David Turetsky and Katie Stukowski – HR Tech 2023 – Pay Trends Dominating 2024

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• david.turetsky@salary.com

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• “Compensation is the link between the employee and the employer to build the trust that they are valued within that organization, and you can’t get compensation right without accurate job descriptions.”
• “Pay equity is the right thing to do. That’s equal pay for comparable work that is internally equitable, externally competitive, and transparently communicated.”

Announcer: 0:02

Here's an experiment for you. Take passionate experts in human resource technology, invite cross industry experts from inside and outside HR. Mix in what's happening in people analytics today. Give them the technology to connect, hit record for their discussions into a beaker, mix thoroughly. And voila, you get the HR Data Labs podcast, where we explore the impact of data and analytics to your business. We may get passionate, and even irreverent, that count on each episode challenging and enhancing your understanding of the way people data can be used to solve real world problems. Now, here's your host, David Turetsky.

 

David Turetsky: 0:44

We're gonna be talking about how the things that we're dealing with today actually translate for next year. There's a lot of really hard stuff that you're going to be dealing with whether you're HR technologists, whether your HR generalists, whether you're in payroll, whether you're in compensation, whether you're a manager, but as I said before, all of us get paid. And all of us feel the sting of inflation. All of us are dealing with things. We're going to talk through that because the psychology of pay is what we're dealing with every day, especially when our kid says, can I have a new video game? Is that still a thing or video games not? They say I want a new phone or something. It's not a video game. I'm very old. So what we're going to be doing today is talking through this. So I first want to introduce Katie Stukowski, our VP of Solutions Consulting. Do you wanna give a little introduction?

 

Katie Stukowski: 1:33

Sure. Hi, everyone. I'm Katie Stukowski. As David mentioned, I am the vice president of Solutions Consulting at Salary.com. I spend my days talking to folks in HR and compensation about how to use data or technology to address all the challenges and trends that we're seeing today. I've been with Salary.com for way longer than I like to admit. But super excited to be here to talk to you about what we're seeing for the upcoming year.

 

David Turetsky: 1:59

And my name is David Turetsky, I'm the vice president of consulting. My job at Salary.com is to help our clients be able to take all the technologies and all the data, and all the things they do to support their employees, and help them with whatever they need, whether it's coaching or rebuilding a jobs structure, rebuilding their job descriptions. I've been doing this for a really long time. I actually have a really cool job also that I host a podcast called The HR Data Labs podcast, I was actually podcasting a lot from our booth. And I also have the pleasure of writing books about HR and how HR interacts with the business. And if you're interested in that, come see us later. Also, if you want the slides, come talk to us, we'll actually give you the slides, you don't have to take notes on everything. So one of the things that we're going to do is we're going to talk about the overall business trends that are affecting HR. Now some of these things are going to seem like they really don't have anything to do with pay and you're right. But they do, they all do. And we're going to talk through those, we're also going to talk about the things that are actually affecting the world of pay, because they're based in the world of pay, we're going to then talk about the strategies that you can employ to actually prepare for this, and be able to overcome them. And as I said before, this is not a sales pitch, all of these things you can do on your own. And we're talking about strategies you can employ without ever talking to a consultant, or buying our data or anything like that. So let's talk first about business trends. And things that we see in the world of HR. Some of these are going to seem duh, like remote versus hybrid work. And people think that the story has been told on this. But as we've seen recently, the sentiment for employees is what? I don't want to come back to work. And we actually just did a study which shows that more than two thirds of employees do not want to come back to your office. But the pronouncements that we've seen from corporations are what? Come back to the office. So how do we actually reconcile this? It's not going to get solved, it's certainly not going to get solved in this room. But when we talk about pay and we talk about how an employee consumes pay to be able to deal with their lives, this is a key. Does anybody know that there are lots of labor actions going on right now? It's kind of like happening all around us. Even in Las Vegas. They're dealing with an A Labor Action. It hasn't actually affected us this week, thank God, right? Where if you're at a conference and the culinary workers could have gone out on strike and what would we be eating? We also have prolonged inflationary pressures. And so for those of you who actually do the budgeting when it comes to compensation, you know, the one of the things you've taken into consideration, we're gonna go into this a lot more detail. One of the things you've taken into consideration is what is inflation at right now? What's going on with where the Federal Reserve is? And by the way, this is not a US, I know I have a friend who's in from a different country, this is not a US issue. This is a global issue. inflationary pressures and interest rate hikes did not just happen to the US. It happened in Canada, it happened in the UK, it happened all over the world. And so if you have a global multinational company, this is not just a US issue. But it affects every employee, how they eat, how they budget, how they save. Unfortunately, we also live in a world where there's a very unstable political environment. And for those of you who haven't seen, we've had problems with our government recently, where for the first time in the history of our country, we do not have a speaker of the house. Does anybody know the reason why that's important, especially for HR? That person's third in line from a succession perspective, or is it second, its second vice president and then Speaker of the House. So God forbid anything happens to our president or to the Vice President, that next person is the Speaker of the House, right? Am I wrong? Somebody's got to know their government studies. Alright, anyways. But it's not just in the US. Obviously, there are things that have happened that are cataclysmic, one of the which has not gotten a lot of headlines is Afghanistan, they've had earthquakes, that caused a tremendous upheaval in the Middle East. So these things are on people's minds, they have family that are being affected, were being affected, they touch on how pay works, because it influences their psychology about how they work. IBM came out with this statement, I don't know whether it was IBM themselves, did anybody see this? They said they were going to lose up to 40% of their staff? It was really ridiculously large number, because of automation. Anybody think that's a problem, if you work for? Does anybody work for IBM here? I would think that's a problem. Because I might be one of those people. That means four to 10 people might be affected by that. That's bad. And so now, it causes pause for concern for my career, in general, but certainly at IBM. And the last one, and this is really key, because this is going to start the conversation back into pay really into pay. We are considering changing the FLSA exemption from $35,000 a year for jobs to $55,000. Which means that for some companies, this is something they just cannot afford. Because it's unbelievable. The population that goes from just that $20,000 is actually modeling that right now. Thank you, thank you to one person out of the whole audience. Oh, another here. If you haven't, I suggest you do at least look at the bands of pay to see who might be affected by that. Because that's dramatic. So now let's talk from business trends, specific compensation trends. So I'll start this off by saying the stuff on the left that puzzle is the puzzle we've been trying to solve forever, which is attracting and retaining people. Right? That's kind of like, mom and apple pie. Everybody knows that. Right? Katie, what do you think about this?

