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Totally Rewarding Chats | Ep. 04: How to Craft a Pay Philosophy

In this conversation, compensation consultant Laura Gale discusses the importance of a pay philosophy in making pay and rewards decisions.

Totally Rewarding Chats Episode 4 Laura Gale Pay Philosophy

Tying people analytics to business goals is critical

In this conversation, Laura Gale, a compensation consultant, and host Sean Lutjens, General Manager of Compensation Benchmarks at Visier, discuss the concept of Compensation as a Service and its growing demand. They discuss different engagement models, including project-based work, resource gap-filling, and ongoing support. They emphasize the importance of having a defined pay philosophy, how it guides organizations in making pay and reward decisions, and the role of technology in compensation services.

Totally Rewarding Chat Ep 4 Laura Gale How to Craft a Pay Philosophy

I know that having a defined pay philosophy helps organizations get more focused around how they want to pay and reward in a way that reflects their values. It's one thing to be market relevant and to understand how you pay relative to the market, but then you need to consider what do we want the employee experience to be regarding paying rewards within our organization?

-Laura Gale

In this episode:

  • Host, Sean Luitjens, General Manager of Compensation Benchmarks, Visier

  • Guest, Laura Gale, Executive Officer & Founder, Compensation & Total Rewards, White & Gale Consulting Inc.

Episode transcript:

Sean Luitjens (00:01.17)
All right, welcome back everyone. Totally stoked for another session of totally rewarding chats. Um, today I have Laura Gale with us. So from the consulting industry, um, Laura, great to have you.

Laura Gale (00:14.046)
Yeah, thanks, Sean.

Sean Luitjens (00:15.798)
So to start with, why don't you quickly give us the elevator pitch, not too many stories of a building, of your background, and then a little bit about the firm you're at, because I find it really interesting.

Laura Gale (00:26.57)
Great, yeah, thanks. So I've been in the field of compensation over the last 15 years. I started out in tech at BlackBerry back in the day when everyone had a BlackBerry and then into retail and consulting and then founded White and Gale Consulting five years ago. So our firm specializes in compensation total rewards and really building infrastructure. So pay ranges, job evaluation, incentive plan design.

for both private sector as well as public sector companies and non-profits.

Sean Luitjens (01:02.786)
So very important information, both of my blackberries were blue, which the kids called blueberries, even though they were blackberries. And do you know what the most impressive feature of the blackberry was, which would probably crush you inside the family, which my kids still remember? Brick breaker. Like that was like the coolest thing ever. They would perpetually take my blueberry.

Laura Gale (01:11.412)

Laura Gale (01:18.846)

Sean Luitjens (01:26.358)
to go play Brick Breaker, so I wouldn't lose it. It would actually be stolen by the kids. So I'm actually gonna have this Blackberry flashback.

Laura Gale (01:33.194)
That's great. I wanna go back to Blackberry one day, but.

Sean Luitjens (01:36.934)
I missed, I actually missed the hard keys, so that's the one thing I missed. The features, whatever, but the hard keys, where I like those. So I ask everyone, what do you do for fun outside of work, for hobbies, etc.?

Laura Gale (01:50.622)
Great, well I have a toddler so hobbies are few and far between right now. He keeps me very busy outside of work but when I do have time we live on the West Coast so a lot of beach walks and I love sailing and just being outside.

Sean Luitjens (02:06.678)
Well, I'm down with that on the piece. Although the water is always super warm, right, in British Columbia on the ocean.

Laura Gale (02:12.57)
We're wearing full wetsuits in the water. Okay. Well done.

Sean Luitjens (02:15.458)
all the time. So basically to get started with, let's just open it up and then dig in. To you, what is the most intriguing total rewards thing going on right now?

Laura Gale (02:27.942)
Yeah, I think what I'm finding fascinating in the field of total rewards is compensation as a service. And what I mean in that is hiring either an external compensation firm, like a consultant, or a system solution to support your compensation processes and people, whether it's supporting your compensation professionals that work internally or your HR professionals. And so...

We're seeing a huge demand for this within, you know, for our organization and similar, similar other consulting organizations and platforms. So the rise of compensation software and the utilization to make, you know, efficiencies in compensation, but also more progressive solutions in the space. We see a lot more reliance on compensation as a service.

Sean Luitjens (03:22.402)
So when you talk about that though, are they using it, obviously we're talking generally a little bit about comp planning. That's cyclical, but are they using you as like a part-time resource? Are they using you for annual processes? Or are they still using you as kind of a retainer? Like, is it all of it?

