More and more I am working with companies that are having a tough time finding a single industry category that meets their needs. This has always been fairly common for enormous multinationals, but even smaller companies are now struggling with it. Survey data has traditionally been mostly kept in industry siloes. Many compensation professionals focus on specific industries. Like the proverbial man with a hammer, everything can start looking like a nail, when in fact it is some exotic blend of part nail part screw and part crazy glue.
Currently, I am doing some consulting with a company that is partly a software company, partly a financing company and partly a home improvement company. For marketing and consumer understanding purposes, it disguises itself under a fourth and completely different industry. Given that this company is also privately held, and no longer an “early-stage start-up”, categorizing market data sources is like a quilting project. You take disparate pieces and stitch them together into a cohesive “whole”.
The new economy is built on innovative products and even more innovative companies. How do you define Tesla? Green company? Auto dealership company? Luxury car manufacturer? In most survey data, Google falls somewhere in the technology sector. Usually something like “Internet Information Provider”. While this is accurate, Google’s main source of revenue is its advertising platform, Adwords. So, is Google really more of an advertising company than a high-tech firm?
Tesla and Google are iconic companies that get some benefit of the doubt. Their classifications mean less since they are so visible and well researched. But, what if you are a publicly–traded smaller “hybrid” company? How about if you are a private company that is breaking ground by bridging industries that have not been combined before?
The new economy is one where data intelligence companies play the role of social media titans. High tech firms are disguised as energy companies. Electricity innovators are also auto manufacturers. Compensation professionals must now determine pay for people with duckbilled platypus jobs at hybrid companies. Compensation committees must determine proper performance goals for executives that are hired from an outside industry, to run a company disguised in another industry with metrics and goals that compare to another complete different set of peers.
Companies are required to not just think outside of the box, but to build containers in entirely new shapes. Boards, investors and executives want compensation professionals to provide clean, unambiguous answers to messy and opaque issues. While this may often seem unreasonable, we must remember that these individuals are dealing with the same complexities away from the compensation front.
Don’t be afraid to ask, or even demand, more from your compensation consultants and survey data providers. They do not live within the walls of your unique company. They can only understand the issues and your desired solutions if you take the time and effort to communicate and teach them. The new economy is thriving because the old one was no longer serving its purposes. Compensation professionals must do the same or some will suffer the same fate as “traditional” companies.
Dan Walter is the President and CEO of Performensation an independent compensation consultant focused on the needs of small and mid-sized public and private companies. Dan’s unique perspective and expertise includes equity compensation, executive compensation, performance-based pay and talent management issues. Dan is a co-author of “The Decision Makers Guide to Equity Compensation”, “If I’d Only Known That”, “GEOnomics 2011” and “Equity Alternatives.” Dan is on the board of the National Center for Employee Ownership, a partner in the ShareComp virtual conferences and the founder of Equity Compensation Experts, a free networking group. Dan is frequently requested as a dynamic and humorous speaker covering compensation and motivation topics. Connect with him on LinkedIn or follow him on Twitter at @Performensation and @SayOnPay.