The Compression Tool allows the user to bring salary ranges closer together and increase the starting rates for your lower-level grades.
Questions to address before applying the Compression Tool:
- Where should pay grade 1 start?
- It is suggested to select a rate slightly below your actual minimum hiring rate as the hire date. The minimum wage override function can be used to accomplish this as explained below.
- How much of a spread should be in between the ranges?
- Generally, the lower pay grades are spread out about 8%-10% between each range, but the compression tool will bring them closer together. Most organizations choose between 5% and 7%.
Please Note: The Compression Tool is only applied to non-exempt grades, (typically for frontline positions), not for exempt grades.
Applying the Compression Tool in Compease
- Company Master > Company Settings > Location, select the Edit icon for the location to apply Compression.
- The minimum wage override field is always present. This function takes the number applied in this field and overwrites the ranges so that no rate displays less than that number.
- For example: The state minimum shows as $10.80, but an override of $13.00 is applied. Nothing less than $13.00 will show on the ranges. This will sometimes result in multiple pay grades having the same minimum rate.
- Use the minimum wage override to indicate where pay grade 1 is to start. Keep in mind that there are often no jobs evaluated at pay grades 1-3, due to this, it is suggested to select a rate slightly below your actual minimum hiring rate.
- For example: If the starting rate is $15/hour, you might not list $15 in the minimum wage override field because you don’t necessarily want pay grade 1 to start at $15.00. Instead, you might start with something like $14/hr. in the minimum wage override.
- In the Compression Factor field, apply the percentage of how much to spread the midpoints of the salary ranges. Remember, without the Compression Factor turned on, the ranges typically are set about 8-10% apart.
- The Compression Factor will bring the ranges closer together based on the percentage chosen (rather than the original 8-10% used by the system). We typically recommend starting around 5%, and the system will not allow anything higher than 7%.
- Next, compare the adjustment in the ranges by reviewing your Salary Range report for that location. Ranges that are in bold and have an asterisk at the end designate the rates that were adjusted.
- For example: If adjustments go as high as pay grade 9, but you have both exempt and non-exempt positions in grade 9, the two grades will no longer match and could create equity concerns. You may need to review the exempt position in grade 9 to reassess whether it should truly be exempt. Alternatively, you may reassess the numbers used in the minimum wage override and compression factor fields to ensure the adjustments do not overlap into pay grades with exempt jobs in them.
Please Note:
- If there are multiple locations set in Compease, please apply the Compression Tool to each location if the range acceleration is needed for all locations. You may or may not use the same minimum wage override and compression factor settings for each location.
- Adjustments do not carry over from year to year and will need to be reapplied upon accepting the next year’s salary ranges. As the market data increases, the need for the Compression Tool should diminish.
- Determine if the Compression Factor percentage needs to be more aggressive, less aggressive or is just right. You can adjust the Compression Factor percentage and/or the Minimum Wage Override rate until you find the right combination for your organization. If either value needs to be modified, return to Company Master to update the appropriate field(s) for that location.
- Hovering over each value on the Salary Range report will display the original range value for comparison. The Compression Factor percentage applied (e.g., 5%) will be the difference between midpoints.
- For example: Starting with $14/hr. as the Minimum Wage Override with a 5% Compression Factor, the grade 2 midpoint will be 5% higher than grade 1. This will be applied throughout the ranges and drop off on its own once the adjusted salary ranges meet the existing range values.