Many of us probably have an image in our heads, locked in from childhood memories, that of a dog chasing a car down a neighborhood street. The dog sprints down the road, barking wildly and trying desperately to catch the moving car. Mostly to no avail because, let's face it, there's no speed contest here.
But have you ever seen a time when that chased car suddenly comes to a stop (traffic light, stop sign, etc.) and then watch when the pursuing dog finally catches up? It's hilarious, as the canine seems suddenly befuddled by the change in circumstances. It just stands there in the street, panting from the exertion, not quite knowing what it should do now.
Which makes his exercise a bit pointless, doesn't it?
The Befuddled Manager
In a sense, the same thing can happen at work, in situations when managers are given a market analysis figure from the Compensation folks. These HR specialists have been asked the question - what is this job worth? What is the competitive, or "going rate" out there?
Suddenly they are given a figure.
Now I have a new picture in my head, one that I see happening all too often in the workplace. Picture an employee hustling down the hallway, a white paper in hand, gleefully shouting (somewhat like Paul Revere), "I have the number."
As in, this is what we should pay. This is what we should do
But do they have the right number? So often I see situations where the explanation or rationalization of that figure is lost on the manager. All they seem to be able to see is - they have a number. Whew. Job done.
Have they considered that the figure in their hand may not have the precision they assume? Likely not.
- Maybe only a limited number of companies participated in the survey(s)compensation anlaysis,
- Just where exactly did the figure come from?
- Is the job match 100%, or perhaps a lower figure - or even guesstimate?
- The data is national or regional, which may be different than our local needs
- Does the figure reflect our industry? Does it reflect our size (revenue, operating budget, etc.)?
Perhaps that fellow running down the hallway should turn around and get some of these questions answered first - before sticking his head out with senior management.
But What Does It Mean?
In a sense, getting the numbers, whatever their quality, is only the beginning. Now what to do? I am asked that question a great deal. Now that management has the number(s), what do they mean? What should/could be done?
What do I do now?
This is where compensation analysis and compensation management/consulting tend to blur their respective roles.
The analyst should have the answers to the questions we just posed and should make it their responsibility to ensure that the internal client hears them as well. At that point, of course, the analysis is complete and perhaps we're back to the hallway.
It's then that the higher (softer) role of Compensation kicks in, getting that client to realize the implications of those figures and start to sort out a strategy that responds to the new analysis.
If you find that you're paying certain key employees 20% below market rates, the analyst will tell you that. But now you need to consider how to deal with potential next steps.
- A 20% increase for those affected (general increase?).
- An ad hoc performance review that portions out increases based on merit.
- A review of internal equity to see who else might be impacted by a flurry of sudden pay increases.
- Crafting an appropriate message that remains positive while not admitting you're been underpaying these employees for years.
So to all you compensation analysts out there; here is an opportunity to add value and get yourself some helpful exposure. Go beyond the simple explanation of, "Here is the number you asked for" and consider what this new information means to the client. Whether other questions are raised, whether possible responses could affect other employees, or whether solving one problem can create two new issues.
Because sometimes your client won't know enough to ask what your answer really means, as they're already anxious to start their rush down the hallway.
Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations. He is also associated with several HR Consulting firms as a contributing consultant. Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation. He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.
Creative Commons image,"Curved Perspective," by Joel Kramer