1. AFOA HR CONFERENCE 2015 Compensation 101
The Jouta Performance Group

2. 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.

3. Compensation
101

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

5. 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

6. 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…

7. 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

8. 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)

9. “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.

10. 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.

11. 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

12. 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

13. 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

14. Philosophy
How to create one?

15. 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.

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

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

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

19. 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?

20. Next Steps

21. 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”

22. 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!

23. Presented By:
The Jouta Performance Group Inc. Invest in your people today, and protect your investment tomorrow