Category Archives: Compensation

Why Doesn’t Corporate Talent Acquisition Change The Way They Pay Recruiters?

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For the most part, Corporate Recruiters are paid a salary. That salary ranges widely from organization to organization, industry, function and location. I’ve seen corporate recruiters who make $40,000 and ones that make $150,000. The $150K corporate recruiters are overpaid, let me just throw that out there right off the bat!

Agency recruiters are usually paid some salary and a combination of commission and bonus. The average goal for an agency recruiter compensation model is 1/3 salary, and 2/3’s bonus and commission. So, if your base agency salary is $30K, the hope is you’ll get to $60K through commission and bonus. It takes some time to get to $90K-ish total, but it’s fairly common for agency recruiters to make six figures. Again, this depends on what kind of agency, location, commission structure, etc.

On average, you’ll see more six figure recruiters working on the agency side, then you’ll see on the corporate side, by a wide margin.

So, are agency recruiters worth more than corporate recruiters?

Worth is defined by those paying! What I’ll say to this question is agency recruiters are more likely to ‘prove’ their worth than you’ll see on the corporate side. Which begs the question why has corporate Talent Acquisition not adapted their pay structure to something similar to that of a recruitment agency?

I’ve run both corporate TA shops and agency shops. I can tell you, realistically, there is no reason, that makes sense, not to at least test different pay structures on the corporate side! My goal in was always how do I get my corporate recruiters to be 2/3’s salary and 1/3 bonus. I wanted to make sure there was some performance-based compensation as part of their total compensation.

Here are some reasons I ran into each time I changed the pay structure of corporate recruiters”

  • “If you change the pay structure the best recruiters will quit!”
  • “We can’t change the salary structure, it’s the law!”
  • “Paying bonuses to recruiters in a corporate setting isn’t fair to the other people in HR!”
  • “The executives will never agree to performance-based pay in a non-sales role!”
  • “We want our recruiters to be hiring manager focused and paying bonuses would change that!”

All of these excuses are complete B.S.!

I did have Recruiters quit everything I came into an organization, but not because of pay. They quit because I made them actually recruit for the first time in their life! They had to pick up a phone, they had hard measures and weekly and monthly goals, they quit because they weren’t recruiters, they were administrators. But, being paid like they were recruiters.

Corporate TA Leaders don’t change their pay structure because they don’t know what to change it to, and change is scary!

I get it. It was the first time I did it as well, but in the long run, we had higher performing recruiters, better hiring manager satisfaction and we flat out performed better as a department, as compared to what we did previously.  Here are some tips to making this change:

– Make sure your high performing recruiters can actually make more money in the new model.

– Make sure low performers make less in the new model.

– Set black and white measurable goals before changing pay, and work with these goals for a while before aligning them with compensation.

– Be flexible to change. The first time I did this I found major holes and had to make some immediate changes that were fair to the recruiters and the organization.

– Communicate with your team and executives through this process.

– Have written outcomes you want to see from this change and watch those metrics closely.

– Paying per hire is never a bad thing, just make sure the pay matches the effort of the hire. Don’t pay the same bonus for hiring an admin as you do to hire a Java Developer. I tried to equalize this by the time and effort it took to fill each position. If it took 1/10 the time and effort, the bonus was 1/10 the amount of a full effort position. Again, you’ll have to test and adjust this for your organization. Don’t write it down in stone, to start!

– You’ll never really have to have a performance management conversation again! Oh, you want to make more money….

Recruiting, even in a corporate setting, is a sales type role and should be paid as such. There is no reason why you can’t have a more effective pay structure in your corporate TA department.

Want some help in getting this off the ground?  Contact me!

 

 

What if it’s impossible to fix the Gender Wage Gap?

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I love the HR and Talent data analytics platform Visier and have been following them for years. Recently, Visier released a study called the Visier Insight’s Report: Gender Equity that I found fascinating!

Basically, Visier claims they discovered the main reason behind the gender pay gap and they titled it the “Manager Divide” (You can download the report here). The Manager Divide—an underrepresentation of women in manager positions—significantly contributes to the gender wage gap. To break it down simply, women begin to leave the workforce around age 26 to begin having babies. At this point, the wage gap begins and women never catch up!

Screen Shot 2016-06-28 at 2.33.25 PMYou can clearly see it in this graph from the Visier report. Men and women virtually earn the same up until age 26, in fact, women earn slightly more. At age 26 there is a huge split in the graph, and women don’t even start to close that gap until close to retirement.

