If Pay Data Says Punch Your Mom in the Face
Most of us have a fairly decent sense of right from wrong and good from the bad. Imagine your pay data is like a self-improvement book. You have been reading the book for a bit and it is starting to ring true. You turn to page 37 to see The Chapter 3 title that says: "Step 3, Punch Your Mom in the Face.” You'd probably put the book down for good.
In cases where there is a bright line between good and bad, we hope that everyone will choose the right path quickly. When it comes to pay trends and market data the line is not as bright, nor the negative consequences as personal, perhaps that is why I have seen so many cases of “we just did what the data said.” Sometimes data is bad. Sometimes it is wrong. Often, we can just feel how wrong it is. Other times it only becomes noticeable when someone else points it out.
Most compensation professionals are pretty good at navigating the obvious problems. We quickly find better data or use our experience to fill the gap in a more useful way. But, when the issue is less obvious, or when we have missed the problem altogether, making a correction can prove to be very challenging.
Sometimes this happens when an employee or manager says that your recommended pay rate or equity amount is too low. Our first defense is to hold up our market data and strong processes. We point out that this is “right” and that they are wrong. While confidence in your position is admirable, take time to make sure that things haven’t changed since the last analysis, and take the time to see if there is something unique about the position, or the person.
Often companies bring in outside help to review pay that isn’t working. When consultants point out flaws in past data or bring in a more representative data set, the pushback can be substantial. There is a level of ownership in the prior processes and data that can be hard to abandon. This is understandable, but not useful. When someone points out that you have essentially been punching your employees in the face, it’s time to take a step back and make corrections.
Now those of you have read my posts for years know that I have no true love for market data. I think companies should use it as a reference point, rather than a bible. But, regardless of your compensation philosophy or approach to data, you must be willing and able to make adjustments when your approach is not aligned to your goals.
Most of us adjust instinctively when the data is obviously “punch in the face”-incorrect. Sometimes the challenge to your internal compass is not as obvious as this. We need to keep an open mind when presented with a new perspective that may challenge “known facts.” In these more subtle instances, being willing to change is just as important. Own what’s right until the moment it isn’t, then change swiftly and decisively.
Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. He has three metaphors for every occasion and is a leading expert on incentive plan and equity compensation issues. He has written several industry resources including the only resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, , “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @DanFutureSense.