Everything You Ever Needed To Know About Compensation

Let me start by saying I don’t really understand Comp Pros.  Seems like a lot of spreadsheets, market analysis, internal analysis, 48-72 hours of waiting, followed by me getting approval to offer the candidate less than what they originally asked for, followed by the hiring manager sending a nasty email to their line executive, followed by me getting approval from said Comp Pro to offer what I wanted to originally, followed by the hiring manager believing I have no idea what I’m doing. But what do I know…

If I ever get the chance to run a Compensation Department (please G*d never let this happen) I would concentrate on only one thing: which positions drive the largest percentage of revenue in my organization.  Now that is much harder than you think.  First, I’m sure you’re organization is like mine in that ‘every’ position is important…wait, I have to stop laughing…and as such, we really need to look at the whole.  No, I wouldn’t do that in my made up Compensation Department – I only want to look at the important people.  It’s not that I’m getting rid of anyone – Comp doesn’t do that – we leave that to the Generalist!  My focus is finding out who is the most important in driving revenue (thus profit) in our organization.  I need to know this because I need to ensure we are leading the market in compensation plans for those specific skills.  Why? Because I want to go out and give my HR/Talent team all the ammunition they need to hunt down the best possible revenue driving team for my organization that has ever been assembled by man, beast or robot.

Bam! – that is all you need to know about Compensation.

“Oh, but Tim you’re so naive! We need to pay all of our people fairly to drive the best productivity. We need to ensure we don’t have internal pay equity issues. We have to have proper bonus plan designs and executive pay structures. We need…” Shut it!  You know what happens when you lead any industry in revenue?  All that crap tends to take care of itself.  You know what happens when you’re chasing revenue in an industry?  All that crap becomes issues.

Ok, so I make one giant assumption – I assume if my organization can drive revenue, that we can also drive profit – that isn’t always the case – but it will be in my organization because I know how to performance manage the morons out who don’t get these two need to be on parallel paths.  My compensation philosophy is simple – over pay the people who drive my revenue, and make sure I always have the best revenue driving talent in the game, at all times.  Pay everyone else at the market rate – I don’t need racehorses in those roles, I need plow-horses.  Most organizations don’t have the guts to do this and it’s why most organizations are always struggling around budget time to determine where to cut.  I don’t want to cut, I want to grow, I want to take over the world – or, well, at least lead my industry.

6 thoughts on “Everything You Ever Needed To Know About Compensation

  1. As a Comp Pro, all I can say is “Amen, brother.” However, fighting umpteen years of “it’s always been this way” stops many of us from doing just this sort of thing. Give me a leader open to risk and change, I’ll build you the structure (without bankrupting the budget).

    “if we build it, they will come.”

  2. I wish the whole of HR would remember that their function is to support the business in reaching it’s goals. If you are not there to help the business advance, you are in the wrong job. If all HR wants to do is administer, then become an personnel administrator. Don’t like and say that you are a HR practitioner. You are embarrasing the title.

  3. So Ben tells me your my clone (but really I suppose if that were even close to true, I’d be your clone considering you came along first)-this post just reinforces his opinion! I am glad to see that someone else sees it this way. I happen to see a ton of companies throwing up the big questions “Where/who can we cut” I suppose some of that is typical, its the end of the year/slow productivity right now mixed with Obamacare coming down the pipeline and a dash of the fiscal cliff…. when you shake that all up you end up with panic and bad compensation decisions!
    As far as the above comments and the concern of where the focus should lie I think this post sheds some light on that: http://upstarthr.com/a-b-or-c-what-are-you/

  4. Appreciate the thought provocation. Agree with Sandrine regarding the future. Otherwise…I could make a LOT of hay with this approach.

    Good brain candy on a Monday, Sackett! Thanks!

  5. Tim

    Thanks ! This is a necessary wake-up call for many Compensation pros. That’s how our internal customer sees us (a blocking point which is then over-ruled by more senior people in the organisation). Not to sound defensive, but sometimes even *we* don’t agree with the numbers we come up with – but we are given instructions and are not always empowered to make exceptions to those rules, unless an angry executive complains about our work. It’s not always all black and white… 🙂

    Anyways, my main comment is about focusing only about the people who drive the largest share of revenue in the organisation. I like this approach, in theory. It mostly means pay the sales guys above the market. And it addresses today’s situation in the organisation.

    I am a bit concerned though that this does not help the company prepare for the future. How about focusing as well on the people who drive innovation for the organisation ? In an ever-changing world, this seems to me it’s a pretty important population too…

    Good food for thought you brought to us !

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