Visier gives a bunch of great ways for organizations to close the gap:

– Implement the “Rooney Rule”: for every manager position you have open to fill, consider “at least one woman and one underrepresented minority” in your slate of candidates.

– Implement blind screening, removing names (or other gender identifiers) from resumes when selecting candidates for interviews.

– Increase measurement and awareness of gender equity in the rollout or implementation of HR policies, including manager promotions and hires, and compensation policies.

– Support meaningful paid parental leave that is equal for both women and men.

– Ensure it is socially acceptable for both men and women to take time off to care for their children.

All good stuff, right?

Here’s my question: if this gender wage gap phenomenon happens because of a natural cause (childbirth and rearing), how does any of this change it?

It doesn’t. The majority of women are till going to leave the workforce, on average between 26 and 36, to begin raising their family. Whether these women leave for 9 months or 9 years, they’ll return to the workforce with that much less of experience.  So, they’ll always be playing catch up, for the most part, to those men who didn’t leave to have babies and raise them.

The reality is, because of women leaving to have babies and raise families, they’ll always be a pay disparity between genders. Should it be 21% on average? No. That’s why we need to focus on the real issue at hand.

In most organizations of any size, you have females making less than men who are in the same position with basically the same experience, performance, and education level. The only reason they are making less is because they’re a female. That’s the real issue.

How do you fix this?

The old fashion way. It’s a big project. You’ll have big spreadsheets and you’ll have uncomfortable conversations with managers who gave larger raises to men, for no reason other than their bias. It’s an uncomfortable project, but it’s the only way to solve the real issue. Painstakingly one position, one department, one person at a time.

You can do high-level analysis in your organization and you’ll find a gender pay gap. That’s natural, the Visier report pointed this out. It’s going to continue to happen because we live in a society and culture where women still do most of the heavy lifting when it comes to childbirth and raising the children. You have to get into the weeds to find the real issues within your organization in terms of gender pay gap, not a 20,000-foot flyover.

Every large organization I’ve ever worked in had gender pay issues within specific positions and departments. It wasn’t rampant, but it was there. A word of caution, don’t point fingers at fault. Just work to solve the problem. It happened, how do we move forward and fix it. Placing blame will cause stalls and fights, you don’t want to be a part of at an executive level. Just find ways to quietly fix the problem and make things right.

 

The Greatest Retirement Benefits You Can Give Your Employees

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My Dad retired this past year. I’m already ‘leveraging’ him for some time. He has so much of it now! It’s like he won the time lotto and he’s throwing it around because he’s got so much of it. “Hey Dad, can I borrow a couple of hours!? It’s a busy week! I need you to pick up the kids!”

I read this article, The Huge Retirement Benefit You Probably Aren’t Expecting recently:

America is reaching a tipping point. Adults in the busiest phase of life, juggling kids and careers, number about 40 million, which is roughly equal to those near and in retirement, who typically have time on their hands. But the number of adults pressed for time is projected to grow slowly, reaching 49 million by 2050. By contrast, the number of retirees with plenty of free time will explode to 88 million, as more and more boomers retire.

When you add it all up, retirees will have 2.5 trillion hours of leisure time to fill over the next 20 years. This free time will redefine their habits and priorities—even their identities. And yet almost no one is planning for this sweeping change, according to a report from Bank of America Merrill Lynch and Age Wave.

Time is going to be the new currency of future generations. It’s like lake front property, there’s only so much. Unless you live in Dubai and have billions, then I guess you can make new lake front property!

The crazy thing is, organizations aren’t really putting that much effort into figuring this whole thing out. We’re treating it like we’ve treated retirement for decades. “Well, Bill’s retiring, let’s throw him a party, buy him a walker with a horn, and give his work to the new kid.” We aren’t thinking in a new context of what do these ‘new’ folks who are retiring really want?

What I’ve learned from Dad is we in HR are missing some things. Here are some ideas of Retirement Benefits you could offer, but you haven’t even begun to think in this new way of time:

1. Part-time, flexible Mentorships – Some people can’t wait to stop working for your organization. Many feel they’re being ‘nicely’ pushed out, or society makes them feel like ‘it’s time’ to leave. The reality, so many of your retiring employees would love to keep in touch. Help out the new kids. Lead mentor groups on how to deal with customer issues, leadership dilemmas, customer/client feedback, etc. And most would do it for free! They would volunteer their time!

2. Corporate Community Volunteer Programs – Remember, these super valuable, experienced, loyal former employees who love your brand, have a couple trillion (with a T) hours on their hands! Can you imagine how much good will you could leverage in the community if you activated your retirees as volunteers with some direction and leadership!?  It could transform your corporate presence within the markets you serve. BTW – hospitals do a great job at this! There is no reason you shouldn’t be able to do this in your organization as well.

