Can we benchmark our way to reward program success?
No, we cannot. Not in today's world.
As I've discussed in the past here at the Cafe, signs point to us having become mired in discovering and copying what others are doing, at the expense of really learning the businesses of our businesses.
Does this mean that we should stop considering any information on prevalent practices? Am I predicting the end of the compensation survey?
Not at all. But it does mean that we need to begin filtering this outside information through a more finely honed sense of our organizations' business needs and strategic priorities.
Compensation Surveys
It may be as important as ever to get a sense - via independent and quality surveys - of prevalent pay levels for the positions and skill sets that our organizations depend on. The difference now is that we need to consider competitive norms relative to the organization's most pressing talent needs - now and into the anticipated future. Is the organization best served by simply "marking to market", particularly for precious and expensive base pay dollars, or should we consider some differentiation in pay investment? Are there positions or talent families where we need to invest more heavily in order to signal and encourage the development of capabilities - areas where the organization has an acute need or where the roles are central to competitive advantage? Do we use some part of available pay dollars to highlight and encourage career choices that are most aligned with anticipated future needs?
Compensation/Reward Practice Research
Likewise, it can also be helpful to be aware of norms and prevalent choices in different areas of reward practice. There is good information in knowing that a growing number of organizations are rewarding sales staff based on gross profit dollars rather than top line revenue alone. Or that many employers are using project-based incentives in their engineering functions. Or that there has been a spike in the number of local employers providing telework or on-site child care benefits. However, the fact that a practice is popular doesn't mean that it fits your organization's needs and business circumstances, that it will deliver value in your situation, or that it is aligned with your priorities and talent management needs.
The practice of benchmarking is not likely to go away - nor should it. We, however, must become more astute in interpreting benchmark information in relation to the particular needs and priorities of our organizations.
Agree ... or not?
Ann Bares is the Founder and Editor of the Compensation Café, Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations. She earned her M.B.A. at Northwestern University’s Kellogg School and is a bookhound and aspiring cook in her spare time. Follow her on Twitter at @annbares.
Image courtesy of oliveandbranch.com
The best practices usually exist at the margins where enterprises are diverging from the lemming-pack and forging new paths to success. By the time others realize what they did and catch up with them at point A, they will have moved elsewhere, to point B.
You can't lead from behind. Sticking to the most popular trend places you solidly in the middle. Might be safe but it certainly ain't progressive or an improvement on the status quo. Besides, unless your operation is a clone of every other enterprise, it won't be appropriate for your actual situational needs.
Surveys provide essential data on context, but they do NOT imply direction or compel imitation. If you use a compass when you travel, you don't always want to head magnetic North.
Posted by: E. James (Jim) Brennan | 03/02/2012 at 01:51 PM
Good points, Jim. And this even assumes that the lemmings have made good choices for their organizations - which isn't always a safe bet. Surveys aren't typically able to tell us whether the most popular practice has delivered any value or benefits for the adopting organizations - much less whether it will work for our own.
Thanks for the comment!
Posted by: Ann Bares | 03/05/2012 at 08:01 AM