As every Compensation practitioner will tell you, sometimes there is no straight answer to a question you’re being asked. However, the boss who is asking that question will still look to you for not only what the tea leaves say (surveys), but what should management do about the information. The answers that you may have to offer, though, often aren't simply black or white, but instead show a good deal of grey.
Ahhh, but management doesn't like to hear about grey. They don't want you to sit on the fence with maybes, variables and “coulda/shoulda” responses. They want you to make a call, to raise your hand and your head above the firing line.
So how do you respond when the chips are down, and the ticking clock just ran out?
Consider This Example
A survey shows that there are 350 nonprofit organizations in Florida, and the base market rate for the XYZ position you're analyzing is $150k. However, that same survey indicates that there are 36 Florida organizations that are same size as yours, and that narrower market is paying only $125k.
When you consider the variations of data, you are faced with . . ..
- Florida is a large state. Where are these 350 organizations located, compared to your site?
- Does the survey tell you this?
- These organizations will vary in size (operating budget, employees, number of sites, etc.) a great deal, from much smaller than you to much larger
- Does the survey segment data according to size?
- How many of these 350 organizations are in the same "type" of nonprofit business?
- Does the survey segment data according to type?
- If the data is segmented, which segment is more important to you? Can you ignore others?
- Do you really care about variations, or does the answer with the most robust data win?
- If you recruit some positions from for-profit organizations as well, should you restrict your analysis to only the non-profit universe?
- Does the incumbent employee’s own base rate affect how you look at the competitive marketplace?
Management is waiting. How do you answer their question about the market rate for the XYZ position?
Depending on the circumstances your answer might be $150k, or under other circumstance you might say that the answer is $125k. Both can be considered correct, dependent upon how you read your data sources. Or perhaps a third figure as well? However, for the incumbent employee, their market is the $150k. That's their view of how they should be valued. That's their view of what they can get from another employer.
The Wannabe Survey Analyst
How your organization defines its view of the competitive market is critical, but most folks outside of Compensation will let that distinction slip right by them. Grab a survey, flip the pages until you get to the subject job and point your finger at the top-of-the-page figure. There. Done. How hard was that?
I've seen it done that way. Likely so have you.
The trouble with this approach though, is that's it's all too easy to miss the mark. If you're a $50M nonprofit food distribution organization in Central Florida, how important is it to know, and include in your analysis what a $150M nonprofit disability organization is paying in the Miami area?
The trick for the wannabe analyst is that often the available survey data doesn't make enough distinctions in the figures being reported. There may not be enough data (statistically valid) for $50M nonprofit organizations in the Central Florida area. Never mind food distribution.
So, data on that narrow slice of "same organization" criteria you're looking for is simply not available.
That data on the top of the survey page may not represent your organization at all. Or you could get lucky.
Broaden Your View
Look at your "market" from two perspectives; 1) what are other organizations - just like you - paying for a subject position, and 2) what are others paying in an organization sized like yours.
You can even add a third component; what about your geographic area? What you have then is a composite of data points that require interpretation and explanation. So perhaps your response is buried in the midst of the survey page, not at the highlighted top.
Just to make things a bit more complicated, another consideration for you is the difference between the employment market value of a jobholder (what pay can they achieve out there) and what organizations just like you and sized like you are paying.
This is the "it depends" element of compensation that drives non practitioners crazy.
I can see their point.
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 "Complexity 3," by michael.heiss
Comments