Benefits and Compensation

A Compensation Hot Potato

My day job puts me in contact with a lot of HR and compensation professionals. Some need help with finding salary data for a job or with setting up job grades. Sometimes, though, they just need an ear to listen.

Hot potato

Recently, I was helping a site subscriber find salary data for a Controller job but he kept saying it couldn’t be correct. I showed him how the data is organized and explained there were multiple job families that included Controller with differing responsibilities and varying salary levels; but, he just kept nay-saying that data. Finally, I asked him why he thought the data was incorrect and, after pulling out a few of his teeth and a wee bit of my hair, we got down to the nitty-gritty.

About the dilemma

The problem with the data wasn’t really the data; it was the position—Controller—or, more specifically, the person in that job. You see, the Controller (a.k.a., his boss) was convinced that his own salary should be a hefty bit higher and was pushing our comp pro to find data that would support that assumption.

How do you convey to your boss that he has a skewed view of his market value? It’s difficult to convey the opposite of what you know your boss wants to hear. It’s just plain dicey to lob a “no, you can’t have it” at someone who controls whether you have a job that enables you to pay your rent and buy food. So what can you do? You can have that conversation but need to be cautious in how you approach the topic.

About the preparation

If you’re working from a job description that hasn’t been updated in a couple of years, address that issue then research the job based on the updated information.

If your organization doesn’t have a comp philosophy and/or comp strategy, draft one and ask your boss to consider it. If possible, work with him or her to fine-tune it for presentation to the executive team. Having a plan in place that defines where in the salary market your organization is positioned sends a clear message to employees, above and below your pay grade, about where the organization stands on competitive pay and, as a result, can cut down on awkward conversations later on.

Validate the data. If you’re relying on only one salary data source, then you need more. I always recommend at least two, preferably three or four, data sources. If all of them show similar data for the job in question, you can be reasonably confident that the data is valid.

If one of them has data that is way out there in left field, however, discard that data for that job. Otherwise, imagine your chagrin when, simply because you relied on a single data source, your boss proves that your outlier data is not a valid yardstick for his or her value in the market. Yikes!

About the chat

Define the data. It is what it is, which is a snapshot in time of what a group of employers are paying for a given job. In some salary databases, though, it might be a picture of what employees say they are getting paid. (I tend to view that data with a grain of salt.) It is not a complete picture of the market.

Unpersonalize the data. Talk about the job, not the person in the job. Even better, provide a report on the job, including all salary sources, and let the data speak for itself. If you get pulled into a conversation about the report, however, reference only the job and never the person, regardless of whether that individual is above or below you on the company ladder. Focus your comments on what the job pays in the marketplace and steer clear of comments like:

  • I know you think you’re worth more …
  • Your job isn’t as valued in the market …
  • I think I can sharpen my pencil on this …

Convey the facts. That third comment is about fudging the data. Never do that. Your boss, or employee Jane Doe for that matter, is asking to be paid at what he or she believes is a market competitive rate. Your role is to provide the market data, utilizing the resources available to you.

If the data indicates they are already paid at or above market, you may be considerate of their disappointment in not being able to use salary market data to justify a pay bump but, as mentioned above, the data is what the data is. If the market data indicates they are paid below market, it’s up to them to champion their cause with the higher-ups.

Keep it simple. As the saying goes, less is more. And, it was never truer than in this situation, so say as little as possible when confronted by a boss that wants “better” salary data for his/her job. If you’re not careful in what you say, the conversation can get way out of hand very quickly. If you’ve presented data from all the sources you have access to, let your boss know that other data sources are available and what the cost is for those sources. If he wants to pursue it, the ball is in his court.

About the marketplace

salary dataMost salary surveys display data as percentiles, usually the 10th, 25th, 50th, 75th, and 90th percentiles. Paying “at market” is generally considered paying at the 50th percentile, which indicates that half of the incumbents included in the salary survey are paid below that rate and half are paid above it.

Though many salary surveys are quite extensive, I’ve not come across a single one that includes every job and every employer in every industry in every geographic location. So, is your salary survey data really representative of the market?

At the point in time the survey was conducted, given it includes a hefty number of incumbents for the job in question, it probably is a reasonable picture of the market value of the job. Note: Because it’s a snapshot in time, you’ll need to age the data before presenting it but that’s a topic for another article.

Sharon McKnightSharon L. McKnight, CCP, SPHR, draws from more than 20 years of management experience, including 6 years as a director of human resources, to develop compensation administration tools and write about compensation issues. Her experience in both operational and HR management provides her with a practical approach to providing online resources that address the challenges facing compensation and human resource professionals.

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