Authors: Liz Roling, Randy Lucius.
Our last recommendation in this series addresses the importance of standardizing compensation processes to ensure equity and consistency across the organization.
5. Decrease Discretion in Compensation Process: In many organizations, managers are given the discretion to make pay decisions, without formal standards or training on appropriate factors to consider. By establishing and providing training on clear and objective standards (which can be identified in a job analysis) for determining initial pay and pay raises, you can be more confident that pay decisions are based on job related factors, as required by the Paycheck Fairness Act.
While implementing these protections can be difficult, all the recommendations have all been shown to have a positive impact on company performance, independent of legal compliance. For instance, a recent SHRM (Society of Human Resource Management) poll indicates that the majority of HR managers believe that using behavioral competencies, which are the outcome of a formal job analysis, enabled the hiring of more qualified candidates. HR managers also believe that using behavioral competencies helps increase employee job satisfaction, decrease turnover, and increase productivity. Moreover, evaluating and addressing fairness perceptions, increasing objectivity in performance appraisal systems, and decreasing discretion in the compensation process are likely to increase employees’ perceptions of justice, which are related to increased commitment to the organization, decreased turnover (e.g., Ambrose & Schminke, 2009; Simons & Roberson, 2003), and even improved customer service (Masterson, 2001).
Disclaimer: Turknett Leadership Group is not a law firm, and the information in this paper is meant to provide general information to explain the legal implications of recent and future legislation for HR. We strongly recommend that you consult legal counsel to completely understand how the legislation will affect your organization.
