Pub. 6 2016-2017 Issue 6

10 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S to increase as the level of responsibility increases (lower grades have a smaller spread) and are typically between 30 and 60 percent. In addition, the differential between each grade midpoint should be consistent. For salary grades containing hourly and non-officer employees, the differential between each salary grademidpoint should be approximately 15 percent while the midpoint differential for higher grades could be 20 to 30 percent. Participating in Salary Surveys, Conducting Market Research and Placing Jobs Into Salary Grades Participating in salary surveys is a useful and relatively cost-effective way of gaining published compensation data. Although itmay require an initial investment of time, discounts for participation are usually available. As good stewards of the organization’s resources, the compensation function should gather as much data from reliable sources as possible. Banks should conduct market research (using industry survey data) for amajority of their positions every two to three years to ensure individual positions remainmarket competitive and that each position is slotted into the appropriate grade. For the positions benchmarked to industry survey data, we recommend comparing the market value median (50th per- centile) for the position to the midpoint of the salary grade under consideration. For unique positions at the bank that are not benchmarked directly to industry survey data, the bank will have to conduct an internal assessment (based on organizational structure, relative importance of the position, level of discretion and judgment, etc.) of comparable positions to slot them into the appropriate grade. With solid benchmark matches in place, there is less room for managers and employ- ees to dispute what is being provided to them. Creating Performance-Based Salary Increases Another best practice is utilizing a salary increase matrix that reflects the current market trend for merit awards based upon an individual’s actual performance level (as documented in their performance evaluation) and relative position within his or her salary grade. The combination of these variables will ultimately impact each employee’s annual salary increase on an objective basis, as demonstrated below. Please note: the actual percentages in the table will vary depending upon affordability and the bank’s budget. Strategic base salary increases are important in the current economic environment. Conducting performance reviews on an annual basis, establishing a compensation philosophy to help drive salary decisions, participating in salary surveys, and conducting market research to slot positions into the appropriate salary grade will help your bank make the most of its annual salary budget. In addition, it will help eliminate emotional decision-making that can cloud judgment, result in unfair treatment and potentially lead to legal challenges. ** The Blanchard Consulting Group 2017 Salary and Cash Compensation Survey is currently available for participation. Please contact Kristen Kostner at kristen@ blanchardc.com or 314-394-3374 for more information or to view summary results from the 2016 survey. Survey specific questions can be directed to Laura Roth at laura@blanchardc.com or 612-886-1225. ** Performance Evaluation Score Low in Range 15-25% below Mid Range High in Range 15-25% above Exceeds Expectation 6% 4% 2% Meets Expectation 4.5% 3% 1.5% Does Not Meet Expectation 0% 0% 0% Ms. Laura Roth is a Senior Consultant with Blanchard Consulting Group. Ms. Roth has worked with over 100 financial institutions over her eleven-year consulting career. These projects include compensation reviews for executives, directors, and support staff; annual and long-term incentive plan design; executive benefit analysis; and performance evaluation system support. Ms. Roth has extensive experience with statistical analysis, survey development, and database management. Ms. Roth obtained her bachelor’s degree in Mathematics fromConcordia University. Ms. Roth can be reached at laura@blanchardc.com or (612) 886-1225. Ms. Kristen Kostner is a Senior Consultant with Blanchard Consulting Group. Ms. Kostner has fifteen years of experience in the compensation consulting field and has specialized in the banking and financial services industry. Kristen’s areas of expertise include workforce, executive and incentive com- pensation, with emphasis on FLSA compliance and other legal and regulatory issues. She also has extensive experience in mergers and acquisition integration, performancemanagement and strategic planning. Prior to joining Blanchard Consulting Group, Kristen worked for Lockton Companies and Palmer & Cay Consulting Group, both of which are national consulting firms. Ms. Kostner obtained her MBA in Finance from the University of Missouri, and a Bachelor’s Degree in Political Science from the University of Colorado. Ms. Kostner can be reached at kristen@ blanchardc.com or 314-394-3374.