Are You A Copy Cat?

Picture the scene;  you've just completed a presentation to senior management, complete with analysis and recommendations for next year's compensation program.  Now you stand ready for the question and answer session.  Now is the time to defend your proposals.

With a carefully blank expression on his face your COO poses a single question . . . why so much?

Justification Or Excuse?

But you're prepared.   You've anticipated the question.   You know that properly answering the "why" question is your once-a-year opportunity to make your mark, show off your CCP designation and help direct the reward programs for your organization.

So chances are you won't respond with, "because that's what everyone else is doing."  Uttering that lame comment would suck the air right out of the room - and likely your career with it.   So you won't say that.  However,  just between us, would that actually be the truth of it?  Are your recommendations based on the unique status of your own organization's external competitiveness, internal equity, overriding Compensation strategy and financial affordability, or have you simply parroted what the Compensation surveys report that everyone else is supposedly doing?   Have you pushed the EASY button and followed the all-powerful "common practice?"

Beneath the simple question above your senior leadership is really asking whether your proposals set a course to  simply follow the pack, or do they lead toward solutions crafted for your organization's own needs?  Follow the crowd or strike out your own path?

Are your recommendations for the company's compensation programs a compilation of "everyone else is doing it" rationale, or are those proposals based on what you feel is necessary for your own organization - regardless of the "average?"

Are Decisions Being Made For You?

Is your view of presenting competitive programs a reaction to the behavior of others, or because certain tactics also make sense for you as well?

• Raising Salary Ranges: surveys will report the projected average increase in salary range midpoints for next year.  But how does that figure relate to the competitiveness of your own situation?  Do your ranges need a similar adjustment?  What would you recommend if you didn't have a survey whispering in your ear?

• The Average Spend: if survey sources report a projected average spend of 3.0% for next year, is that your recommendation as well?  And when responding to the why question, what else do you have to offer as justification?  Does the 3% make sense for you?  Can you afford it?

• Pay Decisions: is the survey source a reliable indicator you can point to as the prime reason for making individual or group pay decisions, or are external sources only one aspect of your analysis, one element of your reward program strategy?  If the market says $47,512 does that figure become your new competitive target?

So before you make that next reward presentation ask yourself whether your decisions and your recommendations are adding value to the organization.   Or was your analysis complete once the survey data suggested a common trend?  Once you saw the answer.

The easy way is to point at others, to argue the common sense of common action.  However that strategy bespeaks more of a Compensation Administrator than one who is charged with overseeing the proper design, competitiveness and effectiveness of the company's reward programs.

To be fair, sometimes what everyone else is doing is the right action for you.   I suppose that's why so many companies are doing it.  Then again, the reported "average" may be no more than an arithmetic exercise that is less a strong trend than rather a convenient manipulation of data points.  Who's to say?

So be careful before you sign on to tactics decided upon by other companies.  That nameless average of common practice is not responsible for your organization's compensation programs.  You are.  And you'd better have a better reason for your proposals than that's what the survey said.

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  With over 30 years Rewards experience Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats. 

Creative Commons image courtesy of pmarella

Comments

[E. James (Jim) Brennan]

There is a difference between initiating and imitating. One can lead or follow the pack. Followers are rarely blamed for remaining in the back of the group, but they will never set the pace or determine the direction; they are guided by the ones ahead of them, whom they will never surpass. Following might appear "safe," but only to the extent that the group followed is going where you wish to go.

Surveys are vital for context, but they are no substitute for vision. Only the one leading the pack is choosing their own direction; the others mindlessly imitate.

Any survey involving numbers is more complex, because they have variances, with relatively few participants actually sitting at the median or average. The art of intelligent survey reliance is consciously selecting the segment you choose to follow: it is rarely the norm, unless you want to be an average firm.

[Dan Walter]

This is a great paragraph....
"So before you make that next reward presentation ask yourself whether your decisions and your recommendations are adding value to the organization. Or was your analysis complete once the survey data suggested a common trend? Once you saw the answer."

[Jacque Vilet]

Great post ---- let surveys be only one consideration when deciding on merit budgets, etc. Surveys are comprised of many companies in your industry (usually) but they have different business strategies, cultures, comp philosophies, etc. which need to be considered as well. So surveys results taken in a vacuum aren't the answer. Comp people need (desparately need) to have more business acumen so they understand this. Any "noodle-head" can just plug in the magic survey number and throw it over the fence to management for approval.

[Chuck Csizmar]

From the comments I've been receiving, here and elsewhere, it would appear that pushing the EASY button is an all-too-common tactic these days. The fear of sticking one's head out is a powerful inducement to play it safe.

On the other hand, shame on some management for assuming that surveys hold the Rosetta Stone for their comp programs.

[Jacque Vilet]

Well now Chuck you bring up an interesting topic --- at least for me. Dan knows it too! :-)

The BOD makes decisions on CEO pay based on survey data almost exclusively. What's good for the goose is good for the gander!

[Chuck Csizmar]

CEO pay? There are more than a few folks out there who believe that high CEO compensation is based at least partly on the advice of high priced consultants - who are in turn paid by the CEO.

Ah, the cynical masses!

[Jacque Vilet]

Ah . . . . and the high priced consultants rely on survey data. After all, who can argue with data??