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10/07/2010

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I think we should just pay them fairly.

Hahahahahahahah.... (inside reference to @annbares post today on Comp Force....

But in all seriousness, when I read this kind of discussion I can't help but feel like we're rearranging deckchairs on the Titanic - or any boat - sinking or not. Rearranging the chairs has no effect on the final destination.

Companies should look at the total experience of their employees - across pay, benefits, management style, culture, location, etc, etc, etc.

My pay is less a function of the company down the street than is the type of desk chair (which I'm sure we're rearranging as we speak.)

Unless you specifically know you are not getting and keeping employees BECAUSE of your pay plan relative to those near you - I don't really think it is worth the energy to go through the hoops I see outlined in the post.

Now... full disclosure - I'm just a business guy - and I don't get paid to do comp plans - so I'm sure I'm naive and off base but most companies could save the time and money they spend analyzing numbers - just because they can - and spend that same time and money - just being better companies for their employees.

My rant is done - blame Ann - she started it.

Sorry, but I'm a little cynical about this lag-lead/lead-lag stuff.

If the average pay increases these days is 2%-3%, but companies still use the rule of thumb that anything within 10% of the market is generally "at market," then how precise do you need to be with your annual pay strategy?

The 10% rule of thumb is so much broader than the exactitude required in pursuing a lead-lag/lag-lead strategy involving 2%-3% average pay increases.

Lets not forget that market competitiveness is not the only factor driving a company's pay strategy. Other considerations include profitability, success on a balanced scorecard of performance considerations, internal equity, and whether the company's broader HR strategy requires layoffs or expansion.

Hmmm, I'm thinking that it might be an interesting survey question to ask, how close does your data have to be before you claim you're "at market"? In my career experience (could be different from others) I've used + / - 5%. I always thought that using 10% was too broad a target. It made it too easy to claim that everything was ok - go back to sleep.

Of course, you can always "claim" anything; the trick is whether the employees think that -10% is still paying market rates.

Chuck,

Fortunately, I don't think that companies do, or should, share with the broad employee population how close to the market they target their compensation levels.

Interesting that you should raise the idea of surveying how close companies measure "at market." Here's a discussion I started on that very issue on WorldatWork's Online Community, "How closely do you adhere to the market?" at http://www.worldatwork.org/waw/community/discussions/discuss.jsp?did=16117&tid=16117.

Also check out the discussion, "Lead Lag Compensation Philosophy" at http://www.worldatwork.org/waw/community/discussions/discuss.jsp?did=16951&tid=16951&frm=sr

Thanks for continuing the discussion.


To "lead", "lag" or "lead-lag" are part of the C&B's strategic process; merely theoritical in nature.

Actual application naturally depends on company's pay philosophy, affordability, geographical location, and many other factors.

If your current market is flooded with candidates (from 2008-2009 redundancies), chances are, your own employees will stay put even if you "lag-lag" for a year.

Would have to agree with Paul Hebert on this one, who by the way sounds more like Dan Pink with each passing day. I am an experienced compensation professional and I truly believe that the we have more important things to do, like, as Paul suggests, making the company a better place to work in some meaningful way.

Let us busy ourseleves with the important work of HR, rather than this exercise to demonstrate how sophisticated and intelligent we are, ie, we understand and can use the concept of present value just like the bright people in finance.

Oh.... Richard, you did not just say that! I just got out of a 2 hour presentation debunking Pink. I'm just saying that your benchmark isn't you competition... Its what the work is worth to you. All benchmarking does is tell you what your competition values it

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