 

Katie Stukowski: 8:13

I think, as David mentioned, so if we look at the puzzle, directionally impaired. So whatever side that is that you can see out there, where my personal opinion is right now, as you can see, this is titled the pressure to get pay right has never been greater. There's always been a pressure to get pay right but certainly the landscape, especially in the last few years has really shaken everything up. And being in compensation and being an HR is challenging. I also think it's as rewarding now as it probably has been in a while because we have to think a little bit more about not just the traditional, how do we attract and retain, that's always been the message, right? Attract talent, retain talent? How do we do that? You know, years ago, it was performance management, talent management, how are we thinking about ensuring we have the right people in the right roles, and we keep them in our company. But now the drivers are significantly different? You know, we're seeing pay transparency more than ever, and we're going to speak about this a little bit later, that pay transparency is not just something that you need to think about doing in your company, it's a must, employees demand it. And what does that actually mean though? What does pay transparency mean? And what's the expectation of how transparent you really actually need to be? But that ties even more greatly into what we're seeing right in the middle, which is pay equity. And pay equity now isn't just how do I work with my employment lawyer, so we make sure we pass the audit. Pay Equity now is how do we actually develop a culture of pay that has pay equity at its base, that we are actually building programs and processes to ensure that not only are we internally equitable, but we're externally competitive. But more importantly, do our employees actually feel that we are building a culture where your company equitably pays and that is going to attract the right people and retain them through the door. Wage inflation? Probably all of you have struggled with the impact of we had to overpay to get people in the door. And we'll see a couple of statistics moving forward that employees more than ever are willing to leave jobs, which leaves a lot of positions so open to fill. But then when you have to pay to get people in, what are you doing about the people who have still been there. So the challenges are great. But that means that there's a lot of different practices, we can start to either revisit, go back to the drawing board, or think creatively on how, as a company, we want to tackle this. And I think leadership is forced more than ever, to have table stakes to support some of the things we need to do now when it comes to addressing these compensation trends.

 

David Turetsky: 10:34

So two of the ones that I pick on here that I thought would be bigger, because the size and the intensity matter. This is a word map that we did from a study that we undertook. The two that that really jumped out at me are salary compression. For those of you who had the hire lower level positions, or positions that are much more support or operational, the rates of those jobs have been much higher recently. And it's actually pulling skilled labor from skilled labor areas like nursing and teachers into the unskilled workforce. And that's increasing the rate of pay for those unskilled workers. And what's happening there is because those rates are increasing, and professionals and managerial levels are not having those pressures, that compression is getting much greater. And for those of you who manage pay, you're gonna see this every day. Because I have a lot of organizations that are turning to me to say my salary structures are broken. What do I do about this? And the answer is, it's not necessarily your salary structures. It's what's happening in the market. And so it may make us change the way in which we manage pay for those different roles. And we're going to talk about those strategies on a little bit. The other thing on here is retention risk. A lot of times when we talk about how to pay and what to pay, we don't think about what do we do if, if we lose these positions? If we lose these people? What happens? Are they critical for the business to actually succeed? We're going to talk a little bit about this later, too. But I was surprised that wasn't more Top of Mind with people who are responding to the survey. And some of the other data that we've picked out is, some of it's kind of shocking. 63% of companies said it's more difficult to hire. Okay, that might make sense. But 20% of the respondents said, it's extremely difficult to hire, they're struggling to hire people. Anybody have a real problem trying to hire good people these days? You can raise your hand, it's okay. We're all friends here.

 

Katie Stukowski: 12:36

I'm not taking notes. Don't worry.

