Even compensation experts, supposedly the most analytical of HR types, have difficulties with data. Makes sense to me, because all human decisions are B.A.D. decisions, made according to the “best available data” when action was required.
When there is no good data, you must rely on the Best Available Data. The resulting acronym (B.A.D.) is quite meaningful as well as memorable. The process of making decisions without access to complete and perfect information occurs every day. The best professional survey analyses involving “counts”, for example, report their reliability statistics. And guess what they define? The estimated rate of error contained in their statistical results. Standard error is a vital measure because it predicts how much of a miss is likely when relying on the normative results derived from a particular observation sample. It is much like the spread in the shot pattern you get from pellets dispersed by a shotgun; or from sand thrown by hand, where wet sand will be more densely clustered than loose sand.
Every measurement, even the best, comes with a certain risk of error. Tight standards of precision offer more hope of being “right” and strenghten the ability to make inferences from studies, but that is not always possible or useful. The real world is filled with bad information, inadequate facts and missing data points. And the opposite situation occurs, too, where you are flooded with contradictory information. In this Internet world, it seems like anyone can find support for almost any contention somewhere. Too Much Information (TMI) has become a catchphrase acronym.
Relevance counts, as well. Despite access to all the information in the world, you can never be sure that one particular answer will prove to be valid in your particular unique situation.
Sooner or later, you may reach a point where you can only speculate before acting without perfect confidence. Even in the numbers-oriented world of compensation management, Scientific Wild-Ass Guesses (SWAGs) still are required sometimes. Operating in circumstances where useful facts may be missing is a normal part of the total rewards profession. The more often you enter uncharted waters, the more frequently you will find an absence of robust benchmark studies with relevant useful facts that can guide your choices, suggest options or demonstrate context. Then, it is time to get B.A.D.!
The best approach when dealing with ambiguity generally is to define your assumptions, explain the risk level and give it your best shot. For instance, if no one complains over an admittedly arbitrary guess about what you think a specific job should be paid, you are probably offering to pay too high and they don't want you to find out because it makes life easier for them. When hiring managers grumble but are able to comply easily and operate adequately, then the approximation is probably just about right.
If any SWAG based on the Best Available Data works out, then your B.A.D. decision will be the best possible outcome.
E. James (Jim) Brennan was Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. After over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.), serves on the Advisory Board of the Compensation and Benefits Review and will express his opinion on almost anything.
Untitled Creative Commons image by Danie Oines