Day: March 1, 2023

Do you feel a little lost in the world of compensation? You hear words coming out of someone’s mouth and you think you know what they are talking about but you’re not sure. Foundational to each discussion is understanding the terms related to the topic. While each organization might have different processes to gather information and procedures for applying the information, the terms describing compensation and related practices should be used with purpose. Below you will find a list of the most common compensation terms and processes with their customary meaning. Compensation doesn’t have to be a “black box”. Start off your next discussion a little more comfortable than you are now. Enjoy!
Annual Incentive Plan – An Annual Incentive Plan is the most common of all short-term incentive plan practices and includes a performance (merit) period of one year or less. It should complement the business strategy and be part of the overall strategy of the Total Rewards program. It is a non-discretionary award.
Benchmark Jobs – Benchmark jobs are commonly found in salary surveys and used to make pay comparisons, either internally or externally, for an organization. When selecting benchmark jobs, they should:
• Be important to your organization’s internal hierarchy,
• Represent all major job families, departments and levels, and
• Serve as an internal anchor for non-benchmark jobs.
A good goal is to match 70% of your internal jobs to the external marketplace. The more jobs that are matched, the closer the salary structure is to the external marketplace. Realistically between 50%-70% of your jobs will be found in the marketplace.
Bonus – A bonus is paid to recognize the achievements of an individual, team, department, operating unit, or a company. Payments may recognize a performance period (monthly, quarterly, semi-annual, annual) and are typically made in cash, but occasionally will be paid in equity or another form of award. A bonus may be discretionary or nondiscretionary and will have a lot to do with the laws of the state in which work is done.
Compa-Ratio – Compa-Ratio is a comparison of employee pay to the salary range midpoint.
Compensable Factors/Characteristics – Compensable factors/characteristics are used to evaluate jobs and develop a job worth hierarchy to provide fairness and equity throughout an organization. The Federal Equal Pay Act of 1963 defines the compensable factors/characteristics, and there are several states with their own set of factors/characteristics.
Compensation Benchmarking – Compensation benchmarking is best defined as the process of applying external market data to make fair and competitive compensation decisions. It may even influence the compensation strategy, policies, and practices.
Cost of Labor – The cost of labor includes all compensation, benefits, and payroll taxes paid by employers to employees and can be compared from location to location.
Cost of Living – The cost of living is tied to wages and represents the amount of money needed to maintain a certain standard of living as measured through housing, food, healthcare, and taxes and can be compared from location to location. Use cost of living data cautiously for compensation purposes as it can be much higher than the cost of labor in a location.
Grandfathering – Upon implementation of a new or revised compensation plan, grandfathering will protect the current compensation opportunity of existing employees when performing the same role in the organization and will support in minimizing employee relations issues to contribute to a successful program implementation.
Gross Up – A payment, such as a one-time award, may be grossed up so that an employee will receive the full amount even after taxes. In this instance, the company will bear that cost of the tax gross up.
Hours of Work (the math) – Assuming a regular, full-time equivalent at 40 hours per week, there are 173.33 work hours per month and 2,080 work hours per year.
Internal Equity – Internal equity is an important objective of the overall compensation program and can be accomplished when jobs are valued fairly and objectively both within a company and to the appropriate external marketplace. Employee compensation should be delivered based on fair and objective criteria (such as performance, merit, seniority, education, experience, and training) within the competitive marketplace to ensure the attainment of internal equity. Pay audits will support in the identification of internal equity issues. Several states have specific laws outlining criteria and process for internal equity.
Long-Term Incentive Plan – A long-term incentive plan is typically used to reward and recognize ongoing organizational achievements (typically ranging 2-5 years). Awards may be payable in cash or equity to the eligible management team (typically at the executive level).
Lump-Sum Merit – A one-time payment to recognize pay for performance, a lump-sum merit will not be folded into an employee’s pay. It is commonly used to recognize employees paid at the top of their salary range or as a cost savings strategy.
Market Pricing – Market pricing is a job evaluation methodology that creates a job worth hierarchy based on the “applicable market rate” for benchmark jobs in the external marketplace relevant to the business.
Market Ratio (Market Index) – Market Ratio is a comparison of employee pay to the market rate.
Merit Increase – A pay increase designed to recognize pay for performance.
Pay Transparency – Pay transparency is an approach to communicating compensation openly with employees. It typically includes the following: compensation plan documents, merit increase guidelines, market data sources, job descriptions, and employee communication for individual pay changes, including salary grade and range. Less frequently, companies might communicate other employees’ pay to all employees.
Salary Range – A salary range represents the minimum, midpoint, and maximum rates that a business is willing to pay employees performing a job. Typically, the midpoint or control point is set to provide market competitive, fair, and equitable salaries based on the competitive marketplace for a business.
Salary Range Maximum – The Salary Range Maximum is the point at which an organization would expect an employee to exceed in performance of essential responsibilities, be ready for promotion, or are highly experienced.
Salary Range Midpoint/Control Point – The Salary Range Midpoint/Control Point is the point at which an organization would expect an employee to meet essential responsibilities, be fully competent, experienced, and independent.
Salary Range Minimum – The Salary Range Minimum is the point at which an organization would expect an employee to need guidance and training to learn their essential responsibilities, grow towards proficiency, and be partially dependent on others for success.
Salary Range Midpoint Progression – The Salary Range Midpoint progression is the percent difference between midpoints.
Salary Range Spread – A salary range spread is the percent difference between the minimum and maximum.
Salary Structure Adjustment – A salary structure adjustment may be used in lieu of repricing an existing structure. In this case, a flat percentage (based on the market movement of salary structure adjustment projections) is typically applied to the midpoints of the existing salary structure to adjust them to the upcoming year. Salary structure adjustments are approximately 1% below the market movement of base salaries.