 

David Turetsky: 12:37

No, no, we're not, we're not taking names or numbers. Well, because you're finding what all of us are finding as well is, trying to find qualified candidates, I kinda sound like a commercial for Indeed. Trying to find qualified candidates is really tough, and even harder to hold on to them over time. And so I'm not shocked by the one on the left, the one in the middle, the one that says 60% of employees are expecting their compensation to reflect their location. So consider the fact that during the pandemic, a lot of people not only went home to work, of course, but they moved to lower cost areas, because if they can work from home, they can work from Montana. And I'm not putting down Montana, but it's much relatively less expensive to live in Montana, than New York City. Right? And let's say you had an epiphany during the pandemic, and you'd like to see more moose, or, or buffalo. You're not gonna see them in New York, even in the Brooklyn zoo, or the Bronx Zoo, or even, what's the one? Anyways, what you're going to find is people change where they want to live. But the way in which we had our policies and practices wasn't, well, okay, well, then you're going to index your pay down to Montana. But people expect that now. So when you're giving offers, we have to have either geographic differential setup on our salary structures, or we're going to have to understand what the market is for that location. So we're paying appropriately for that location. That arbitrage with location, that doesn't happen all the time. It won't, and setting arbitrary rules for that, just because one person or two people leave and go to another place, and you're paying them more because you paid them to be in a higher cost area, you're probably setting up more expectation than you're actually solving problems. So in the context of our salary budget survey, one of the epiphanies we had was the 3% increase is done. And you might say, but David, that's not merit. Merit is less than that merits not 4%. Well, when we consider increases, we consider 4%. Because it's the total increase pool. Managers are allowed to make decisions within that, sometimes we put rules around them. But in the context of our research, we're now seeing increases at a sustained higher rate than we saw in the past. And this is transformative. Because we'd never had this before. I mean, we had it a long time ago, but we've been at 3% for decades. Does anybody remember the 80s and 90s? When we used to give 10% double digit increases? Okay, I'm old, I remember that. But slowly, we started whittling away at that. And then went from seven to six, we had five for a while. And then when we went to three, we had managers say to us, how can I differentiate performance based on 3%? And what did we say? Give a lot of zeros. Anybody, like giving zeros to your people? For an increase? Oh, come on, I was expecting to see at least somebody who, you know, Cruella de Vil raising their hand going? Yes, I love it. But unfortunately, we have to do that in an era of pay for performance in actually I would be the one person raising their hand. Because if you don't do that, then you cannot pay for performance. If you're not giving zeros, then you're not differentiating pay enough to make it worthwhile, someone who's actually busting themselves to actually get something done. Because to be honest with you a 1% differential in pay for performance? That's not going to really change someone's behaviors, especially across a year, right? Anybody feel it a 1% pay is justifiable for really killing it? No, it's not. I'd deny that. So when this and by the way, this is a summary of our real, real results. Yes, we see regional differences. Yes, we see level differences. But to say that the pay differentials now, or the salary budgets are different now than they were two years ago, is kind of like, obvious, right? But it's built into our psyche. Not every employee gets 4%. Not every employee gets 3%. But the expectation is now set that it's more than three. Do you want to talk about anything with me, Katie?

 

Katie Stukowski: 16:48

I mean, I think you hit the nail on the head. But now I think what people are struggling with is it's become an expectation. So now employees expect every year to see that 4% increase. So again, if we go back to attracting and retaining and being more transparent around pay, if you do consider giving somebody less Do you have the right data? Do you have the right conversation to backup why, when it may have become an expectation? Which we'll talk about a little as well? And also, when it becomes an expectation, again, it goes back to how do we differentiate? If you are one of the 20% highly struggling to attract talent, that's not going to be enough these days. And that goes back to having a lot of hurdles in the landscape that we're in today. And how do we approach increasing internal employees pay today, especially if you have compression issues that you're trying to overcome, as we talked about pay equity in the next few slides as well, helping employees understand how they're being paid what they're paid. So it goes beyond just, yes, this is a drastic shift that now 4% is the norm. But that also means 4% is not going to be enough in the future as well. And it will become the expectation.

 

David Turetsky: 17:56

Are there any CFOs here? Okay, well, so when you have conversations with your CFOs about this money, every dollar is precious, every percent is precious. So as Katie said, these are going to be the norm potentially, but you're going to have to have more difficult conversations, not just with your employees, but you're going to have them with the CFO, because the numbers are going up. And of course, they're going up across the board for all your suppliers.

 

Announcer: 18:22

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David Turetsky: 18:31

The one thing that we didn't put on here, which we probably should have is, does everybody know that there's a for every one of these slides, there's also one that says structure movement? So what structure movement is, how much should you be shifting your pay ranges that are associated with this? And I don't think it's surprising when I say that the shift in pay ranges has not been 4%. In fact, we've seen two and a half or three for the change in salary structures, which means that we're not changing the rates of pay that we're offering to new hires that dramatically. We may be actually totally revamping those structures. But the shift in static structures is not going up by that much. Yes, sir. Let me play back and I'll answer your question. So what's the difference between contract employees and employees? W2s or 1099s when it comes to things like this? And the answer is when you negotiate a rate with your contractors, that's the rate for that period of time. If they want to renegotiate, they're not looking at this. Right? Sometimes when we're talking about healthcare, we're talking about nurses, it's coming through a service. And of course, the service wants to increase the rate of pay as high as you can. So they may actually go higher than 3%, especially because whether it's a nursing type of skill, that's that's, that's more rare. But to be honest, when we're talking about pay increases, we're talking about W2 increases. We're not talking about contractors. And for the most part, whether you're talking about part time or full time, that's the same, W2 versus 1099. Expect the W2 are going to have this kind of increase, we can take that offline to talk about contractors. But that usually doesn't come into these types of equations. So there's a lot of stuff happening in the world of comp. And it's, if you have compensation people, their hair's falling out like mine has. There's so much going on, that they are trying to maintain a straight face, they're trying to be calm, but the ground around them has shifted. As Katie was talking about before, pay equity is not a nice to do anymore. It's the rule, it's the law, you have to do it. And for those of you who are operating in states like California, Colorado, Massachusetts, Rhode Island, New York, New York City.

 

Katie Stukowski: 20:50

Soon to be Illinois.

