If you’re anything like me, compensation is something you think about a lot.
Questions like– am I earning a fair market salary? Do my peers make more than me? And should I have asked for more? — are often at the forefront of my mind when considering a career move.
As competition for talent grows (even Taco Bell is offering 6-figure salaries these days) I wanted to learn the ins and outs of compensation from the ground up.
Sharisse Brown is an international compensation analyst who has been working in the field for over 7 years. CAPITOL STANDARD sat down with Sharisse to get the lay of the land. Here’s what we learned:
What are the basics of a good compensation package?
“First, it depends on the organization or industry. But generally, the basics of a good compensation package is base salary and benefits.
Benefits can be broken into several categories. The most common categories are health insurance and retirement. A good compensation package includes base salary, variable pay, and benefits. Variable pay is performance-based compensation such as performance bonuses, profit sharing, short-term incentive plans, and commissions.”
When it comes to base, equity, and bonus packages, which one is most important? Which one is most negotiable?
“The most important aspect of a compensation package depends on the individual and his or her needs and desires at the time. If I have significant years of experience, I would focus more on base pay and equity. If I am a consistent high performer, I may focus more on variable pay or bonus packages. The most negotiable packages are base salary and bonuses. Equity relies on internal data, such as incumbents’ salaries and years of experience within an organization. And external data—what organizations are paying for the same position within their organization.”
What types of compensation packages should we be looking for?
“The types of compensation packages one should look for is one that is rewarding and a good balance between base, equity, benefits, bonuses, employee perks, lifestyle, and flexibility.
Most people do not think about employee perks or lifestyle and flexibility as part of a compensation package. But it is becoming more and more important as technology continues to advance. For example, telecommuting or a flexible work schedule may be considered part of a strong compensation package.”
What are some red flags should we be looking for?
“A huge red flag is if an organization is not being open or transparent about their compensation philosophy, programs, and practices. You want to make sure what a recruiter or hiring manager is telling you aligns with what the organization practices. If there is some discrepancy between the two, that is a red flag. Another one is if an organization is not willing to negotiate. Most organizations leave room for a candidate to negotiate their compensation package.”
Her Best Advice on Negotiating Your Salary
What are the questions we should be asking when it comes to being compensated fairly?
“Below are questions that any candidate should ask when considering a salary offer:
-What is the organization’s compensation philosophy?
-What benefits does the organization provide besides base salary?
-When will I be eligible for a pay increase? Or, when will my salary be reviewed?
-Do you offer benefits such as student loan repayment and tuition reimbursement?
-What is the organization’s retirement package or 401k matching?
-What is the organization’s work/life balance philosophy or program? Is telework offered or alternative work schedules?
-How often do you review salary market data to update the organization’s compensation program?
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Why would anyone ever ask about an organization’s pay philosophy? What do we gain from asking that question?
“It is important to know about an organization’s pay philosophy because this will determine what emphasis they place on certain components of their compensation. It determines how an organization will attract, retain, and motivate candidates and employees.
An organization’s compensation philosophy explains the why of the employees’ pay and whether it wants to lead or lag behind the labor market. Furthermore, it will help you decide if the organization’s compensation program will be able to accommodate what you personally want to earn and accomplish throughout your career.”
What do most professionals today get wrong about compensation?
“Most people don’t think their compensation packages are negotiable. Negotiating your salary is a normal part of the hiring process and, in most cases, it’s expected.
And many young professionals don’t believe they have the relevant years of experience for a position when they do. You may use volunteer opportunities or leading a college course project as relevant years of experience. When reviewing your resume, think of all the opportunities you may have leading, managing, or mentoring. These opportunities translate into relevant years of experience.”
What advice do you have for mid-level to senior-level professionals when it comes to compensation? And what about the in between? Should we be creating our own career plans?
“For midlevel to senior professionals, I would advise them to look at retirement, bonuses, vacation, paid time off (PTO), and variable pay items such as stock options. As we become further into our careers, most focus on retiring. As a result, we should consider what our compensation packages will offer us when we are ready to retire. Especially company matching or stock options. We should be creating our own plans and goals and align these to organizations that we seek to work for.”
[sc_fs_faq sc_id=”fs_faqik1ori04v” html=”true” headline=”h2″ img=”” question=”When is it appropriate to ask your company to reevaluate a compensation package? ” img_alt=”” css_ ]“Six months. If you did not receive a compensation package you may have wanted, you may want to negotiate this in the very beginning of your employment.”[/sc_fs_faq]
What advice do you have specifically for women when it comes to compensation?
“Do not to sell yourself short. Most women shy away from negotiating their compensation package. We often don’t feel comfortable discussing their abilities, skills and achievements. Organizations are beginning to look more towards gender equity within their organizations to ensure that there is pay parity between men and women. Now more than ever, women should confidently be negotiating their compensation packages.”
What resources do you recommend for calculating salary?
“Most organizations use reputable third-party vendors to gather market data to determine what a position or job earns within the labor market.
As a result, I recommend using the Department of Labor, Society of Human Resources Management, and World at Work as resources for trends in salary. Also, some of the third-party vendors provide historical data on their websites regarding market salary data.”
I think sharing ones compensation with peers can be a powerful tool for career growth. What are your thoughts?
“This question comes up a lot in the compensation world. I think we should refrain from discussing specific compensation details with peers. Each organization has its own compensation program. As a result, they have a different approach to competing for talent in the market. One organization may place a heavy emphasis on base salary while another focuses on benefits. Moreover, organizations may target different market percentiles to set their salaries and compensation packages.
For example, one organization may target the 50th percentile. While another may target the 75th percentile. Percentiles are location markers along a range of values. The 50th percentile is the median or average. While the 75th percentile means that 75% percent of the market is paying at the same or similar rate for a position.
Most organizations target the 50th percentile. Lastly, organizations look at years of relevant experience, education, and performances to set a candidate’s or employee’s salary/comp package. So, discussing specific compensation details may not be wise. But discussing general compensation information to get a pulse on what is occurring in your industry is a good idea.”
The Future of Compensation
What are some dying trends in the realm of compensation?
“Fixed increases to base salary are becoming less common as other trends become more prevalent. Organizations are finding ways to compensate, reward, and retain high performers in ways that decrease impact to their bottom line.”
What does the future of compensation look like?
“Pay transparency is huge. More organizations are using software that help employees better understand their compensation packages.
Next is pay equity. Organizations are reviewing internal and external data to ensure pay equity across the board but with more focus between women and men.
You’ll see more variable pay programs that provide lump sum payments instead of fixed increases to base salary. Organizations are finding ways to align staff performances to organizational strategic goals, competencies, and performance. This helps organizations identify and reward high performers while, also, identifying and assisting those that are not performing well.”
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