In terms of one part of your corporate Compensation Philosophy you can be a Pay Follower, a Pay Leader or Market Rate.
You never hear Pay Leaders complain about Turnover…
You always her Pay Followers complain about how Pay Leaders can actually pay that much…
Those who Pay at the Market always talk about how money isn’t that important…
HR and Compensation Pros will always talk about how it’s not about how much someone makes, it’s about the total compensation package. Ironically, those Best Companies To Work for tend to have the highest total compensation packages and be Pay Leaders. It’s a vicious cycle to get the best talent.
If your a pay follower you will never have the best talent. If you pay at market, you will never have the best talent for long. If you’re a Pay Leader you’ll have the ability to attract the best talent and the resources to hook them, but you still have to have the culture and leadership to keep the long term.
This is everything I know about compensation after 20 years of working in HR.
What have I learned?
I always try and work for Pay Leaders, otherwise you end up chasing your tail a lot within the HR world.
Consider yourself graduated.
Mike, well yeah! Whoever went to work for Apple or Google (Pay Leaders) and planned to sit around goofing off all day? If you love what you do and you are fortunate enough to work for a Pay Leader, then this discussion may be moot.
I’d love to say we are a Pay Leader, but we aren’t… oddly enough we keep top talent around more than we don’t. Doesn’t mean that market rate doesn’t create issues that we have to deal with, it means we really do have the right incentives for the talent (the work they want to do). If I wasn’t seeing it with my own eyes, I’d completely agree with everything you said in this post!
As an employee, it’s good to work for a Pay Leader. One thing to keep in mind is that if the Pay Leader is smart, they expect RESULTS. Top Talent likes to be successful, so Good Pay + High Expectations + Success = Retention.
As a friend … spoken like a true recruiter … “s/he’s worth it, just give me the money” … I as a manager have been guilty of saying the same thing … Ok to be a pay leader, but better have a plan … pay leaders have to have performance to match pay points, or at some point heads will roll … Compensation and all HR efforts need to match (actually follow and support) strategy …