 

David Turetsky: 20:51

And the state of Illinois, who has very, very good structure and the rules. Pay transparency is not a nice to have either. And you don't need to actually have a headquarters in any one of those states to have to abide by them. All you have to do is have one worker, especially in California, and you have to follow the guidelines that exist. Those employees have rights, you need to know what those are. So the world of compensation got more difficult, especially with that. By the way, we're not saying it's a bad thing. And we're going to talk about how there are pros and cons to each of these later on. But it becomes more complex. We talked about the FLSA regulations and how they're evolving as well. We talked about the competitive markets being more complex, especially around the entry level pay. But the regional pay differences, those people who moved, they've changed the way in which pay happens in those regions, especially if those regions have had booms in the industries in which they have natively. North Dakota when they had their oil boom, changed the entire state pay structure. Because there were support structures for the oil companies, there was a lot of other things happening. Mining, mining, states are dealing with this as well. And we talked about the compression problem with middle management, the competitive markets are becoming crazy complex. Okay, so staying on top of that, it's gonna be important, we're going to talk about that as a strategy later on. Jobs are becoming more complex. How many of you have workers who have more than one job? Okay, if you're in most organizations, and I'm thinking more about service organizations, if you're in healthcare, you have this, if you're in electricity, or energy, you have this, where someone can go to work one day thinking that they're just going to be working at the shift that they're supposed to do. And all of a sudden, they get anointed, the supervisor of that shift, they're taking on a different job, you need to capture the hours and the rules about that job while that person is doing that job. It's not okay to say, Ah, I'll just give them an extra five. That's not how things work. It's not how things work legally and it's not how things work from a records retention perspective. So your systems, your processes, and the way you pay them change based on what they do at that moment in time. And it's not just healthcare, it's not just energy, it's tons of different businesses. We've never seen in the history of paying people the speed of change happening now. And the good news is that show floor downstairs, there's a lot of solutions that will help you with it. Unfortunately, it's dizzying all the different things you have to do. There's not one vendor who can solve all the problems. Is there? Do you guys have one vendor? Please let us know, it'd be really cool. That's why this has made our lives in the world of compensation so difficult. Because I can't tell you there's one solution, there isn't. And being in compensation now is difficult than when I was a practitioner, back in the 80s and 90s. Late 80s, by the way, late 80s. So how do we develop those strategies? And now what we're going to do is we're going to turn to complaining and kvetching as my people say, to actually talking about what are the solutions for this. We're not going to go into each one of these now, we actually have 200 slides on this. So we're here for the rest of the day, right? You know this is like a four hour session? Just kidding. So we're going to talk through each one of these and each one of these in detail. The last one, the one that you probably want to get the most of, is the least. Why? AI really hasn't worked its way into compensation as much. And to be honest with you, I'm not trying to solve that problem right now. We're all going to solve that together. So let's go into this in detail. Let's talk about the importance of architecture. Katie, why do job descriptions matter?

 

Katie Stukowski: 24:49

They don't.

 

David Turetsky: 24:50

Okay, well, I'll just sit down.

 

Katie Stukowski: 24:52

I think most people know job descriptions touch almost every aspect of total rewards, human resources, compensatio, tracking your talent right from a recruiting perspective. Job descriptions matter because they help you ensure that employees understand what's expected of them. It helps you as a company hire and find the right people. It helps you understand who you have internally within the organization, helps you identify what roles you may be missing, what gaps you might need to fill. And as well as help you accurately price your jobs. And especially now, as with pay transparency, as we all know, job ranges are a necessity to have aligned with your job descriptions. Whether you need to do that from a posting perspective externally, there's laws that say if an employee asks for a job range to be addended to the description, you need to comply. But more importantly, job descriptions matter because they really help again, create the confidence in the employees that they understand what is required of them. It helps them understand and be confident in the organization that they are paying them according to how they should be paid for the work they're being asked to perform. And compensation's that link between the employee and the employer to build the trust that they are valued within that organization, and you can't get comp right if you don't have accurate job descriptions. Doesn't mean you need a six page job description, but you need something that helps document the role of that actual work. But they're also not fun. They never end. They never are the piece that anybody wants to own. But because of that, they also have a huge impact across many roles within the organization, which we'll see in the upcoming slides as well.

 

David Turetsky: 26:32

Anybody here write job descriptions as part of what they do? Excellent. One of the fun things about writing job descriptions that Katie just mentioned was it shouldn't be six pages. Why? Does anybody do all that work? Really? You may recruit for six pages, but they ignore like three or four of them, if not five, right? And one of the things that pay transparency is going to do especially as the state audits you if they need to, is they're going to comment on how crappy your descriptions are. Because no one does that. So we're going to be working very closely with our clients to make sure they have very clear descriptions. And they understand what people are supposed to do. And the people who can help us with that are the managers who should own the work, because they're the ones who know what work needs to get done. And they do that in partnership with the employee about those jobs. Now, this is what we call the skills taxonomy or part of the skills taxonomy. Katie, this is the fun stuff for us, isn't it?

