The new year provides a fantastic opportunity to reset. For many of us, that might include a stronger commitment to health and wellness or personal development. We might resolve to improve our health, learn a new skill, or read more books.
But don’t overlook the opportunity to hit the reset button at work, too. Here are three New Year’s Resolutions to help you kickstart a stronger compensation strategy in 2021.
Market rates change over time, so it’s important to revisit your salary ranges once or twice each year so they continue to reflect your goals. Salary ranges are a fantastic tool to ensure fair, competitive compensation decisions—but only if they’re up-to-date.
If you don’t currently use salary ranges, now is a good time to start. Equal pay laws requiring salary range disclosures have already begun going into effect. California AB-168 and Maryland’s Equal Pay for Equal Work Act require employers to provide candidates with the salary range for their position, if requested. And effective January 1, 2021, Colorado’s Equal Pay for Equal Work Act requires employers to disclose salary ranges in job postings.
It’s a best practice to multi-source your data, using salary survey data companies (such as Radford and Mercer), and self-reported sources (such as Payscale and Comparably). Keep in mind, however, that these sources tend to lag the market. It’s also a good idea to lean on your company recruiters and other fast-moving data sources for real-time feedback on the competitiveness of your offers.
The wage gap not only persists, but there is evidence it may actually be widening as a result of the pandemic. Put in the work to close the gap by conducting one or two pay equity analyses in 2021 and addressing any inequities you find. While only 35 percent of organizations conducted these analyses in 2016, 56 percent of organizations conduct them now. Taking action can demonstrate your organization’s commitment to equality, while helping you maintain compliance with equal pay laws.
Make sure you look at total compensation: salary, bonus, and stock. While women represent 35 percent of equity holders, they only own 23 percent of the equity. Black and Latinx employees make up a very small proportion of employee stakeholders, and hold a disproportionately low percentage of total equity wealth.
Make pay equity adjustments during your regular compensation cycles, alongside merit-based adjustments or cost-of-living adjustments. This can help ensure you make the most strategic use of your budget, and avoid widening pay inequities. If you don’t have the budget to make needed adjustments right away, plan a phased approach to make them over several cycles.
We’re a year into the pandemic, and the vaccine is in sight. Employees who temporarily transitioned to remote work early in the pandemic are probably wondering what comes next. If you plan to embrace remote work long-term, document and circulate a remote compensation strategy so it’s clear and consistently applied.
For example, will you pay local rates, a global rate, or by zone? When will you adjust compensation for employees who have already relocated? Are there any geographic areas where you’re not able to support employees?
Communicate your remote compensation strategy with your team, and give them plenty of time to adjust. It can be helpful to share some context around how and why specific decisions were made. For example, you can explain that employee compensation will be adjusted to local market rates if they relocate, effective 4/1/21, to align with your existing relocation policy.
The next year brings a lot of hope that we can get back to “normal,” but we have a tremendous opportunity to do better than that. Setting up-to-date salary ranges allows us to make more strategic, consistent compensation decisions, so we can optimize what is likely our organization’s largest operating expense. Pay equity adjustments can help us do our part to close the wage gap once and for all. And setting remote compensation policies can help employees stop living in ambiguity about what comes next.
There’s a lot to look forward to in 2021. Resolve to do better and kickstart a stronger compensation strategy.