When compensation practitioners face the need to develop their first program recommendation for senior management a common mistake often made is for the practitioner to not consider what the audience expects to hear – which can be a fatal mistake.
The inexperienced often presume that they will be viewed as the acknowledged expert, and that their recommendations will carry a great deal of weight. If they are fortunate, that will be true. However, more than likely running with an ego puffed up with notions of “expertise” will steer you straight into a brick wall.
I know. I still have the bumps on my head.
What You Say Matters
In my experience members of senior management may not be familiar with compensation techniques, which is probably why they have a need for you. However, they will still possess a series of personal biases of likes and dislikes, a basic knowledge of company-centric pay philosophies, and those well-developed internal cultural preferences that they feel “work” for them.
And while we’re talking communications, remember that it’s a two-way street. Just telling someone something is not communicating if they don’t understand or have different perspectives. So have a care of tripping up when communicating with the decision makers in your senior leadership. Some terms to be cautious with:
- Average: Compensation practitioners may argue that, in many cases, the use of a Median figure is technically more accurate. But your audience likely may not know the compensation distinction, as in their minds they are thinking Average. Educating them on the difference, especially if slight, will distract the presentation away from its key points while still not changing anyone’s thinking. You can avoid this potential glitch by using Average.
- Market Data: Most clients will presume that the market data you present is for their own jobs and within their own industry. Often this is not the case, what with generalist surveys, title match challenges and potential restrictions on how finely you can slice the data (industry, revenue size, geography, specific titles). Clarify your market analysis to avoid misunderstandings and later challenges.
- Incumbent Data: Your client will assume that your survey data represents a counting of actual employee incumbent pay rates across your survey sources. They will not understand the usage by some surveys of algorithm formulae to guess/presume/estimate pay levels.
- Quality of Data: Not every survey will deliver the same quality standards that you, and your client, will assume as a given. Small surveys, geographic cuts, industry-centric vs. general surveys and even self-reporting surveys (employees complete the questionnaire) should not be considered as providing data of equal value. But unless you qualify your sources your client may presume that they all offer the same credentials, or if questions arise, leaders may criticize all your sources as flawed.
- Survey Limitations: For many clients, just listing a series of survey sources can be enough to elicit nodding heads at your thoroughness. But every survey is a composite of a list of participating companies who try to match as many job titles as possible. Therefore every survey will show a different number for the same job. Again, your client will (initially) give you the benefit of the doubt, lacking the knowledge to make critical assessments of the diversity of potential survey sources. It will become your role to educate them.
- Midpoints vs. Market Rates: Many times, a client will automatically presume that the midpoint of a pay range (within the organization’s pay structure) is the going rate (market rate) for that position/title. That they should be paying employees at that rate. Again, your role as educator is to explain the difference between a pay range midpoint and a market rate. And why every employee should not necessarily be paid at the midpoint.
- Smoking Gun vs. Pricing Guide: It will help your education process if you can get senior leadership to understand that survey data is not the holy grail of compensation analysis. That the figures representing your marketplace analysis are not a “smoking gun” but limited data that suggests that many employees (certainly not all) are paid at a particular average rate. In my view this data should be used as a “pricing guide” to aid the organization’s decision-making as to appropriate next steps. The data is NOT an “Aha! moment” that tells you what you should be paying.
As you can see, an ongoing responsibility sitting on your shoulders is to educate the decision-makers on how best to view the market data within your proposal/recommendations. If left to their own devises your senior leadership may head off in the wrong direction, primarily because of their own biases and because they do not understand your behind-the-scenes analysis.
You need to make sure that they understand. Such educational success will make your job easier.
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 "Mother," by Christopher Wray
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