 

Katie Stukowski: 27:37

Absolutely. This is what takes the job description and actually links it down to how employees or managers can start to understand what are the necessary skills, industry skills, core skills that employees should be able to perform within their role? But more importantly, how do you assess that, and that's the challenging part. I mean, I was working with an organization just a month ago, where it took them almost two years to develop their competency framework for two job families. Two years for two job families. They had many, many more. But the importance for that was they wanted to help ensure that not only the managers had the foundation they need to assess the employees that they had, and identify the behaviors that they were covering the right skills, covering the right gaps that they had in their organization, but also to help the employees assess where they're at, and what were their opportunities to grow. So job descriptions certainly set the foundation. But when you start to layer in the framework of competencies and skills, you start to be able to build broader transparency to help an employee truly understand what is their opportunity for growth? What is their opportunity for growth in a role, as well as in pay? Managers also understand how do they have more complex and more defined conversations around the work that employees are bringing to the table as well. So this really is the fun stuff. But this is also the stuff that sometimes is a lot harder to get right or to even get off the ground and to start at an organization in general.

 

David Turetsky: 29:00

Does anybody have career frameworks that they publish to their managers or employees? Excellent. Thank you. Those

 

Katie Stukowski: 29:05

One hand!

 

David Turetsky: 29:06

No, two!

 

Katie Stukowski: 29:07

Oh, sorry.

 

David Turetsky: 29:08

One went up like halfway in the back. So it's kind of one and a half do career frameworks. What a career framework does is it enables that manager and employee to have a conversation to talk about, where my life, where my job, where my career can go, instead of looking on Indeed or some of those other sites to say, where can my career go somewhere else? So instead of having a job description, or instead of having something that looks like this, which really kind of doesn't tell the employee anything, having the career framework gives you an opportunity to actually see that laid out where I can see what skills I need, what the descriptions are, and Ding, ding ding, from a pay transparency perspective, what's the expected pay level? And if you're really transparent, what are the other pieces of pay I get? Do I get commission on that job? Do I get an incentive on that job? Do I get long term incentive on that job? Ooh! But that's important because if I want to grow my my role or my life in this company, I want to commit to it. And I have that job in my mind where I'm a generalist, I want to be a director, I need to know where I'm going and what this means to me. Because if I don't, or if you don't tell me, I'm gonna go out, and I'm gonna look, and I'm going to find somebody who really wants me, and they're gonna pay me what I want, or what I think I want. You know, that whole grass being greener thing? We all know what's real. And if you don't give them that spark to stay, and to grow their career with you, I promise you, they will look elsewhere. And the framework is a way in which you can communicate to the manager and the employee a way for their career to grow inside your organization.

 

Katie Stukowski: 30:43

And leaving isn't just about the money anymore. Compensation is certainly key to retaining your talent, but it's slowly becoming the number two reason employees will leave and go find another job is they don't understand their opportunity for career progression within your company. It's also no longer just the manager, we all know that employees will leave when the manager doesn't seem to be a great fit. But are we also equipping our managers to have conversations are we giving them the right data and tools to help ensure that their employees understand and they have a way to feel comfortable talking about pay and progression, which are personal and which are very hard conversations to have.

 

David Turetsky: 31:20

One of the things that we love is actually showing numbers and percentages to show you what's actually happening in the market. Gartner did this study to look at skills, said the 50% of the workforce will require new skills. Now, we know the pace of change in technology is probably much faster than this. But we're a little always a little behind trying to associate those skills with those jobs. But Gartner's right. We know there's a lot of jobs that need to get, or job descriptions at least, that need to get redrafted because new skills, new technologies are being introduced all the time. And it's not good enough to say, they'll get it on their own. Because you know where they're gonna get it on their own? Anybody have a good answer? Your competitors! That's right! I didn't hear it, but I'm gonna say it like I did hear it from somebody. They're gonna get it from somewhere else, and they're gonna leave. They're gonna get those skills, they're gonna become more valuable, and no, they're not going to come back to you. Unless you pay him a ton more. You have to be on top of the skills that are necessary, you have to train for them. And one of the ways you do that, is by starting to build that into your competency models and your skill models, and how your descriptions work. And when we talk about needing skills, individual organization throughout your business need them. Yes, some of them are foundational in HR. But Katie, it's beyond that these are not just HR processes, right?

 

Katie Stukowski: 32:45

Absolutely. We see a number of them up on the screen here. But as you all probably know, there's a lot of different areas within your company that skills are highly impacted in the way that you do business across the board. You know, we see up here recruiting, how do you make sure you have the right interview questions to find the right talent to put in the right jobs that they're gonna perform at the level that you come to expect? But more importantly, how do those employees understand what roles they're actually aligned with to be able to interview for speeding up that process and allowing you to make sure you have the right talent. And as we know, training is another piece that involves compensation and investment in employees. And if an employee ends up being the wrong fit, or they decide to leave, you're going to end up paying more money on the back end to fill that gap. Pay Equity. How do you define within the realm of pay equity substantially similar work? Skills are essential to determining in our organization, we're gonna talk about job architecture too, how do we define in our company and go beyond a job in a pay range compared to a comp ratio, but really look down to the employee level at who in our organization and what roles are doing comparable work that helps us then identify where we have those gaps or significant gaps that we need to think about remediating. And when you have skills, that ability becomes much stronger, as well as much more easily communicated. And there's so many more that we see up here as well.

