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Pay Philosophy Crisis – Consider it Handled!

Posted on 19 Feb 16 by

I recently started watching a TV series called “Scandal”, where the main character owns a crisis management firm that helps people solve problems under some wild circumstances. This made me think of the various pay philosophies in the compensation world that may differ drastically by company and industry. Although these may not be “Scandal” type crises, it has always been a headache for compensation professionals to adhere to their pay philosophies during the annual compensation planning process.

But as we all know, pay philosophy is the basic principle of compensation planning. So, what is pay philosophy? Basically it is a formal policy that documents an organization’s position about employees’ compensation.  In another words, it b explains the “why” behind employees’ compensation.

As an ex-Mercer compensation analyst, deep in my mind, I know their 3P compensation management model is a very powerful and effective tool for compensation management.  It also defines the best of compensation pay philosophies. “3P” refers to “Pay for Person”, “Pay for Position” and “Pay for Performance”.  Although compensation philosophies are typically developed by your HR and the Executive teams, they are based on several factors such as the size of the organization, location, industry, business objectives, and even the economic environment. Organizations will adhere to different compensation philosophies at different times and based on viewpoint.  The HR team for example, is most concerned with implanting this philosophy into the compensation planning process. This can be very detrimental if you are using a spreadsheet to conduct your organizations compensation planning, because will you probably need to “translate” the philosophy (or philosophies, lots of organizations intend to perform “pay for position” and “pay for performance” at the same time), into formulas in your spreadsheet before you send them to department managers. 

The better way is of course to use a centralized compensation planning solution like the one from Curo. Such a solution is a highly configurable cloud based offering, which supports any type of compensation philosophy.  Whether you want pay for position, pay for performance, or both at the same time, the solution makes it happen.  Thus allowing easy adherence to philosophy during the entire compensation planning process.

So, if you do watch Scandal then you know what Olivia Pope would say about your compensation problems after purchasing Curo, “Consider it handled!”