3. C-Suite Bullship Detectors – Your executives don’t always know what’s really going on because they have a bunch of VPs kissing their ass telling them what they think they want to hear. Retirees are a great mechanism to tell your executives what is actually going on, versus what they’re being told. They’re like highly paid consultants, without the highly paid part!  We all need someone without a vested interest to tell us like it is, even when it stings a little. Your retirees would love to do this. Works really well for newer retirees who are still close to the business. Not so well once they get a ways out. You will be shocked at the bond your executives will build with these folks!

Something to think about. How are your new retirement benefits helping your former employees spend and invest their most precious commodity? Time.

 

Should people be paid based on their value to their organization?

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Every day we see examples of people, usually women, and minorities, that aren’t paid fairly, as compared to their counterparts doing the same work. Here is a recent example dealing with the U.S. Women’s Soccer team:

Five key members of the U.S. women’s soccer team have filed a federal complaint against the U.S. Soccer Federation to the Equal Employment Opportunity Commission, alleging wage discrimination. In the complaint, the players cite USSF figures from last year showing that they were paid nearly four times less than men’s players despite generating much more revenue…

The pay disparities exist even though the U.S. women have been successful not only on the field, but also at the ticket booth and in terms of television ratings. The team’s 5-2 win over Japan in last year’s World Cup final was the second-most-watched soccer match in U.S. television history, with 25.4 million viewers. That’s also the largest television audience for a game involving a U.S. national team; the biggest audience for a U.S. men’s game was 18.2 million for a USA-Portugal World Cup match in 2014….

Soccer payRevenues for 4-year cycle: $60.2 million for US men, $51.2 million for US women…Former U.S. men’s star Landon Donovan, meanwhile, says pay should be commensurate with revenue.”

So, what should it be? Should the women get paid the same, or more, than the men?

The women have had a much better performance. The men have brought in more money to U.S. Soccer.

Should they be paid exactly the same?

This is why compensation, on both an organizational and individual level, is so tough!  Many people want to  believe in pay for performance, but it’s not that easy.

If we truly compensated people based on what revenue, and profit, they drove to the organization, pay disparity would be worse than it already is.

What would I do in this circumstance?

Clearly, you need to bring the women’s compensation up closer to the men. I would not make it equal because the finances of it don’t work out. The men, at this point, make more revenue. So, I would develop a compensation model based on revenue. Since they are technically a nonprofit, you can’t base it on profit.

Because the revenues are close, the women would get a huge pay increase, but still be slightly below the men, right now. If revenues change, the comp models adjusts with the revenue change. I would also incorporate performance incentives based on reaching certain levels. This might actually push the women’s total comp above that of the men’s comp.

This puts a ton of risk on the players side. They think they want this, but what happens when revenue sucks some year, and now everyone takes a huge pay cut?  Then either side would lose their minds and still want to get paid. I want to have my cake and eat it too. Welcome to the world of compensation!

Welcome to the world of compensation!

So, what would you do for the U.S. Women’s soccer team?

Top Jobs in 2016? Hope you’re good at math!

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Glassdoor released their most recent top 25 paying jobs report in the U.S. and one thing was common in 24 out of the 25 jobs, STEM!That’s right in 24 out of the 25 top paying jobs in the U.S. you better have exceptional, high-level math skills, or be great at science, preferably both, if you don’t mind.

That’s right in 24 out of the 25 top paying jobs in the U.S. you better have exceptional, high-level math skills, or be great at science, preferably both, if you don’t mind!

Here’s a taste of the top 10:

1. Physician
Median Base Salary: $180,000

2. Lawyer
Median Base Salary: $144,500

3. Research & Development Manager
Median Base Salary: $142,120

4. Software Development Manager
Median Base Salary: $132,000

5. Pharmacy Manager
Median Base Salary: $130,000

6. Strategy Manager
Median Base Salary: $130,000

7. Software Architect
Median Base Salary: $128,250

8. Integrated Circuit Designer Engineer
Median Base Salary: $127,500

9. IT Manager
Median Base Salary: $120,000

10. Solutions Architect
Median Base Salary: $120,000

Some things that standout from the list:

– These salaries aren’t really the highest paying jobs in the U.S. We all know of people making way more than $180K.  So, I’m not sure how Glassdoor actually came up this list, besides maybe asking going down to a coffee shop and just asking some folks. Hell, I know at least three people at Glassdoor, myself, who are making more than $180K, and not working in any of these jobs!

