What's Your Delta?

An incremental change in a metric is called “a delta” in math and physics.

“How much will your pay increase next year?” is a query about your delta.  "What kind of pay increase do you anticipate giving to your employees?" is asked a lot; but perhaps it is the wrong question.

Surveying your delta is basically another way of asking, “What is your incremental rate of change from where you stand right now?”  Even harder to answer is, “What is THE delta?”  Some people consider it vitally important to carry a precise percentage number to their top management that says this is the normal rate of change planned by everyone else.  But it may be completely useless information of the type that demeans the compensation profession in the eyes of the executive team.

Let’s examine the sense of the question in a different light.  What would be the relevance of a rate of change that affects physical movement instead of pay movement?

Pose the question:  “What is the average individual change in speed?”  The movement delta of the average person is probably a few miles per hour.  Some people are motionless (especially when asleep); some are walking; some are driving in motor vehicles; and some are jetting around the world at five hundred miles an hour.  So the average, the median, or the weighted average person’s rate of movement change might be a few miles an hour.  But why, you demand, would anyone want to know such a meaningless metric?

Indeed.  That is a very good question.  Even better, why would anyone care what an unknown hypothetical normative rate of change amounts to, in the absence of any clear information about their base starting position.  After all, it DOES make a difference to any implications about the measurement of changes in your rate of movement if your personal delta takes place while you are riding in a speeding train versus tripping down a stairway or jumping from an airplane. 

Perhaps the better question would focus on the shortfall between where you want to be and where you are right now.  Rather than compare various rates of change from different base positions, instead look at how far you have to go to reach your goal.  In other words, stop asking “how quickly are you accelerating?” and start asking “how close is your destination?”  The compensation market index or overall compa-ratio may be more important than the rate of change.  Communicating a call to action or issuing a status report would seem more usefully productive than simply depositing a vague factoid on the floor. 

Telling executives where you stand as an organization places you squarely at the center of the team working on solutions to shortfalls or designing preventive/contingent programs to maintain the desired position.  Defining a closure relationship seems superior to describing relative movement.

What do you think?

 E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired after over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.), and will express his opinion on almost anything.

Comments

[John A Bushfield]

Jim - Interesting post. I had to read it a few times to understand that you were referring to an entire organization, rather than a component of it or an individual employee.

My observation is that knowing where you want to be requires some serious strategic thinking and the establishment of (dare I say it?) a compensation philosophy. Even then it may be an elusive goal, since industries are beginning to radically adjust their pay structures to meet the business demands of the new millennium.

Life for the Comp professional is likely to get much more difficult in the future, but much more important too.

[E. James (Jim) Brennan]

John - Although it applies either way (to org or to individual), the organizational application is probably more relevant to the typical reader here. The point remains the same: how fast you are changing speed is less pertinent than how far you have to go and your rate of closure. Let's hope that appropriate increases in the value placed on comp professionals does indeed follow the increased difficulty we continually face!