 

David Turetsky: 34:10

And by the way, these things, yes, they're owned by HR, these are business processes. They're owned by the business. Yes, the process itself is owned by HR. But if we don't do these things, the businesses themselves cannot function the way they need to, especially when it comes to things like training and workforce planning. So while these seemingly are HR processes, as Katie said, they are also business processes. So now let's talk about, Yeah, I'm sorry, go ahead. So the question is, because we're moving much more towards skills, are job descriptions antiquated? Is that correct? So I'll give my answer and I'll ask Katie as well. First of all, job descriptions themselves are required. If you've ever gotten an OFCCP audit, or you get other types of audits, they're required. Those rules haven't changed, they will still be here. And if you do recruiting, anybody recruiting here? Anybody responsible for recruiting? Well, you need them because you need to be able to go give them to candidates. So they're required there, but they could be changed. They could be skill based. And the answer is, they're an antiquated piece of something that's been left behind. Should they be skill based? Absolutely. And in fact, a lot of organizations are actually redoing their descriptions to throw away a lot of the junk. We talked about six pages in one of the the discussions we had before the six, six pages of the job description. If you made that more about the skills that were required, and at what level? And what are the expected behaviors, at those skills for that level of job and for that job in specific, you'd have a much more effective conversation with an employee about what they do, and at what level do they do them? Versus what's the expectation on them? And what training we need to get them there. So my answer to you is, I wish we could change our job descriptions from a laundry list of tasks, which it should not be, it should be required duties, working conditions, education, experience, it should be changed to be much more about skills. What do you think, Katie?

 

Katie Stukowski: 36:20

In a lot of the same way, I agree with David. We had a very interesting conversation with an analyst yesterday in which you may or may not have attended on this exact topic alone. And I do think there's a really compelling argument there. And I do think that there could be a future where the job description becomes antiquated, to put it in your own words, but I think we have a long way to go. I think that there's a culture shift that would need to happen. I think I work with clients continuously talking about how do we develop a competency framework? How do we take and infuse these skills and in that conversation alone, being able to understand the difference between a job description and understand a competency framework profile, which in itself looks like a description, but it's really bringing it down to the level at the employee of the defined skills. Many people don't still in our industry and our jobs don't understand that difference. So I do think that the appetite is there. I think it in a world as David mentioned, how beautiful would it be to get away from the rigor and the work and just the sweat and tears you put into writing job descriptions, and help really define the level of work that employees are really bringing to the table, but I think we have a long way to go. And I do think that the challenges will also be will the employees understand what those skills mean? What are the worth of those skills? Why are they being paid based off of that? And are we also prepared to quantify that and have those conversations as well. And it's a challenge in compensation today, a lot of compensation folks owning HR, or owning pay equity and owning this. Even just going from the shift of I understand how to hire people and put them in a job and a pay range compared to the comp ratio to then go into this level in itself is one of those challenges that we talked about within the compensation world as well. So do I think it's compelling? Absolutely. Can I see a future? Yes, I think we have quite a way to go from just an overarching culture, and adoption. And you know what it's like to shift perspectives in an organization. Think about how long it took to get people to pay 4% increases. So we do have some time, I think, to get there.

 

David Turetsky: 38:29

Hey, are you listening to this and thinking to yourself, Man, I wish I could talk to David about this? Well, you're in luck, we have a special offer. For listeners of the HR Data Labs podcast, a free half hour call with me about any of the topics we cover on the podcast, or whatever is on your mind, go to Salary.com/HRDLconsulting, to schedule your FREE 30 minute call today. So let's move on to paying competitively and looking at market pricing. So now that we have a job description, and now that job description is more accurate, and maybe it has skills, instead of just being about the six pages of tasks. Now, what we're going to do is pay competitively based on what the market says. And so here, we're gonna have to go through this quickly. But here are things that you need to take into consideration when you're market pricing. First of all, do not just use the old term, well, this person is such a rock star, forget about that. You have to price the job because it's about the job. And then there's a range of pay and if someone's a rockstar, go to the highest end of that range.

 

Katie Stukowski: 39:34

That goes back to your job descriptions too. If you have 460 jobs and you have 400 job descriptions, you're writing them for people and pricing people. So just something to think about.

 

David Turetsky: 39:44

The next one I want to highlight here is that you're matching surveys or you're matching sources. Don't choose one. Choose multiple. Why? Well, it's kind of like do does anybody ever go to one mortgage lender and say, Yeah, that's a great rate, I'm gonna take it at 8 percent. No, you shop, you get rates, you get different rates, you try and find what makes sense for you. So you'd get a bunch of data, you put it together, you create a composite, you say that's a good rate for our company, it more accurately represents the job.

 

Katie Stukowski: 40:15

And if you don't have data today, think about what data fits your organization. And we've seen a huge uptick in even the smallest organizations understanding the power of data brings to the table. I've affectionately been called a data nerd. So if you want to talk about compensation sources,

 

David Turetsky: 40:29

Talk to us.

 

Katie Stukowski: 40:29

I can do that all day. However, data is a way again, to help move the needle towards pay transparency because it empowers leaders, people leaders, and others to truly be able to communicate, this is why we pay what we pay.

