Editor's Note: A sense of historical perspective can be a good thing in any profession. Many of the pay issues you are facing have been encountered and addressed before. Jim Brennan shares a Classic reminder that some of our old tools can play a helpful role in your current solutions kit - or perhaps give you the time-tested springboard you need to develop your own approach.
The compensation tool chest continues to grow. While we tend to fixate on the shiny new gadgets that are today’s innovation, don’t forget that the tried and true mechanisms don’t necessarily grow rusty with time. What worked well once before can save your rear, if you still have it around when it is needed again.
The more things change, the more they stay the same. Well, not exactly; but the well-seasoned compensation professional would be smart to hold on to the ideas, plans, programs and tricks that worked well in the past. Someone somewhere today is just encountering the same issues that simple old-fashioned techniques handled long ago. The newest solution may be the freshest unused device in your modern repertoire, but it is more important that the fix be effective than that it should be innovative.
Those who obsess about flashy interventions can end up putting on a good show that offers superficial bling but fails to solve the essential issue. Over-reliance on process can interfere with practical problem-solving, which ought to be the end outcome result.
Newest is not necessarily best.
Change is additive rather than binary. Trends overlap and concatenate, so that every new alternative simply increases the number of viable options and extends the complexity of the observation universe. Innovations rarely totally eliminate all predecessors. New technology will not completely displace all prior paradigms. Not all workers will be virtual even twenty years from now. Brick and mortar working environments familiar to the 16th Century will still remain somewhere.
Old tools can include pay compression solutions, rabbi trusts, merit increase matrix programs, flat absolute pay increases, phantom stock, slotting, tax equalization, step increases, fixed base salaries with re-earnable bonuses, shadow grades, forced performance distributions, totem pole rank & yanksystems, balanced scorecards, gainsharing and many more elements. Most problems can be addressed by current tradecraft solutions. For example, if merit grids are too complicated, pay compounding can be simply controlled by flat dollar increases for equal performance in same-grade jobs; merit increase percentages are applied to the midpoint rather than to the personal salary.
That list is a small sample of the many traditional pay practices. Some are still excellent while others are still terrible, but they are all well accepted historical alternatives to inaction. If you don’t know them, you cannot use them or avoid their improper application or determine when they are ideal. For those who want to know more about each, many articles, books and texts on compensation cover all those topic categories.
As we go deeper into the 21st Century, the tools available in the trade continue to grow in number and variety. We have to grow ourselves to keep up, to adapt to the new while not forgetting the old. In this world of mixed challenges, many older methods will work better than newer ones. That is counterintuitive on many levels, because new usually displaces the old. Normally, an old comp program should be dropped whenever you add a new one, but comp toolsshould always be saved and stored for potential future use some day.
E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience in most industries. After corporate HR posts and consulting CEO roles, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review.
Creative Commons Image "Old Tools on the Wall" by DigiDreamGraphix.com