Compensation Trends Offer Lessons for School Districts
Several leading business consulting firms, including WorldatWork, Mercer, the Hay Group, and The Conference Board, are predicting an average increase of more than 3 percent in base pay for U.S. workers this year.
According to the WorldatWork Salary Budget Survey, U.S. workers will see an average base pay increase of 3.1 percent in 2013-14. Kerry Chou, senior compensation practice leader at WorldatWork, shared that this would be the first time since 2008 that the average increase is above 3 percent. Chou added that salary budgets are only slowly starting to improve and that organizations need to focus on how pay programs are executed, ensuring that pay is being differentiated between high and low performers, that managers know how to talk about compensation with their employees, and that transparency and good communications is important.
Jeanie Adkins, a Louisville, KY-based partner and co-leader of Mercer's rewards practice explained, "Employers realize their greatest challenge is to retain top performers to avoid post-recessionary flight of these valuable assets. This means they have to reward and recognize them. This includes providing higher pay increases, along with other non-cash rewards such as training opportunities and career development."
Adkins also noted that differentiation is occurring between high-performing employees or those with high potential and average or low-performing workers. Mercer's work has shown that on average last year the highest performers earned increases of 4.6 percent compared to average employees who earned 2.6 percent more and the lowest performers who earned .2 percent.
More information on the Mercer study can be found in my July 20, 2013 post, Survey Provides Insight into National Salary Trends.
She went on to say, "Differentiation of salary increases based on performance is now commonplace and remains an effective way for employers to recognize those employees that enhance the company's competitiveness and contribute to its success."
While these perspectives come from leaders in the business world, there are lessons that K-12 talent managers should consider as they explore changes to compensations systems in education. These include:
• HR, central office, and school building leaders must have the skills and knowledge to talk about compensation with their employees.
• Explore ways to recognize staff through non-cash rewards and career development opportunities.
• Compensation systems must be transparent.
• Businesses, like many school districts, are also dealing with budget issues related to compensation. As a result, business leaders are looking more closely at who they reward and how they are rewarded--specifically, how to differentiate salaries based on performance.
• The focus of a compensation systems should be on recruiting and retaining top staff.
As more districts explore alternative compensation, alternative salary schedules, or differentiated compensation (chose your term), I think we will see similar lessons emerge from education-focused organizations as are currently being shared by the business community. What do you think? Please share your thoughts in the comments section below!