 

David Turetsky: 40:42

So the other thing here is, you have people around you who love numbers like CFOs, getting more accurate descriptions, getting more accurate data will help them feel more comfortable about the data. One of the ways is knowing your market, trying to find data that fits your industry, your geographies, that fits the company that you work for, the company size. Maybe you're a nonprofit! I've seen a lot of nonprofits lately who've had to look at for profit companies from benchmarking because they're not able to recruit against for profit anymore. And so they're taking that as one of those sources to look at how they pay. Let's talk about pay transparency, it's really important. It's the law in many of the places in which you work or operate. One of the scary things that we found when we were doing this, this came from a Salary.com survey, only 36% of companies have actually established a philosophy that explicitly talks about pay transparency or that commits to it. So think about California, think about Illinois, think about New York, think about Massachusetts, Rhode Island, all the states, Colorado, all the states we mentioned before, for those companies who don't operate in any of those states, okay, I get it. But I promise you more of those, more of those 64% actually operate there, and they better start thinking about a philosophy or strategy. So I can't talk to that right now. Because I think sovereign nations don't have to apply that a lot of federal law or state law doesn't apply to them either, because they are their own entity, from a nation perspective. So but here's the thing, if you're operating in a world where someone can go to Amazon, next door to your sovereign nation, next door, right outside, right, and they can be told what the pay range is. But you're not disclosing pay range, where is someone gonna go? They're at least going to look at the ones that are disclosing the pay range. And if they come to you, and you're not meeting that pay range, they're probably going to go to the one that has the more competitive or the higher pay. Yeah. Let me play that back for everybody. For everybody who didn't hear him. He said, if six or eight states are doing it, you know, why don't we just bite the bullet and do it for every, every state? And the answer is, we call this the lowest common denominator theory. If you operate in California, just operate the way California operates. They're the hardest. If you try and do things multiple ways, you're gonna look on Indeed, and you're gonna see, well, this pay range operates, this pay range is for Colorado. But if you're not in Colorado, it doesn't apply. What is somebody going to infer? You don't care about me, because I don't live in Colorado? Just disclose the pay range, just do it! Lowest common denominator, if you have to for one state, just do it. Because I promise you, you're gonna make more of a nightmare for yourself if you don't. And the reason that's important is you have to do a ton of education. How many of your managers and how many of your stakeholders and how many of you leaders want to learn 10 different ways of doing pay transparency? No way, I promise you, I have been doing this a long time. Do it one way, satisfy all the requirements. You're going to make a nightmare for yourself if you do it multiple ways, and your managers are not going to put up with it. They're just going to make stuff up and blame HR for it too. I promise you I've seen that. One third of HR professionals say that any manager in their organization can explain. Only 1/3 say their managers can explain. What?! That means two thirds of these HR professionals don't believe their managers understand how their employees are paid. Now, by the way, that doesn't shock me at all. But we need to do a better job of education. Pay transparency is not going away. Massachusetts just introduced legislation to make it the law, it wasn't there yet. It's now been passed by the House. It'll be passed by their Senate soon. And I promise you if you operate in New England, if you're in Vermont, you're in New Hampshire, you're going to be operating in the concept of pay transparency because the other two states in New England are two states are Rhode Island, Massechusetts, Connecticut, I think it's on the docket. Here's the problem. How transparent, I think we kind of answered this with the question that you raised, sir. How transparent do you want to get? And the answer is, you have to look at your culture, you have to talk to your leadership, you have to talk to managers, you have to talk to employees and stakeholders. If you have a bunch of Gen Z in your company, I promise you, they already know what each other are paid. There's a Slack channel, they probably have already told each other. They might not have told everything and they may not have been honest. But they've at least started the conversation. When I worked at Morgan Stanley, I was the guy who had to call a manager to say, you have to have your two employees sit in my office tomorrow, because I have to tell them that if they discuss pay again, they're fired. That was me in the 90s. And I'm now the person standing in front of you that says that was horsecrap. We should never have done that. But that was the rule. Because I was also required to wear a tie, which I hated as well. You have to take your culture, and you have to figure out what makes sense for you. You have to understand the law that applies to you and your employees across the board and make a decision for your company. It's not enough to say we're just going to put pay ranges on our postings, not going to work. If you operate in California, your employees have rights. We're not going to go through this, but all I'm gonna say is, is that there is a range of regulation, we're not giving legal advice here. You need to talk to your general counsel to understand what applies to you. Because at the end of the day, it's a decision that your company makes how you comply. You have to comply. Does anybody remember the Netflix issue that they posted a flight attendant job? And the flight attendant job was paid between $60,000 and$385,000 a year? Well, they disclosed it! Was it right? No. Did they get fined for it? If somebody works for Netflix, I'll talk to you after and I'd love to know if you got fined for it. You don't have to tell me if you don't want to. But that's not the right thing to do. Because that's not a rational rate of pay for a flight attendant. There must have been a mistake. But it's a bad mistake. You need to prepare for pay transparency. We don't have a lot of time to go into all these things. If you want to get the deck we'll we'll provide it to you, you have to prepare, you have to understand what you have to do, you probably have to do a pay equity audit. And if you haven't done one in a while, you probably should do it, especially after COVID. But you also have to train managers. That's the big takeaway here. At Salary.com we really believe pay equity, not just as a law, but it's the right thing to do. And the way we describe it is equal pay for comparable work that is internally equitable, externally competitive and transparently communicated. I finally got it right, right, Julie, I keep messing that up. But it's really important, because those three concepts, make pay equity work for an organization. Because if we don't communicate transparently, you're keeping secrets again. And then pay equity is going to get away from you again. You have to constantly evolve your process to make sure that every pay change that you make, every award you make, is fair. And again, we say pay equity, we don't mean equal. We don't mean everybody should be paid the same. We're not talking about peanut butter. There are reasons why people get paid differently. But if you saw the news last week, I think it was last week or the week before the Latina pay day where a person who is Latina, got paid equally, it was until October of this year, right? It was sometime in October that they had to actually get paid all of last year, and up until October this year to equal what a white male got paid on average. That gap is real. It's real, it's measurable. But it's also about treating people with respect and treating people fairly. And so it's not just about giving them same wage. Pay transparency sets up the opportunity for people to get paid fairly. Pay Equity is where they given the appropriate opportunities to get promoted, to get the right pay? It's all the right thing to do. Okay, if you don't address them, you're gonna have declining performance, productivity, people gonna get pissed, they're gonna leave. Your brand is gonna get damaged. I think all of us remember that headlines that came out of Google where someone published a lot of the rates from Google, was horrible. But it was real. And we were shocked. And now they're gonna be discrimination claims made. And those are bad, because they are really nasty, and they're really expensive. I've been talking a lot. Do you want to talk about assessing pay equity?

