Tags: salary | pay | compensation | employment

WSJ: Why There's No Method to Your Paycheck

WSJ: Why There's No Method to Your Paycheck

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By    |   Wednesday, 03 August 2016 12:52 PM

When it comes to determining employee pay, most companies don’t have any kind of formal plan to guide them.

That’s the finding from PayScale Inc., which studied 7,600 companies in the U.S., Canada and United Kingdom and learned that only 38 percent of them had any kind of structure to determine compensation.

But about one-third of companies are developing more formal plans as the labor market improves and states like California enact fair-pay laws. Massachusetts on Monday passed a law that requires employers to pay men and women equally for comparable work, and prohibits them from asking about salary history as part of the screening process of jobseekers.

GoDaddy Inc., the Internet services company based in Scottsdale, Ariz., is one company trying to change its pay practices from a looser method.

“The process was, ‘what did we pay the last person? Let’s pay the new person what the last person was making,’ ” Matt Toeller, a human resources executive at GoDaddy, told The Wall Street Journal. The company’s new procedures include outside data that help to determine salary levels for job description, skill level, region and pay scale.

“Companies that do have pay guidelines typically aim to pay at the 50th percentile, or median, of the range that similar employers pay for a given role, with a spread of, say, 20 percent on either side based on a new hire’s experience and skills,” the newspaper reports, citing compensation experts. “When pay decisions rely on imperfect data and gut instincts, gender bias and other ills creep into compensation decisions.”

Massachusetts Law

With the new Massachusetts law, employers will have to wait until after they extend a formal offer, that includes compensation, to ask about a potential hire's salary history, CNNMoney reports.

"This legislation is an important step toward advancing more equal, inclusive and thriving workplaces throughout the Commonwealth for women and families," said Lt. Governor Karyn Polito, in a release Monday.

The law, which goes into effect July 2018, also allows workers to openly discuss their salaries without retaliation from their employer.

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When it comes to determining employee pay, most companies don't have any kind of formal plan to guide them.That's the finding from PayScale Inc., which studied 7,600 companies in the U.S., Canada and United Kingdom and learned that only 38 percent of them had any kind of...
salary, pay, compensation, employment
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2016-52-03
Wednesday, 03 August 2016 12:52 PM
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