10 questions to understand how payroll works in your company

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It’s rare for companies to offer great transparency about how they make compensation decisions. But like laws are being passed requiring pay scales to be shared in job postingsretention of salary information will become more difficult for employers.

Lack of transparency around salaries typically contributes to a culture of ambiguity, which paralyzes employees who try to ask for a raise and leaders who respond to their demands. Too often, leaders are placed in the impossible position of influencing a process that they do not control and know little about.

To prepare for the inevitable moment an employee wants to talk about raises, leaders need to make sure they can comfortably answer these ten questions about how compensation works at their company (and it can’t hurt non-managers to understand these dynamics too) .

1. What is the company’s compensation philosophy?

2. Who determines this philosophy (management team, remuneration committee, etc.)?

3. What do we invest in our employees as part of their “total rewards” such as benefits and bonuses?

4. Do we pay at market rates, above or below? How does this differ within the organization?

5. When and how often do we give raises?

6. How do we determine what is allowed for raises company-wide, i.e., are raises based on revenue, company-wide specific performance targets, company or individual goals?

7. When was the last time a job analysis (confirming what the role does) or job evaluation (confirming what the role should be paid for) was done for your department, team or the roles you you manage ?

8. For each employee, you will also want to have this information: what is their classification/band and corresponding salary range? Where are they in the salary range? What is their relaunch history?

9. What is the company’s position on pay transparency? (New York State and Colorado have already passed mandates for employers requiring transparency)

10. How big is the organization’s pay gap for women and people of color?

If you can’t answer these questions, request a meeting with senior management or your organization’s human resources department so they can fill you in. Because these topics can be tricky, take good notes and summarize what you’ve learned in an email to make sure you’re conveying the right information to your team members. This preparation will go a long way to ensuring more productive salary discussions when the time comes.

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