When a flat base rate increase does not work
Budget season is already stressful and often turns into a time crunch. Most organizations apply one rate of increase without taking the time to truly review market trends. In mining, the rate of increase has trended higher, with increased demand and steady competition for people.
Maintaining the general base rate increases may be the issue. What is the market doing right now? What should I be paying this person? Is the wage band too high? Is it too low? These questions are where the panic originates from, and there is never one clear answer that supports every role in the organization.
The assumption worth checking
One of the most common misconceptions in compensation is that rates only need to be reviewed once every two years. A lot happens within the year and the anticipated rate increase may not be keeping up with the multitude of company changes. Reviewing wages and benchmarking will allow you to ensure that your budget truly aligns and supports the company’s initiatives.
Should your budget strategy focus on the 50th percentile? When hiring and maintaining staff, the 50th percentile acts as a general guideline, not an absolute. The base pay should shift based on the actual skill set and scope of work.
So the rate moves. Down five percent, ten percent, a reflection of what that employee is actually doing in relation to what you may find as the 50th percentile. In general, are there any employees checking all of your boxes?
The 50th percentile assumes yes. Fully qualified, hitting every marker in the job description, doing the whole job on day one.
This is why it is so imperative to maintain job descriptions and review market data in relation to the scope of work.
Budget for the curve
Some people hit the mark. Some fall under and some sit above it. You pay accordingly.
If you are constructing a site and you need to hire 300 people, you can estimate the shape of it before you start. Fifty applicants who come in offering two thirds of the required skill set and fifty who present all of the skills requested. The rest fall in between. You might budget everyone at the 50th percentile and then work the range from there, depending on where people actually land.
When the job description says something the title does not
It is common to have a broad scope of work when creating a new position. Many times the creation of a new position does not include reviewing the specifics for an aligned market rate. It is important to understand what you are looking for in a candidate and why. It is important to remember the strategy behind the job description and scope of work. The rate and the job description have to agree with each other. When they do not, the gap tends to show up later, through lack of candidates or pay gaps at the point of hire.
Where KaBLING fits
The pay philosophy conversation comes first. What do you value, what do you not value, and where do you intend to sit.
KaBLING supports what you decide. The full analysis on every role, matched to what the work actually involves, with the source, the method, and the date behind each number. Clear answers and documentation you can build a structure on.
The structure should grow with you. When an increase comes through, it pulls across every level automatically, and the board sees it the same week.
Frequently asked questions
Should every role be paid at the 50th percentile?
No. The 50th percentile represents the market rate for someone fully qualified against the job description. Where each role and each person sits relative to that rate is a strategic decision based on skills, experience, and the organization’s pay philosophy.
What does the 50th percentile actually represent?
The rate for a person doing everything in the job description at the experience level it requires. It is the reference point the rest of the structure is built around.
How do you set pay for someone who does not meet every requirement?
Reduce from the 50th percentile by an amount that reflects the gap, and build a path that takes them to the full rate as they develop. The reduction should be documented against the job description.
What if the job description does not match the title?
Price the description, not the title. A Superintendent role carrying assistant manager responsibilities belongs in the band the work sits in.