Laura Gale (03:39.978)
All of it. So, you know, there is the special projects. So we'll have where you're engaged for three, four months and you're doing a market analysis, you're building pay structures, incentive plans for organizations based on their stage of growth and where they want to be positioned in the market competitively in terms of pay and rewards. So that's kind of the project side of things. We'll also do...

project M&A, so when a company is looking to acquire another organization, we'll come in and do a salary and pay and rewards analysis of the company that they're looking to acquire to see if they're going to need to bring them up to their competitive positioning or if they're paying higher than the company that is acquiring them. So that's what the project looks like. We'll also do sales incentive, design, and so forth.

And then we'll also, as you probably know, compensation professionals are in high demand because every company needs some form of compensation expertise, no matter what the size, because you need to pay your people and you need to get that right. And so oftentimes if there's a resource gap or a leave, like a paternity or maternity leave or...

just need ad hoc on a cyclical basis, we'll jump in to help fill resource gaps or support their current team with their ongoing processes. So whether that's helping with their comp planning, budgeting, forecasting, or even sometimes with their ongoing job evaluations if they're in the public sector space of point factor job eval and maintaining the integrity of job evaluation systems. I'm using a lot.

Sean Luitjens (05:33.25)
So do you want to deal with, no, that's great actually. It's such a gamut. So I mean, I'll summarize it because I'm not that bright. Basically, from a small need to a grander need, basically Comp as a Service allows an organization to use as much or as little as they need. So if you look at it, you want it to be positive or negative first, which one?

Laura Gale (05:34.282)

Laura Gale (05:51.462)
Yeah, exactly.

Laura Gale (05:56.964)
Let's go with negative.

Sean Luitjens (05:58.606)
All right, so give me the one or two reasons people wouldn't typically use Comp as a service. And then if you want to just spin that into, you know, what are the top two reasons why they should. But basically, you got to, there's got to always be some negative side of it.

Laura Gale (06:12.154)
Yeah, I think when I hear when people, and I used to not like working with consultants, or you know, I used to prefer to do things in house when I was in house, because I think one of the pieces where some companies might hesitate is they want to build those skills and knowledge internally on their teams. And so, well, I say that...

You actually can do that having consultants, but it's just the style and the approach of the consultant. So some consultants will, it's more guidance. They'll create everything and do everything and then come to you and here, you know, here's your solution. But if you work with a consultant that...

educates along the way and builds the tools and capabilities with the team internally, you can actually have a really successful transition and handoff to their team and educate them along the way of what's happening in the industry, the legal changes, more progressive and innovative solutions. So I think the downside, if you're not working with the right service, that you may not be building the in-house knowledge of how to create these programs and things.

I don't know if some of you have heard of the

Sean Luitjens (07:17.73)
And I guess we covered all the good, you got the good, right? So.

Laura Gale (07:21.09)
Yeah, other downsides? Honestly, I don't know if I see any more downsides.

Sean Luitjens (07:26.614)
No, that's fair. I won't push you on that. So the one thing as we talk about this that crosses my mind is with Comp as a Service, right? How do you coordinate creating a pay philosophy? And I guess while I'm at it, or before or after, you can educate me on your perspective on why having that pay philosophy is so critical, not just in Comp as a Service, but I'm assuming you think pay philosophy is important, but having a defined pay philosophy for companies, particularly these days.

Laura Gale (07:55.674)
Yeah, I think having a defined, I know that having a defined pay philosophy helps organizations get more focused around how they want to pay and reward in a way that reflects their values. So it's one thing to be market relevant and to understand how you pay relative to the market, but then you need to make the decisions of, you know, how do we, what do we want the employee experience to be around paying rewards within our organization? And so

It guides you over the long term. So you can't do everything usually all at once, nor do you want to do everything all at once when it comes to pay benefits, rewards. You want to have a, some great guiding principles in the form of a comp philosophy that will help anchor your decision points. So if you're looking at implementing a new bonus plan, how does that fit within how?

your compensation philosophy. If you want to do an RSP matching program, how does that fit within your compensation philosophy? Because it's really easy in comp to be more reactive to what's happening, as opposed to be proactive and thoughtful and having some infrastructure in place. So how we usually go about that is meeting with executives.

senior leaders and really understanding what they're trying to create for the organization, the culture and where they're going and what their strategic plan is and what's important in terms of their values. So we work with some organizations where community and impact on the community is really important. And so if that's the case, then how do the rewards programs reflect that and what can we create in the reward program? Is that, you know, voluntary days off that they can go volunteer in the community?

some organizations and their values are social and environmental impact. And so potentially their RSP matching is going into funds that are for organizations that are centered around having those principles as well. So maybe I should rephrase that. It's kind of stumbling there.

