Editor's Note: Even in the age of AI, ML and even TMI, SWAGs based on B.A.D. are still necessary. Jim Brennan shares some Classic pointers!
All decisions are B.A.D. decisions, relying on the Best Available Data known at the time.
Even compensation experts, supposedly the most analytical of HR types, have difficulties with data. Makes sense to me, because all human decisions are B.A.D. decisions, made according to the “best available data” when action was required.
When there is no good data, you must rely on the Best Available Data. The resulting acronym (B.A.D.) is quite meaningful as well as memorable. The process of making decisions without access to complete and perfect information occurs every day. The best professional survey analyses involving “counts”, for example, report their reliability statistics. And guess what they define? The estimated rate of error contained in their statistical results. Standard error is a vital measure because it predicts how much of a miss is likely when relying on the normative results derived from a particular observation sample. It is much like the spread in the shot pattern you get from pellets dispersed by a shotgun; or from sand thrown by hand, where wet sand will be more densely clustered than loose sand.
Every measurement, even the best, comes with a certain risk of error. Tight standards of precision offer more hope of being “right” and strenghten the ability to make inferences from studies, but that is not always possible or useful. The real world is filled with bad information, inadequate facts and missing data points. And the opposite situation occurs, too, where you are flooded with contradictory information. In this Internet world, it seems like anyone can find support for almost any contention somewhere. Too Much Information (TMI) has become a catchphrase acronym.
Relevance counts, as well. Despite access to all the information in the world, you can never be sure that one particular answer will prove to be valid in your particular unique situation.
Sooner or later, you may reach a point where you can only speculate before acting without perfect confidence. Even in the numbers-oriented world of compensation management, Scientific Wild-Ass Guesses (SWAGs) still are required sometimes. Operating in circumstances where useful facts may be missing is a normal part of the total rewards profession. The more often you enter uncharted waters, the more frequently you will find an absence of robust benchmark studies with relevant useful facts that can guide your choices, suggest options or demonstrate context. Then, it is time to get B.A.D.!
The best approach when dealing with ambiguity generally is to define your assumptions, explain the risk level and give it your best shot. For instance, if no one complains over an admittedly arbitrary guess about what you think a specific job should be paid, you are probably offering to pay too high and they don't want you to find out because it makes life easier for them. When hiring managers grumble but are able to comply easily and operate adequately, then the approximation is probably just about right.
If any SWAG based on the Best Available Data works out, then your B.A.D. decision will be the best possible outcome.
E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience in most industries. After corporate HR posts and consulting CEO roles, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review.
This posting is truly a classic that probably wouldn't get old if it were reposted every two months (well, maybe it would . . .).
Not sure if its an addendum or a codicil or what, but a related posting ( http://feedproxy.google.com/~r/CompensationCafe/~3/EEcMXdOpXfM/when-there-are-no-good-options.html?utm_source=feedburner&utm_medium=email ), was almost certainly a by-product and prompted by Jim's original treatment.
I'll keep my eyes open for a repeat performance, maybe in early June?
Posted by: Chris Dobyns | 04/03/2019 at 03:09 PM
"Classics," like fine wine, Chris, require the passage of time for fermentation so their full flavor may mature for maximum enjoyment.
In other words, our Esteemed Empress Editoress-in-Chief has RULES governing the granting of "classic" status. Ours is not to reason why … etc.
Posted by: EJames Brennan | 04/03/2019 at 05:18 PM