurements that provide early insight to potential risks Step 2: Communicate Translating your metrics into business strategy Step 3: Repeat Steps 1 and 2 t Lane@LaneTransou.com
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Align Know the following : Business What do you do and how do you make money Industry Who are your competitors Strategy Where are you going Jobs What do all of those jobs really do Market How hard do you compete for candidates Lane@LaneTransou.com
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Metrics The easy ones: Usually available through your HRIS or payroll system Base Pay Cost Year Over Year Overtime to Total Pay Turnover Rate Days to Fill Open Positions Lane@LaneTransou.com
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Employee Metrics Company Demographics Average tenure of employees by department/job Average age Average base pay of employees by department / job Male / Female Lane@LaneTransou.com
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More Metrics A little bit more challenging: Compensation as a factor of revenue Compensation as a factor of output Compensation as a % of fixed costs Survey benchmark data year over year analysis Lane@LaneTransou.com
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How Often to Report Weekly – probably not Monthly – maybe Quarterly – yes Semi Annual – yes Annual – yes Bi-annual - no Lane@LaneTransou.com
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Communication Formal – All employees or bonus participants Interpersonal – One on one with management Reporting – Boards & Executive report out Being available Lane@LaneTransou.com
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Communications Speak the language of the business How do we make money (base pay) What do we do with the money (resource investment) How do we make more money (variable pay) Know the jobs in the business Job analysis Formal or intuitive Lane@LaneTransou.com
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Resources for Metrics Lane@LaneTransou.com American Productivity & Quality Center – Houston APQC.org SHRM.org How To Measure Human Resource Management Jac Fitz-enz Proving the Value of HR: How and Why to Measure ROI SHRM SHRM.org/templates&samples/samples/spreadhsheets&calculators Tracey Smith – Numerical Insights LLC
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THANK YOU! Lane Transou CCP, GRP, SPHR, SHRM-SCP Lane Transou Consulting, LLC Lane@LaneTransou.com
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