Is your compensation structure a Payalotasaur? Could it be an Equitops? Maybe it’s a Budgetgonadon. No matter your approach to pay, you are probably acting as a Compensation Paleontologist to get things done.
You ever wonder how scientists can find a perfectly complete, entirely intact fossilized skeleton of some giant dinosaur? The truth is they almost never find a whole skeleton. Often they find only a few bones, sometimes only fragments. They must then take all of their knowledge, imagination, and experience to determine all the parts that are missing.
Does this process sound familiar? Where paleontologists differ from most compensation professionals is that this creation of missing pieces is both expected and part of the fun of the job. So many of us in the compensation world, force job matches and pay levels to align with the existing data, rather than extrapolating between the known pieces. In the end, we take the bones given to us by the survey providers and build illogical beasts with no useful form or flow. When we do this, we do a disservice to our employees and our companies.
The best paleontologists can craft an amazingly accurate estimate of a long-gone animal with only a few fossils. They take what they know from other fossils and modern animals and artfully determine each unique piece. This gives every future scientist a roadmap, or blueprint, to identify other found fossils as additions to the newly identified creature.
The best compensation pros do much the same thing. They identify the jobs with very strong matches and make those positions guiding elements for the remaining jobs. Where useful data is available, they use it. Where data is thin, illogical, volatile or nonexistent, they determine the curve of the underlying skeleton of their unique structure and create pricing that follows the flow.
In doing this the best of us create structures that stand the test of time. When you depend only on data and not your abilities, jobs that are benchmarked "perfectly" one year may be wildly out of range the next. We don’t control the data; we only control how it is used.
Care must always be taken. We cannot simply create a structure from thin air. It may work for a while, but like Bigfoot and jackalopes, things will become a joke in no time. We also cannot depend on having all the data we want. We live in a world of innovation. New jobs, new career paths, and new industries are evolving all the time. If we insist on using past “data” for every job, we will find ourselves forcing jobs to reflect the past and not our future.
There will always be mistakes if we take the artful and imaginative path (here's an article on five past mistakes by paleontologists). Without taking these risks and leaps of imagination, we may find ourselves uncompetitive and not even realize it. While one company steadfastly clings to its data-bound approach, the competitor across town is hiring the best and the brightest. Only compensation professionals can prevent this.
In many companies, this is the most valuable service you can provide. Every company needs a solid foundation from which to launch. Like great dinosaur scientists, the foundation we build must be a combination of knowns and unknowns. Next time you are faced with this challenge think of how lucky you are to be able to create the skeleton of the first Incentaraptor or Casholophus. It will add a bit of fun to the process and help keep things in perspective.
Dan Walter, CECP, CEP is the President and CEO of Performensation. He is passionately committed to aligning pay with company strategy and culture and considered a leading expert on equity compensation issues. Dan has written several industry resources including an issue brief on Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @Performensation.