Sean Luitjens (10:12.014)
Go ahead, I'll go. Ready, three, two, one, go.

Laura Gale (10:17.286)
So some organizations have in their values around social responsibility. And so that could inform some of their programs like RSP, their matching programs and their savings and investments and how they reward employees and in terms of the social impact.

Sean Luitjens (10:38.126)
So how, so I guess I'm now I'm gonna be Mr. Negative, the pessimist. So you walk in and someone's like, we want you to help with our program. Do you have some requirement of aligning the pay philosophy versus what they're asking you to do? Because I can see where you're walking in and they're like, hey, we want you to do all these things by the way, their pay philosophy just doesn't even line up to the objectives. Like how do you nip that in the bud upfront?

because otherwise just one of you is gonna fail. And if you're the paid person, obviously you're the one going out in front of the bus, right?

Laura Gale (11:13.114)
Yeah, no, exactly. So we draft the philosophy at the start with in collaboration with usually the head of people and culture and the CEO and the leadership team. So we really get their insights on what they how they want to position themselves relative to market who their comparator groups are.

and what values are important in terms of the employee experience. And then we draft that and finalize it, everyone agrees on it. And then we go through the process of doing their market analysis, looking at where their gap is to the market and what we recommend from, you know, pay ranges to bonus plans and any other sort of reward or compensation service that may be a gap. Then.

what we're able to do may be different than the compensation philosophy for various reasons. And so when things start to deviate from, decisions start to deviate from the con philosophy, we go back to the con philosophy. So as an example, if we have a tech company that wants to pay 90th percentile of this group, then we look at the market, they're positioned around the 40th percentile. The cost to get to the 90th is a lot.

So from an affordability standpoint, they may not be there today. Let's pivot, go back to the philosophy. Where can we actually be today and what are we going to work towards for the future? So it's always, it's a bit, you know, you draft it, but then in reality, the recommendations and, you know, things like the ability to afford it and other factors may start to adjust your comp philosophy.

Sean Luitjens (12:51.242)
And do you find most companies are pretty, I don't wanna use the term pliable, but amenable to revisiting and adjusting either the philosophy or may I even say the budget, which probably doesn't happen as often, to kind of align those two for the most part or does it end in a not so great way because you're external?

Laura Gale (13:14.234)
No, it always works out well. We get to know the organizations and what's important to them. And it's really reflecting what they want, not what we want. We don't have an agenda. Our job in compensation has helped to educate. So we educate on market practice, what other organizations are doing, what we're seeing in terms of what's progressive in the industry, but then meeting them, where are you today? And where do you want to actually be in the future? So we're not trying to push our agendas. It's all about...

packaging and getting out of them what they stand for. So that's why it's not us putting our solution, it's co-creating a solution with them that works for them.

Sean Luitjens (13:56.374)
No, that's awesome. Because I think of all my years around Comp and Bend, I've met zero compensation analysts that are bored and departments that aren't overworked. So I think having some augmented service is actually figuring out the best way. And it's an interesting, for me, it's always been interesting to watch because I've never been a practitioner. The cyclicality of the business, just some of the easy ones about when the merit cycle is, survey submission, getting your data back. Like there's this period of times which

Laura Gale (14:03.102)

Sean Luitjens (14:26.346)
you can't hire for really, because how do you justify that? But at the same time, how do you actually survive that with your sanity every piece?

Laura Gale (14:33.882)
And I've been in the boat where I've said, I cannot go through another comp planning cycle with this company. And my colleagues who have said, I have to find another job before the next comp planning cycle because it is so, it can be without the right tools and systems in place, a very stressful process and time of year.

Sean Luitjens (14:53.314)
I did not pay for that transition, but being a lifelong nerd, you know I'm gonna dive into it. So how do you see incompetence of service in particular then since we're down this road, how do you see technology playing a role?

Laura Gale (15:09.97)
Yeah, so we can create as a project team with our clients, solutions that we think are incredible and design a sales incentive plan or comp planning framework or a merit matrix or salary ranges that we're really excited about and excited to implement. And I believe that through systems, like, and I think sometimes where our challenges is in consulting is the implementation stage. So...

How are our clients then? Where are they housing their pay ranges? How are they continuing to bring in market data to ensure that they stay relevant? Are we gonna talk to them a year from now to refresh the ranges? That's helpful, but how is it gonna become a living, breathing, either document or ranges for them? And how are they going to equip leaders to understand the data, to...

know how their team is paid relative to market. And I think where systems can play a huge part is not just the administrative side, because compensation professionals spend so much time just like running the comp planning cycle, but being a true comp partner and having a system, then you all sit down with leaders and look at their team together because you have that right in front of you and sit down and say, okay.