 

Katie Stukowski: 49:47

I mean, definitely, if you're thinking about having a little bit more ownership or if you're reviewing the way that you've done it in the past, because many organizations they're again moving past the audit, they want pay equity to lead into merit. So they make sure when they're providing those 4% or more increases, that it's going to link to the pay equity approach that they're infusing into their pay culture. So first and foremost, as we talked about, understand your jobs, understand your roles, understand your job architecture. And we're seeing more and more companies go back to the drawing board when it comes to defining job families, functions, levels, and then the descriptions that go into that. Understand, again, what are the underlying drivers in your company that you believe are reasons why you pay, but more importantly, determine the comparable work within your organization. What are those, what we call substantially similar groups within your company that allow you to identify again, pay equity doesn't mean equal, it means if they are doing substantially similar work based off of different values or variables that you tie into that they should be paid equitably. Or have the opportunity to be and you need to close gaps if they aren't. And the last thing that I would also emphasize is have a view of your external market as well, because pay equity shouldn't just be about are we closing gaps anymore between men and women? Are we paying people within comparable jobs equitably? And more and more organizations now want to offer talent acquisition and recruiting ranges of pay that tie to pay equity to make pay offers that align right into that approach that they're infusing as a culture. So just a few pieces there.

 

David Turetsky: 51:21

We kind of adjust our time, so I'm gonna skip this because we're running out of time. So I think a lot of you have stayed just to hear

 

Katie Stukowski: 51:24

Sure. us talk about AI right, because everybody's talking about AI. We had to have one slide, it was actually required by HR Tech conference. One of the things that AI does in this conversation is, it's an unknown in the world of compensation. We've never had to actually consider the fact that there may be something that is so complicated. Yes, it's requiring new skills. But I'll ask you, do we actually have to budget to pay AI? Sit for that for a minute? Think about it. It's a piece of technology, we're actually paying to get that technology. But are we budgeting for it? Are we giving it a title? Are we going to grow it and train it? Are we going to treat it like an employee? Or is another piece of capital equipment? Or is it just a piece of software? I will argue that if you're introducing something that has skills, that has some kind of functionality, that is providing work that other people do, that you treat it like a person. You budget for it, you train it, and you make changes for when you have to promote it, or change its job. I know that might seem really crazy. How many of you have heard of AI that actually have names? They do. We're trying to give personas to AI! We're trying to say, well, that AI's name is Charlie. Charlie will do a lot of the administrative tasks that we currently do. Okay, what's its job title? Why don't we have a job description for it? Why don't we budget for it and train it? I know that might seem like I'm going into a dystopian movie. But start to think about this as something that something is going to do it's actually taking work away from a human, or enhancing the work of a human. So let's think about it as actually a budgeted position. Does it devalue work or make us more productive? How many of you ever heard the fact that when computers first came out, people said why? It's just gonna be a distraction. No one needs that crap. The head of IBM at the time, said, there is no reason that someone will need a PC on their desk or computer on their desk. It's one of those famous phrases that did not age very well. But what's the difference between that and AI? I challenge you to think about the world in which we may actually have to consider it an employee or maybe a 1099. I don't think I have to go through conclusion. I think we've talked enough. Anybody want to ask us any questions about what we've talked about before we end? Yes. So the question is, where can you pull in industry specific or regional benchmarking data? Benchmarking sources, like surveys, like a lot of the companies that exist downstairs, have data that survey across industries, survey across geographies, and they will provide you what are called cuts of data. And those cuts of data go into geography, company size, company, whether the company is nonprofit or for profit, they actually produce that. So if you go to your survey company, they actually have those cuts of data. Surveys have been doing this for decades. Do you have data today? Okay. There's also different types of data. So as David mentioned, surveys often will get down to the regional and the industry level, but ask if they are providing cuts that are that granular. There's also aggregate data out there that tends to then allow for a more defined scope. As David mentioned, it's because it can fill gaps using statistics and algorithmic regression. So there's a number of different options. But does it cover the right roles, and then the right labor markets or industry that you're specifically looking for, to make sure it's a really good fit for your benchmarking practice. And if you can afford layer in a couple of different perspectives, so you really get a much more rounded perspective of the market to help you make the best pay decisions possible. Not always there's free sites out there too.

 

David Turetsky: 55:29

But free sites, you get what you pay for. Yes, sir. Qualitative versus quantitative methodologies on job evaluation. I started doing job evaluation in 1989. I don't think there's a one way of doing it, I would actually do both. I would get the numbers from the quantitative side. And I would also do a qualitative analysis as well. But first, the thing that's required is a good job description. So before you start trying to value your jobs first, make sure your job description is reflective of the job today, a lot of job descriptions were made prior to COVID. And I promise you, they're different than they are today. Good question. So if you don't have any other questions, thank you so much. We really appreciate your support. Take care.

 

Announcer: 56:20

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