1. The company is top heavy - there are too many Directors and Vice Presidents. Directors function as managers. 2. Below Director level, base pay is a big problem for many employees. The market based pay system, when designed, was poorly understood and many in top and mid level management believe the market rate, which is the average of what your competitors pay, is the maximum that employees should ever receive. They are very reluctant to let anybody make much more than the market rate. The upper half of the salary range - which is from the market rate to maximum - should be used too. It is for top performers who have considerable experience and/or expertise which adds real value to the company. The salary ranges themselves are actually competitive in most markets, but that doesn't matter if the actual pay employees receive is not.
The formal, annual performance appraisal process was subjective and didn't tie to the amount of increase an employee received. However, doing away with it is a step in the wrong direction considering the compensation problems that persist at ONEOK. Pay and performance are tied together as far as employees are concerned. The formal, annual performance appraisal process should be improved so that it is not subjective but measures how well the employee performs the major functions of their job in quantitative terms. The "score" should then be directly tied to the amount of increase an employee receives. A lot of unfairness that occurs could be eliminated that way. There are not enough checks and balances on pay as it relates to performance.
Top management needs to encourage the use of the entire salary range, not just the first half. HR needs to develop and provide the tools management needs to improve salary administration. HR should approve every pay action before it can go into effect, in order to ensure fairness. In my opinion, HR is currently a risk averse function, A major change in philosophy is needed to make it a true strategic partner that supports business needs.
