Premium or Incentive Pay for Certification
linaleyda
1 Post
I would like to get direction on how to determine additional premium pay for certifications, such as a Certified Public Accountant. Is there a general rule or guidance on determining premium pay? I appreciate your help.
Comments
It is going to depend on the value of the certification itself. Obviously a CPA is worth much more than say a CFP (Cert Financial Planner) and is much harder to obtain.
That said, I would look at the differences in the market for accountants with a CPA and those without a CPA. Some certifications bring a huge leap in pay while others don't. I would also look at what is involved in getting the certification (do they need x years experience to get it -- like the PHR? Are there multiple levels/tests/classes to get there? do they have to have a degree? etc)
But you have also to look at it from a business perspective....did it help the employer for the employee to get the certification? If so, your pay increase should be large enough to keep the newly certified employee from immediately leaving strictly because of the pay issue. If not, one hard thing to come to the realization of is that your employee who just got certified might have outgrown the current position and there may not be a better position/promotion available. Sometimes that happens and the best thing to do is to wish them well on their way.
So unfortunately there is not one tried and true standard/general rule.
HRforME has given you some good advice. There really isn't a standard or general rule. In my industry (IT), my employees get certifications to further their development but also to help out the company. We are required by our vendors/partners to have a certain number of certifications in order to maintain a certain status level. We know that once our employees have these certifications they can go out in the industry and demand more money. I am constantly reviewing market data and monitoring the salaries to make sure we are staying competitive. We have had to raise a bunch of salaries lately because of the certification levels that our employees have achieved. If we don't, we will lose them as employees. Raising the salary is the cost of doing business for us b/c ultimately that certification helped us achieve more business.
[quote user="IT HR"]There really isn't a standard or general rule.[/quote]
Life would be so much easier if there were such rules in compensation but there are strong legal reasons why there are no such rules. In fact, certain businesses that hvae engaged in compensation information sharing in the past got in trouble under anti-trust laws. Making pay rules or colluding to set pay rates is anti-competitive and will get smacked down pretty hard. You can use salary survey information across similar roles, preferably in your industry and area, to get some idea of what the premium is for one certification over another (versus none).