This is an old precept that is brought up from time to time. It is currently taking more and more room in managers’ agenda: on the subject of compensation, should we acknowledge and value the complexity of jobs regardless of the people? Or would it be better to identify and ascertain the competences of the people who perform the same job or process and, based on this mapping, determine salary levels, using as reference the parameters identified and assessed in the market?
This is not a new issue in the compensation environment, but it has been getting more and more attention, as most companies have recognized the competitive potential in people, which has then become the reference for success or failure in business management.
Underlying this challenge is the legislation in force, which does not clearly allow companies to value people. This gives rise to labor liabilities (salary paradigm), which are managers’ greatest fear.
Paradoxically, if we focus strictly on the work environment, when people who perform similar jobs are compared to each other, surely they can “see” the noticeable differences in competence that exist within the team, but they may not notice the salary counterpart, i.e., an employee who performs the same job but adds more value to the processes, ends up with the same salary level as an employee who works in the same position but has poorer result / performance.
To progress in this scenario, we must make a profound, effective assessment of the internal reality, the level of know-how required, risk evaluation, partnerships formation, and a well structured management strategy. By doing this, it is possible to make the model less vulnerable to the legislation in force, i.e., to minimize possible effects of potential risks.
As an exercise on this subject, we can examine some alternatives involving compensation scenarios that might be set in place. Among them we can point out the following issues:
Value and acknowledge the base salary / nominal salary?
Value and acknowledge the variable salary via bonus, profit /result sharing, awards, allowances, among others?
Value and acknowledge indirect compensation, considering the benefit package?
Other issues, taking into account the reality of your organization?
Each modality requires a specific strategy, supported by consistent, transparent pillars and policies, in order to attain previously set objectives.
A good indication that may be used to support the model is to have human resources working directly with the organization’s managers to share the designing of the plan, to develop debates and, finally, to align the level of understanding of the structure of the model,supported by an effective communication process that maintains a consistent of feedback channel. Surely, this will help take preventive or corrective actions.
In general, a program of this nature should permeate all positions in the organization. However, implementation by groups or families of positions is recommended, so the efficacy of the project can be more precisely determined.
It is well known that this challenge exists and barriers may rise, depending on the stage of each organization and on the existing local culture.