Picture the scene; you have 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 facial expression, your COO poses a single question . . . why so much?
Justification or Excuse?
But you are prepared. You have 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 will not 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 will not say that. However, just between us, would that 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 unique requirements? Will you 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 pay increases 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 3% make sense for you? Can you afford it? Why not more? Why not less?
- Pay Decisions: Are your survey sources reliable indicators that 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?
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. Never mind communications.
To be fair, sometimes what everyone else is doing is the right action for you. I suppose that is 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?
Remember that paying the average is not going to put a halt to quality staff leaving for more money. So don’t make that promise.
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 is what the survey said.
Point the finger of responsibility at yourself, never elsewhere.
P.S. Another weak rationale is, “Because it’s the right thing to do.”
Chuck Csizmar CCP is the 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 "Amelia Cat II," by brownpau
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