Where Are the Compensation Professionals?

According to reports, Citigroup and Bank of America will be raising base salaries for their staff to make up for decreased bonus dollars.  While it became very apparent that the incentive plans at these locations were rewarding the wrong results, I cannot believe that anyone thinks this is the right answer.

Now instead of having the ability to pay for performance, these companies will have fixed costs that they must pay regardless of the outcomes.  Didn’t anyone advise them that they could adjust their incentive plans to make sure they’re paying for the right results?  This is a dangerous move, and while I imagine some of this is in reaction to the negative press the Wall Street firms experienced after paying bonuses, this seems purely reactionary and not well thought-out.

So I sit here wondering, do they have Compensation professionals at these companies?  If so are they are trying to speak out and just being ignored, or are they the driving force behind these moves?  Our founder and editor, Ann Bares, wrote a very good post over at her Compensation Force blog about agility being one the most important assets for compensation plans in our current economic environment.  These companies are sadly removing any ability they may have had to be agile and respond to changing conditions.  I hope that someone in the organization realizes what a big mistake this would be, but I fear that they’re already too committed to this very poor course of action.

Darcy Dees works as the Compensation Manager for Rock Bottom Restaurants, Inc., headquartered in Louisville, CO.  She has been working in Compensation for over 5 years now and recently attained her Certified Compensation Professional (CCP) designation.  She spends what little free time she has hiking and reading.

Creative Commons Photo:  question by tj scenes

Comments

[Becky Regan]

Darcy,

Increasing base pay for these execs is in response to new controls on bonuses exerted by the Fed for TARP recipients. There are only so many ways to mix total comp. To me, these organizations are reacting to comply with the new restrictive regs handed down by the Feds. They can only be creative to a certain extent as their hands are tied with respect to bonus and incentives payments. The Feds focus is on reducing risk taken by these execs, the Banks' focus is on retaining key staff. You're seeing the result of increased government intervention: the market reacts and modifies to achieve desired objectives.

[Darcy Dees]

Thanks for the clarification Becky. Maybe it's better to question why we don't have someone with a Compensation background working on the regulations. Although there's something to be said for an outsider who can question the "sacred cows," sometimes they really do serve a purpose, and only someone with experience would know how to navigate this.