This is what your team's paid. This is your pay history. Look, let's look at some pay equity analysis, how, and look at data in different ways. We're so busy pushing out things in spreadsheets and the administration of that, that it can actually move internal HR professionals and comp professionals into more strategic conversations with leaders, thereby enabling the leaders to make more informed pay decisions.

Sean Luitjens (16:55.682)
Okay. And do you usually, do you guys help them select the tech? Do you guys back into the tech? Like I'm always curious how they get from point A to point B. And do you provide, because it's an interesting ROI for me thinking about it. It's an interesting ROI discussion because sometimes technology, it's my least favorite way people rationalize it, but it's around head count. But it, but it is what it is.

and you're part of that discussion. So it's an interesting dichotomy to me that you're talking about potentially helping them put something in place and becoming more efficient and potentially the ROI might be you long-term.

Laura Gale (17:34.975)
Yeah, so how we help them and think about, start to think about systems is, and it's different for every company. So for some organizations don't have anything set up right now. They don't have pay structures or a comp philosophy or anything like that where, and this is all really new. So we, we ask in the beginning about our clients, the current systems, their processes, where their pain points are.

And typically we will create their infrastructure prior to then going down the system route and make sure that they're comfortable with how it's created. But we've also with clients that are a little bit more tech savvy and willing to, you know, be, you know, early adopters of new technology will, we'll actually put what we design, like pay structures into, into the platform so they can see and start to get used to what.

what it can do for them in terms of an administration, if they're open to it from the beginning. So it depends. Sometimes it's through our work together at the same time as we're doing a project. Other times it's in the implementation phase where we're saying, maybe not ready for it over the next six months, but maybe in the next six months then putting what this infrastructure, the pay ranges and your merit planning cycle into a system.

Sean Luitjens (18:57.306)
It's interesting, when I've presented, one of the things to talk about even coming from tech is having that plan in place. Like, what do I wanna be? So figure that out, and then having to get the underlying infrastructure platform set. So, you know, you've gotta have everybody in there. It sounds boring and it's not the fun part. It's not as cool as tech sometimes, but how do I grade all the jobs? How do I get them all matched right? How do I get everything lined up?

so that the machine eventually can make it work. Otherwise, I think someone told me once, it sounds like a plan, smells like victory, but it tastes like chicken because everyone gets everything together, it looks all cool, it's everything else. And then you're like, what does that even mean? It doesn't come out with anything that's relevant. It just comes out wrong because the underpinning piece of it, when you lay it into the technology.

The technology just does what it's told to do based on the data you give it. And so if the data is wrong, the whole thing falls apart and just is bad, bad. That's really cool. So the question I ask everybody kind of near the end.

Laura Gale (20:08.967)
Just a second, so you got really blurry on my screen. Am I breaking up or is it you?

Sean Luitjens (20:14.034)
No, it's me. And actually what I didn't tell you was with Riverside, well, I guess I'm just gonna say 20 minutes. With Riverside, Riverside is actually, you'll see it on your side uploading. It's uploading you and it's uploading me in real time. And then it puts it together on the platform. So it'll look good when it comes back out. Yeah.

Laura Gale (20:18.149)
Oh, it's just...

Laura Gale (20:28.734)

Laura Gale (20:35.015)

Laura Gale (20:41.382)
Okay, just taking a picture.

Sean Luitjens (20:43.414)
So I'll get to the last question. You ready? Go three, two, one. So as we get near the end, I like to ask everyone this kind of fun fantasy question. If you could automagically, highly technical term we like to use, fix one thing in total rewards, what would it be?

Laura Gale (20:46.378)

Laura Gale (21:04.306)
Yeah, so I've thought a little bit about this question and I would love to fix leader capabilities and understanding in making informed pay decisions and what the market's doing. I think we hold a lot in compensation at HR sometimes and we do our best to train leaders and have them...

informed and how to speak about pay and how to speak about the compensation philosophy and how pay decisions are made, but until leaders are constantly viewing the data and seeing the market data and the job matches and all those things, like they're not going to feel confident. So I would love to...

solve leader capabilities and confidence and give them all the tools and resources that they need.

Sean Luitjens (22:04.11)
So, I don't always dig into that answer, but I'm gonna dig into this one. So there's two sides to that, right? So the tech side is easy, I say that as a nerd, right? We can roll up and select kind of an executive, not a big fan of the term dashboard, but dashboard for them to kind of look at. But to me, the hardest part of this is almost bi-directional in that you're trying to say you wanna do it to leaders. I've been on my high horse about you wanna do it down to managers.

This isn't their day job. So how do you translate the language of comp and ban into normal humans to be able to look at that and put it in context?

