BambooHr elevate summit: the impacts of pay strategy.

• Author: Sasich, Chris
• Position: Around Utah

Snowbird--There is a perpetual elephant in the room in every office and workplace: compensation. It's that thing we think about but don't talk about. Pay strategy can have huge implications to the ecosystem of your business. It can be the difference maker in attracting and retaining talent, which can determine your product quality, which can impact employee morale--and the sum of these parts can add up to either success or failure.

Dave Smith, CPO at PayScale, a compensation and software solution, and Justin Gagnon, CEO of Choicelunch and customer of PayScale, discussed compensation solutions at the Elevate Summit, BambooHR's user conference.

"One of the things we've learned through a large body of research over the last three years is what really matters is not the number itself--that does matter, it is important--but it's what you do with the number and how you communicate it internally," said Smith. "It turns out it's not complex, but it is really hard, and the thing that makes It hard is the emotions involved with having discussions around why somebody gets paid more or less than somebody who they think is just like them."

Smith said that problems with pay are ubiquitous for many companies and have been for many years.

Gagnon's company has been facing these issues head on. Choicelunch, a healthy school lunch delivery service, is based in California, a state that is on pace to reach a $15 minimum wage by 2021, causing a race amongst municipalities to be the first to hit the new minimum wage. This can be complicated for businesses like Choicelunch, which has about 150 hourly wage earners spread out over different cities.

"Some of the other competitors have been employing a really smart strategy of jumping to the minimum wage like six or nine months ahead of when everyone else is going to be there," said Gagnon. "We've been losing good people, and we've been having a difficult time bringing new people in the door at our current rates without causing significant wage compression."

The result was Choicelunch being short staffed with underperforming employees. Gagnon said they were seeing a lot of mistakes being made that were impacting their customers. Morale took a dramatic hit. What Gagnon did next was a risk.

At one of their locations, Choicelunch increased the hourly wage for the hourly workforce by $1.50 across the board. This dramatic shift in the company's wage floor came with the stipulation that managers be relentless with their...