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Compensation  >>   3-dimensional Matrix Search Discussion Posts
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3-dimensional Matrix  
Posted: 08/05/2008 06:18am   135 Views

I am trying a create a matrix based on 3 variables (dimensions) in Excel. The 3 dimensions are Performance Rating, Development Potential & Compensation Ratio. Any tips?



3-dimensional Matrix  
Posted: 08/05/2008 08:35am  

you could try it in two steps.  Do your performance/potential decision first (like a 4-box) then use the result of that decision against comparatio for the pay adjustment guideline.



3-dimensional Matrix  
Posted: 08/05/2008 09:07am  

Multiply your merit increase percentage times the job value (the salary divided by the Compensation Ratio).  For example, 4% times ($20,000/.93) generates a 4% increase on a job value of $21,505 or $860.  That would equate to a "4.3% of salary" increase for an incumbent earning $20K.

Using the same example ($21,505=100% C/R), the same 4% Performance Rating against Job Value would give a woman earning $19K the same $860 but it would be 4.5% of her base while the equally-performing peer-position guy earning $23K would find his equal $860 to be only 3.7% of his base salary.  Very fair and moves each appropriately on the maturity curve.

On the other hand, what does Development Potential have to do with Performance Rating or Compensation Ratio?  One is a future guess and the others are respectively a recent historical assessment and a status quo measurement. 

If you consider it important that high-performers be promoted swiftly (questionable at times), you could do a logical if formua to accelerate the progression for hi-pots, but sophisticated outfits frequently assign folks for seasoning into areas where they cannot excel but merely need exposure/experience.  And some who have hit their Peter-Principle level require merit cash to retain them in lieu of promotability premiums they can't win.  Most upwardly mobile get the greatest dollars from promotions rather than from annual merit increments, anyway, so paying now merely for future potential may be unnecessary.  You can always make the necessary adjustments to promotional increases when they are actually awarded rather than when they are merely theoretically reflected by "potential".  In today's scarce-skill world, however, there can be good reason to slap golden handcuffs on both your institutional memory and your future leaders.

E. James (Jim)


3-dimensional Matrix  
Posted: 08/05/2008 11:02am  

Since Jim has beaten me to the punch again, all I can do is echo his concerns about using Development Potential as a merit pay factor.  But here's one for you ... are you going to share these pay guidelines with all employees?  How are they going to feel when they see that they aren't rated the highest under Development Potential? 

And what does Development Potential mean?  Does it mean you're only investing in the Hi-Pots, and everyone else is going to get the crumbs in terms of training and development opportunities?

I think potential assessments are fine for confidential career succession planning.  To have it listed under a merit pay matrix is dangerous.  I know what our lawyers would say.  It comes dangerously close to age discrimination.   

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