Laura Gale (22:45.702)
Yeah, I think practically speaking, you just have to start showing more to leaders and educating and sitting down and just explaining how things work. I know leaders don't have a ton of time, but pay is really important part of the employee experience and a lot of employees perceive their value from their pay and their career. And so I do think that leaders need to get that right. And so I think...

being able to see market data, see pay ranges, see where your team is sitting relative to one another, see how past pay decisions were made, can help them with those conversations. They don't need to be experts, you just need to be able to have the data in front of you and understand the comp philosophy of the organization and how your team and how your employees are paid relative to that philosophy. So you can...

have those key messages for your employees and around the why of pay decisions, whether it's a bonus payment or a pay increase.

Sean Luitjens (23:52.81)
That's really well said and that's why we, you know, we at Visier invite smart people to come talk, you know, so that I can be on with somebody smart.

Laura Gale (24:00.506)
I think the other tricky part of that is, is that unlike, you know, certain fields, uh, compensation, because it involves pay and what someone takes home at the end of the day, it's a more emotional sometimes for employees. And so while us con professionals just see numbers, we don't necessarily, um, see the

the emotional impact that can have on an employee, that leaders can be a really great gauge and coach around that. So I think it's complicated because it also involves human emotions around what they're taking home at the end of the day, especially in the days of high interest rates and stresses in terms of financially.

Sean Luitjens (24:48.178)
Yeah. Well, I think the way I phrased it, actually sum that up sometimes to people is, humans are statistically highly predictable. They are individually amazingly unique. And so the human and human resources really comes into play. And you're right, it's pay. And it's very personal actually. And anyone who tells you different, if someone comes in and walks in and tells them they're getting a 5% pay cut, it becomes amazingly personal very fast.

Even if you just role play with somebody, we're going to give you a 5% pay cut. Like the wheels come off that bus instantly. So I agree. I couldn't agree with you more. It's also what 50, 60% of the average company's costs are around humans. And so it's not.

Laura Gale (25:32.582)
And it doesn't mean that leaders like, you know, need to be delicate around the conversations. It's that having the facts and having, you know, the understanding of why the company is making those pay decisions and being able to communicate that in a non-emotional way while someone may have an emotional reaction to that. You don't need to necessarily own that as a leader, but it can be really challenging. And so that's why.

Sean Luitjens (25:56.818)
I think it's the hardest part. I think it's the harder part of pushing pay philosophy down is on paper, it looks very simple, right? I'm gonna do it in a merit matrix. Somebody somewhere has to have a discussion around the zero to 1% thing. And I don't know, I'm assuming most humans are good. No one's having fun in that conversation. And that's where the peanut butter method I think comes from, it's just the human nature of, I want it, everyone wants to have a great conversation.

So having the numbers and the data and the reasons and what are the outcomes when we do this and everything else I agree with you is super significant that management understands. Here's the ramifications if you do this. There are ramifications when you do it, do you understand it? So that's awesome, which is why I think Comp as a Service being able to bring that in, the one thing I'll add, I look at Comp as a Service kind of interesting and from the standpoint of you're not working with one company.

I'm just assuming, I don't know this for a fact, but I assume White and Gale has more than one client. And so you end up with this really cool ability to come in and say, well, you know, not only do I think we should do a different, like here's why and here's a success and the failures we've seen from these things. And so I think that added perspective has value and you can't get that from a, you know, an employee is only new for so long when they're there and that value goes away.

Laura Gale (27:21.022)
Yeah, that's a great point. You know, we can bring that fresh perspective as well as what's happening in the industry. We've worked with over a hundred companies over the last two years across technology, retail, property development, higher education. And so we see different organizations across industries and it can be helpful for our clients to understand what the landscape and what the climate is in Total Rewards.

Sean Luitjens (27:48.394)
And I'll just leave you, do you have anything else, anything you wanna sum up? It's not a required answer, so I don't feel like you have to make something up, but anything you wanna, any note you wanna end on?

Laura Gale (27:59.05)
I'm excited for the Comp tool and for Visier's Comp platform. I think it will, yeah, I don't know. I'm just going to cancel what I just said. It's kind of like.

Sean Luitjens (28:10.078)
Yeah, I'm gonna cancel it. I was gonna cut it anyway. So, three, two, one. So hey, thanks Laura for being here. Really appreciate it. We appreciate you taking the time out. And for everyone else, drop us a note. And obviously at the outro slide, we have Laura's contact information if you wanna reach out. Thanks all.

Laura Gale (28:12.96)
I'm not gonna do that.

Laura Gale (28:28.69)
Great, thanks guys.

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