Have you complained recently to someone else that you did not get a good night sleep? Do you feel yourself dragging or feeling less than your normal self? It seems to be a regular conversation regardless of where you are or who you talk to.
Most of us have heard plenty lately about self-care and with reason! So, what do you need to do to reboot yourself? Dr. Saundra Dalton-Smith, MD is a physician and researcher. She wrote the book, Sacred Rest: Recover Your Life, Renew Your Energy, Restore Your Sanity. While Dr. Dalton-Smith’s 7 types of rest may not appear to be earth shattering when you read the list, we believe you’ll find at least one of them will resonate with you and because it is what we ALL need. The seven types of rest are:

1. Physical Rest – there is both a passive option, such as sleeping, napping, etc., or an active option, which involves stretching or a massage. She notes that signs of a deficit of physical rest include aches, pains, swelling in legs and feet, back spasms.
2. Mental Rest – this involves calming an overwhelmed and overworked mind. The doctor points out a deficit is likely if you can’t sleep because your mind is racing at night, or you can’t remember more than a couple of things.
3. Social Rest – This is the time spent with “life-giving” people versus the people who need things from us: reports, data, a phone call, etc. Those folks, while well intentioned and doing their job, drain your energy. Then there are family members who need things from us: a meal, money, a ride, etc. While we need (and want) to engage with people who need things from us, social rest is about focusing on relationship and spending time with people who do not need anything from you but rather give to you – fill your emotional cup.
4. Spiritual Rest – Dr. Dalton-Smith is very clear this can mean different things to different people – specifically one’s own belief system. It is more about feeling a sense of belonging. She identifies a deficit when someone doesn’t feel they are doing good, or their work doesn’t have purpose. She also notes lack of an inclusive and supportive environment contributes to a spiritual deficit, i.e., a toxic work environment will rob you of spiritual rest.
5. Sensory Rest – This refers to getting a break from the ringing phones, the notifications, screen time, Zoom calls, etc. According to Statista, 22% of us spend 3-4 hours a day, while 46% spend between 5-6 hours daily on our phones. A shocking 11% spend more than 7 hours a day. Our brains need a break from our screens.
6. Emotional Rest – this is not about emptying our minds, but rather spending time with people where we can be our authentic selves. “Many of us carry quite a bit of emotional labor privately, in that we don’t share with people what we’re feeling.” This can be due to wanting to maintain privacy, not feeling comfortable, etc. Regardless of the reason, we need to have time on a daily basis where we can just be ourselves, let down our guard.
   Creative Rest – This refers to the time where we let ourselves enjoy the beauty around us (be present, be in the moment). This may involve taking a walk, watching a sunset, listening to music, dancing. Dr. Dalton-Smith points to a deficit when you struggle to brainstorm or solve problems. She further argues, many of us have a deficit because there was so much problem-solving due to COVID.

Dr. Dalton-Smith argues that people often have a hard time accepting the deficits because they have things they need around them (a job, a car, a home, etc.), but that does not mean you are not in need of rest. If you are feeling burned out, you need rest, and not just a solid 8-hours of sleep. Her recommendation is to begin where you have the biggest deficit and if you need assistance in figuring out where your biggest deficit lies – she has a quiz for that (please note, it may take up to 24 hours to receive your results). She provides a score for each area and the severity of the deficit.
There is good news. The renewal process is something you can start as soon as today! It begins with being intentional, thinking about how you spend your time, and reflecting on what brings you peace and joy. Small steps can have a big impact, not only on your personal well-being, but it will likely spread into your work life and family life. Where are your deficits?