9 Reasons Outsourced Compensation Planning is Essential to Organizational Health

You feel like you’re paying your employees well, but do you have the data to prove it? Is your compensation compelling enough to attract top talent? And is your total rewards package enough to keep them? 

Compensation planning—make that timely, well-researched and strategic compensation planning—is essential in today’s tight labor market. Here are nine challenges organizations can solve with quality outsourced compensation planning, like the services Employers Council offers.

1. You’re losing talented employees to competitors. 

63 percent of workers who left their job in 2021 said low pay was a factor.1 You want to be the company others are leaving for, not the one getting left behind—a strong compensation plan can ensure you’re doing everything you can.  An effective plan addresses both acquiring and retaining employees with packages that incentivizes prospective candidates to apply and motivates current employees to stay. 

2. You don’t know where to start. (AKA: What’s a compensation philosophy?)

You can’t have a solid compensation plan without a solid compensation philosophy. A compensation philosophy is simply a formal statement of the whys behind your pay system. As we’ve written before, a comprehensive compensation philosophy should include topics such as: 

• How the philosophy reflects and supports your organization’s mission, vision and values 
• What percentile of market wages you pay and why
• What jobs are critical to the success of the organization and worth paying a higher percentage for
• If higher turnover is acceptable in certain positions 
• How your compensation philosophy supports equal pay for equal work
• How the philosophy will guide your recruiting and retention policies

If you don’t have a compensation philosophy—or have an incomplete or unwritten one—you’re not alone. 12 percent of organizations don’t have any compensation philosophy, and 26 percent say they have one, but it’s not written down.2 

Outsourcing development of a comprehensive philosophy is a smart shortcut on the path to compensation excellence. Employers Council is here to assist, whether your organization is looking for a few sounding board check-ins or full-service plan development. 

3. Your organization doesn’t have the capacity to evaluate the compensation market.

Some organizations, like many nonprofits and local governments, don’t have the capacity to do market-based job matching or evaluation internally. They don’t have the staff or the resources needed for a compensation deep dive.

Outsourced compensation planning, like the services Employers Council provides, can help with anything from figuring out how to compensate one new employee to doing a complete compensation plan overhaul for an entire organization. 

4. Your job descriptions are way out of date. 

The most popular compensation service at Employers Council is market-based job matching. Compensation consultants match members’ job titles and job descriptions to the data in Employers Council’s system. 

But in order for those matches to be relevant, the job descriptions need to be up-to-date and accurate. What’s on paper needs to mirror what is happening on the job in real life. In addition to making small edits and additions to existing job descriptions, Employers Council can help with in-depth job evaluations—interviewing employees, analyzing each position, and modifying job descriptions—if they are needed for quality job-matching. 

5. You don’t have access to the right compensation surveys or data. 

Another key component of useful market-based job matching is having detailed, timely compensation survey data to compare against. Employers Council uses Payfactors’ survey data (updated monthly), its own Employers Council benchmark survey data (updated annually), and any other unique survey data the client might like to include. This combination of data sources gives Employers Council a comprehensive national view; compensation consultants can also filter results to get details on members’ specific pay markets. 

6. You’re growing too fast to keep up. 

Compensation planning is simple when you only have a handful of employees. But if you’re growing, you’re going to need a fair pay structure. Outsourced compensation planning can organize job titles into logical tiers—or simply give your own newly created structure a once-over for feedback and suggestions. 

7. You don’t know how to communicate your compensation philosophy and/or plan to employees.

50 percent of organizations say that most or virtually none of their employees understand their compensation philosophy. And 41 percent of organizations say they don’t share very much information about base pay ranges—individually or across the organization—with their employees.2 

But clear communication about your compensation philosophy and plan can head off a whole host of grievances down the road. Outsourced expertise can pave the way. Employers Council offers post-reporting services to help organizations come up with a communication plan for their employees, train their managers, and solidify the new compensation structures they are introducing.

8. You want to understand how your total rewards package stacks up. 

Employee pay is only one piece of the total rewards puzzle. Thanks to quality market-based job-matching, you may feel confident that you’re offering competitive salaries but remain unsure how your benefits—including flexibility and work/life balance supports—compare to other employers. Employers Council can help you get a clearer picture by comparing your organizations’ benefits to your peers’. Employers Council also has a consultant who specializes in analyzing incentives, like C-Suite bonus structures, to help organizations make sure they are offering compelling total packages.

9. You just need help with everything. 

Many members are surprised to find out Employers Council can support their total rewards package from start to finish. Pre-planning to prepare for a compensation study, developing a compensation plan, executing payroll and benefits, communicating pay structures—Employers Council can help with it all. Employers Council is a one stop shop for anything related to compensation, including employee engagement, climate and culture.

1. Parker, Kim and Horowitz, Juliana Menasce. “Majority of workers who quit a job in 2021 cite low pay, no opportunities for advancement, feeling disrespected.” Pew Research Center. 9 March 2022. Accessed 1 June 2022. 
2. 2021 Compensation Programs and Practices. World at Work, 2021. Accessed 1 June 2022. 

Ready to learn more about compensation planning? SIGN UP for our 2022 Compensation Series virtual training: six classes that will supercharge your compensation expertise.