Tips on leading a reward benchmarking project

A few weeks ago a young reward professional had a question for me as he was preparing for a job interview. He was asked how he would manage a reward project where he needed to benchmark a new organization structure and make recommendations to senior leadership.

I thought it worthwhile to share two short videos on my response to him.

PART 1: Conducting a Reward Benchmarking Process

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The first step in any project of this nature is to agree on the project brief with your key stakeholders, including key senior leaders, the head of HR and other role players.

Make sure you set-up regular project meetings to keep your key stakeholders updated on the progress of your projects.

Next, you commence the technical work in the project focusing on the following steps:

1. Source all the job descriptions and job evaluations and familiarize yourself with how these come together.
2. Benchmark the jobs against a reputable job survey, using your internal job titles, job grades and the job content. Work with your HR business partner and line managers to match the jobs to the survey.
   TIP: Don’t share the survey data yet with your stakeholders, it can cloud the matching of the jobs. Rather, focus strongly on the job content, job grade and title and agree on the job matching.
3. Once the job matching is complete, pull the current salary data and most recent performance evaluations for each employee.
4. Start comparing employee data to the market data. Look at the lower quartile, median or upper quartile or pick different points to compare the data to that align to your pay strategy. Use a compa-ratio as part of your analysis.  The compa-ratio is calculated by dividing an employee’s salary by the market salary. This gives you a consistent reference point to use across a large sample of data and allows you to see how each employee’s salary compares to the market.
   TIP: Use a graph in Excel to visually represent what it looks like.

PART 2: Sharing the data and outcomes

When you have completed the technical analysis, start by sharing the preliminary outcomes with the line managers and HR business partners. This will help check thinking and approach and iron out any data inaccuracies.

If you are to secure a meeting with your CEO and key stakeholders, share the information with them in advance of presenting it at the senior leadership team meeting. Use this opportunity to orientate a few key people around the outcomes. Take on board their feedback and work towards finalizing your presentation and recommendations.

Working through your head of HR, arrange a session with the senior leadership and remember to focus on the following points:

1. Present your methodology, show that you involved several stakeholders and help your audience understand the market survey and the validity of the data.
2. When presenting information, summarise the data to give an overall picture of the situation in your company. Consider showing:
   • The overall compa-ratio for the total group of employees forming part of the benchmarking exercise.
   • Then drill down into particular business groups or employee demographics to show the compa-ratio for those specific groups.
   • Show how many employees are below the 25^th and above the 75^th percentile and how many are in the mid-range.
   • Calculate the cost of different scenarios that your leadership team may want to consider, for example moving all the employees who fall below the 50^th percentile up to the 50^th percentile or moving only good performers up to the 50^th
   • Develop suggestions on how to treat underperforming employees and be prepared to make recommendations. For example, poor performers receive no adjustment or receive no adjustment into the future until their performance improves.
   • Finally, outline the next steps in implementing your recommended scenarios.