Felt Fair Compensation Implementation – From the Requisite Organization Model
By Michelle Malay Carter on March 11, 2009
At the prompting of a reader, today’s topic is Felt Fair Pay Implementation, and it makes sense coming on the heels of my last polemic post on pay for performance.
Background Reading On Felt Fair Compensation
Felt Fair Compensation is based upon the work of the late Dr. Elliott Jaques and his meta-model, Requisite Organization.? If you would like to do some background reading prior to my talking about implementation, try these Mission Minded Management posts:
- If We Really Understood Work, Compensation Would be a No Brainer
- How the Compensation Industry Machine Silenced a Circumventor – A True Story
- Felt Fair Compensation – She Said What?
- CEO Pay – A Friday Not So Funny
- Using Peer Groups to Set CEO Compensation? Keep Good Company
- Face to the Customer Organization Design – A Critical Decision. Farewell to Circuit City
Felt Fair Pay Basic Concepts
- Humans have an intuitive sense of fair compensation for the work they are doing.
- Multiple research studies (over time, over the globe) have shown there is a direct correlation between level of work of a role and the compensation felt to be fair for?that role.? (As a bonus idea, level of work is tied to time.)
- Felt Fair Compensation consists of a differential pay system based upon science-based work levels.? (See differential table below.)
Felt Fair Pay Implementation
Once you understand work levels, implementing a Felt Fair Compensation system is relatively straightforward.
- Determine the requisite level of work of each role within your organization.
- Research and establish role comparables for your industry and market and their corresponding pay.
- Create your pay strategy.? i.e.? Will we pay at, below, or above the average?
- Put dollar figures to the differentials by determining the dollar value of X, which falls at the break point between level 2 and 3.
- Further stratify your compensation?by creating work bands and pay steps within each level.
That is it!? It’s not difficult to understand, but it is not an easy thing to do for a variety of reasons.? I’m OK.? You’re OK.? Let’s fix the compensation system!
Sample Felt Fair Pay Differentials Table
Equitable Differential Pay
|
Work Level |
Time Span Begins At |
Differential |
Sample Salary |
|
7 |
20 years |
16X |
$960K |
|
6 |
10 years |
8X |
$480K |
|
5 |
5 years |
4X |
$240K |
|
4 |
2 years |
2X |
$120K |
|
3 |
1 year |
X |
$60K |
|
2 |
3 months |
55% |
$33K |
|
1 |
1 day |
31% |
$18.6K |
?Questions?? Are you being paid fairly for the work you are being asked to do?
Filed Under Felt Fair Compensation, Organization Design, Requisite Organization, Strategy, Work Levels
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