News & Resources

Three Steps to Begin Assessing the Compensation of One’s Company

March 20, 2019

By: Jennifer Plummer, PHR, SHRM-CP

The overtime rule update has been looming for years.  The end of the first quarter in 2019 is a great time to evaluate overall compensation.  On March 19, 2019, Lisa Nagele-Piazza, J.D., SHRM-SCP, wrote a great article for SHRM.org titled, “Prepare for New Overtime Rule Now but Wait to Make Changes”.  In the article, she writes about the DOL proposing a new federal overtime rule which would raise the salary threshold for white-collar exemptions to $35,308.  The current threshold is $23,660 which was last changed in 2004. 

This is not the first time that updates to the overtime rule have been proposed.  Now is a great time to assess compensation and proactively prepare instead of being reactive after a rule change.  That way, if a rule is updated, one can know immediately exactly what will need updated, instead of rushing to figure it out.

Here are three steps to get started on assessing the compensation of a company:

1.Create (or review) your compensation plan

If you do not have a compensation plan for your company, start by collecting all the data on your staff and compiling the information in one location.  The information should contain employee information, job position information, and compensation information.  If one has a compensation plan, review that the information is accurate.

2.Review job descriptions; conduct exempt test

Job descriptions are important because they will help to organize work positions.  Job descriptions take time to accurately write because you cannot just pull templates online.  To accurately write a description, one must take time to evaluate each different position and describe work duties in writing that reflect what is actually happening.  These job descriptions will be used to conduct an exempt test.  Each position should be reviewed and determined “exempt” or “nonexempt” under FLSA standards. This should be visited annually to ensure accuracy.

3.Evaluate market rates

Wage information for each position should be reviewed to ensure positions are being paid within a market range.  If you are paying your staff below market value, it may be difficult to retain talent.  If you are overpaying your staff, you may be over budget and can reduce costs.  A good way to evaluate rates are to review salary guides and conduct a survey with local companies within the area. 

These three steps are just a start.  If you need help, reach out to Loyalhanna Management Services at 724-672-4300 or contactus@loyalhannagroup.com, we would be happy to help.