That Can't Be The Right Figure

Anyone who has worked in Compensation can identify with the following scene; you’ve just finished explaining your market-pricing analysis to your clients when suddenly frowning faces appear as they look down at the figures.  “This can’t be right,” someone mutters and suddenly you find yourself looking at irritated expressions.  “You’ve got it wrong.”

Been there?  Heard that?  Of course, you have.  That’s why compensation practitioners receive fewer Christmas cards than their HR generalist colleagues.  Because compensation folks are charged with conducting external analyses and presenting comparative marketplace realities. That’s called sticking your neck out.  But sometimes those realities aren’t welcome news.

Why Are Your Figures Wrong?

If management likes what they see, you’re only reporting common sense, and everyone nods their head.  The only time you’ll hear a complaint (or receive a frowny-face message) is when the market figures you report aren’t what management expected to hear.  In that case, sometimes the knee-jerk reaction is that your analysis must be wrong.  The reasoning behind their negative reaction can vary from a genuine confusion to a defensiveness that somehow, you’re criticizing their past pay decisions.

The accusations can take several forms.  Which of these is what you usually hear?

• You don’t understand my job
  • My job is special (bigger, better, more complex than similar titles)
  • The employee is a terrific performer and their efforts should be rewarded
  • The job description is out-of-date or otherwise inaccurate
  • How can HR know enough about my job(s) to properly match them against other company jobs?

• You haven’t used the right surveys: “Where did you get your data?” is an often-used retort when the market figure isn’t to their liking. Whether it’s about a specific industry, or geography, or even number or type of participants, a common go-to reaction is to challenge the data source.

• The job is really a “senior” position: “Perhaps we haven’t made the description clear,” is another rationale for further study. The job is actually more like a senior, or a lead role. “Our job is more than their job.”

• I’ve heard numbers that are much higher: Another pushback is to quote employee challenges, a newspaper article, or even comments from neighbors or relatives, to make an unsubstantiated case that the “real” market figure is higher.

• The employee(s) will quit: If we go with this so-called market figure. This statement is simply a threat, based more on emotion than objective data.  It’s an attempt to make you feel guilty for what you’ve done, or at least to plant seeds of doubt in your head.

• Have you called around to local companies? “Maybe a custom survey is what is needed.” Here the complainant is more interested in what specific, cherry-picked companies are doing than the general market.  However, the rationale for a custom survey is weakened by higher costs, longer lead times, limited participation and narrowing the scope too much.  Plus, you likely recruit from a wider competitive marketplace than that identified in a custom analysis.

• Recruiting vs. market figures: Do not confuse the two. If the market figure is 100, the recruiting figure for that position is likely to be greater than 100 - unless you’re dealing with an abundant labor market and your candidate in unemployed.  Note: The manager will always be thinking of the recruiting figure, and recruiters often have their finger on the scale, pushing up the figure they think is appropriate (and easier for them to recruit against).

What to Do

Like most other endeavors that deal with variables, the market-pricing process is not exact or formulaic and can be subject to human error as the compensation practitioner analyzes the competitive marketplace.  When that does happen, and objective data is presented to challenge your analysis, thank the manager for the new information and then promptly re-conduct your analysis.  You’ll gain credit for listening and for keeping an open mind.  Points for you.

However, in most instances, your analysis is going to be spot-on and what you’ll be hearing from disappointed managers are in the main excuses, defensiveness (they don’t want to be blamed for decisions they have made), attempts at a blame game and a lack of managerial courage.

Stand your ground. Bend when you must (political realities are always with us) but stick to your analysis and try to anticipate the nay-sayer arguments. Try to have the “gotcha” questions answered before they’re asked.

You still won’t get those Christmas cards, but you will be respected, even by those who disagree with you.

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.  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 clowder of cats.

Creative Commons image, "Appearances," by bark

Comments

[Joe Thompson]

As par usual, Chuck, you've nailed it. I've been exposed to all of the accusations you've cited, as well as three others (related to working with the public sector):

"But our employees have security clearances and you haven't accounted for those!" The comp-father, Chris Dobyns, and crew published an excellent WorldatWork article on security clearances and compensation several years ago that effectively explains the issue.

"But our missions are of national importance and what our employees do impact whole industries and sectors of the economy. Therefore, our salaries have to be much higher than this!" [A variation on this argument was that many of the rank-and-file employees occupied positions that should be considered the equivalent of C-suite positions in the private sector for compensation purposes due to their level of influence.]

"These numbers are wrong, because these say our pay is 'right' but our employees are still quitting!" [This is the argument that holds that compensation is the sole driver of recruitment and retention - the only lever that a manager needs to pull to make magic happen.]

In all cases, you're right - sound analysis and strong tradecraft don't earn you any Christmas cards.

[Charles Csizmar]

Joe -

Thanks for your comments and for adding to the list of excuses. If I had more space I could have included Hospitals, where even lower level employees tend to think that patients would die. Or Corporate HQ, where only high performing employees are allowed to work - and of course those jobs should be graded higher. The list goes on.

[Chris Dobyns]

As I was reading Chuck's article, even before I'd finished the 2nd paragraph I was already thinking to myself, ". . this subject is going to light up Joe Thompson just like a New Year's Eve fireworks display" (sorry, I'm still in "holiday" mode).

Prediction fulfilled.

Yes, a lot of familiar themes in this posting (I was actually holding my breath to see if I would see the use of any variation on the words "cherry-picking").

Prediction fulfilled.

And since Joe may have piqued some reader's interest about the value of a security clearance, with full attribution to the workspan periodical, here's a link to the original article . . . although I did help co-author this piece
( https://drive.google.com/file/d/1nRJWFzi8-f5kS0Nq8mkUgsDo20a9TdsT/view?usp=sharing ). I always liked the "expedited shipping" metaphor we came up with . . . but I'll let everyone read that for themselves.

[Karen H]

I work for a health system (we have multiple hospitals) for nine years, and yes, I've heard the argument (many times) that even the lowest level jobs are under-valued due to their contributions to patient safety.