The position valuation combined with benchmarking to create a salary band for each position is an efficient process to ensure the organization’s compliance with the pay transparency laws. The landscape of compensation and pay transparency has changed significantly since 2020. Currently, 36 states have some form of pay transparency law in the United States. These laws vary from state to state and may include a variety of requirements, from posting a pay range for internal and external job postings to not asking salary history questions of applicants. Failure to follow these new pay transparency laws may result in monetary violations that range from $100 to $10,000 per violation. According to Forbes, these new laws, paired with labor costs, make up approximately 70% of expenses for most organizations, making it increasingly important for organizations to develop a compensation strategy. Organizations that invest in a thoughtful compensation strategy better position themselves to motivate and retain their employees, attract new hires through a stronger employer brand and navigate the landscape of pay transparency and pay equity. It is important to understand that a compensation strategy doesn’t only involve how to compensate employees in terms of pay and benefits but should start with the leadership team setting a foundational framework of where the organization is now and would like to be in the future. The leadership team should consider how the organization wants to position itself with the market and industry. Some questions to consider include: Is the organization in a growth phase? Does the organization need to attract and retain top talent? What positions will be added for anticipated growth? How do strategic goals align with the current and future budgets? The leadership team needs to develop its retention philosophy and determine if more value will be placed on retaining current employees for organizational knowledge or attracting top-tier talent. Finally, the compensation strategy should measure the equity of the positions internally and externally and align with the organization’s goals. Leadership teams new to creating a compensation strategy shouldn’t overcomplicate it but start basic and build on it over time. Everyone in the organization needs to understand the strategy. While the organization shouldn’t share the full details of the compensation strategy, it is critical all managers and supervisors have a solid understanding of the compensation strategy, direction of the organization, goals that the organization is working towards and how the supervisor and their team will be able to contribute to the success. Once the compensation foundation has been built and goals set, a job analysis should be completed. This process will study the foundation of a position, its essential functions and responsibilities, including mental and physical skills, and determine its relative value and rank in the organization. Upon making those determinations, job levels and families need to be created. The supervisor BY KERRY GLEASON, UBB THE IMPACT AND KEY ELEMENTS OF A COMPENSATION STRATEGY 26 Community Banker
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