– Most people think doctors make way more than $180K. Many do – surgeons for example. Anesthesiologists make way more than $180K. Most specialized medical docs make more than $180K. So, who makes $180K? Your family doc. The one who sees your snotty-faced kid. That’s why there is a shortage of family docs!

– Being a Lawyer is the lone hold out where you don’t have to know math and science and still get a good paying job on the list! Oh, and most sales jobs. We forget to tell kids that, a decent sales person can make more than almost all of these jobs.

So, what does this list tell you?  First, go take the football out of little Johnny’s hands and put a calculator in it! More kids will get money to go to college for their grades, then their athletic prowess. The University of Alabama will pay your kid to go to school for free for having a 32 on their ACT. That is probably easier then getting Nick Saben to come visit. I know, you still have to live in Alabama, but it’s a free education.

As Fast Company points out, you don’t really need to make all that money anyway. $70,000 is the limit you need to be happy, or at least that’s what I keep telling my wife! I don’t think she’s buying that nonsense either!

Career ADHD: Is Employee Tenure Still Important?

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I keep getting told by folks who tend to know way more than me that employees ‘today’ don’t care about staying at a company long term. “Tim you just don’t get it, the younger workforce just wants to spend one to three years at a job than leave for something new and different.” You’re right! I don’t get it.

Payscale recently released survey data showing that the average employee tenure is sitting at 3.68 years.  Which speaks to my smart friends who love to keep replacing talent. I still don’t buy this fact as meaning people don’t want long term employment with one organization.

Here’s what I know about high tenured individuals:

1. People who stay long term with a company tend to make more money over their career.

2. People who stay long term with a company tend to reach the highest level of promotion.

3. People who tend to stay long term with a company tend to have higher career satisfaction.

I don’t have a survey on this. I have twenty years of working in the trenches of HR and witnessing this firsthand. The new CEO hire from outside the company gets all the press, but it actually rarely happens. Most companies promote from within because they have trust in the performance of a long-term, dedicated employee, over an unknown from the outside. Most organizations pick the known over the unknown.

I still believe tenure matters a great deal to the leadership of most organizations.  I believe that a younger workforce still wants to find a great company where they can build a career, but we keep telling them that is realistic in today’s world.

Career ADHD is something we’ve made up to help us explain to our executives why we can no longer retain our employees.  Retention is hard work. It has real, lasting impact to the health and well-being of a company. There are real academic studies that show the organizations with the highest tenure, outperform those organizations with lower tenure.  (here, here, and here)

Employee tenure is important and it matters a great deal to the success of your organization. If you’re telling yourself and your leadership that it doesn’t, that its just ‘kids’ today, we can’t do anything about it, you’re doing your organization a disservice. You can do something about it. Employee retention, at all levels, should be the number 1, 2 and 3 top priorities of your HR shop.

4 Reasons You’ll Leave Your Job on Your Terms

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There’s a million ways to lose your job.  Layoffs, company closes, smacking an employee on the butt, you name it and someone has lost their job over it!

The reality is, though, most people leave their jobs on their own terms and it has nothing to do with more money or a higher level job.

If fact there are four main ways people leave their jobs:

#1 – Crappy Boss.  Almost anyone who has left my company has left because they didn’t like me, or I didn’t like them. Well, to be honest, I probably didn’t like the way they were performing.  If they were performing well, I don’t really care if I like them personally. I’ll take the performance over me liking them!  So, for some I’m a crappy boss, for others I’m not.  The key to great leadership is having only a few believe you’re crappy!

#2 – Bad Job Fit. We hired you and thought you would be awesome. Yay! But, we all messed up with thinking you would fit.  You’re not the right fit. You know it. Doesn’t ‘feel’ right, so you you leave to something that feels better. In so many of our jobs that we hire for, fit is the most important part of success. Fit and showing up every day. Shocking how we can’t figure this out!

#3 – Commute.  Length of commute is subjective.  My friends in Detroit live 10 miles from work and drive an hour on good days to their jobs. They seem completely happy with this commute.  I drive 12 miles and it takes me twenty minutes and if I get slowed down and it takes me 22 minutes, I’m ready to shoot people!  People take a job and think the commute is no big deal, but it is a very big deal for so many people.  If the length of commute comes up in negotiation, run away from that candidate.

#4 – Cultural Fit.  I hate conservative, very political environments.  There’s something about kissing ass all day that makes me not a pleasant person to be around.  You need to know who you are and what kinds of culture you like.  Some of my best friends love ultra-professional conservative cultures and do exceptional working in those cultures.  Everyone has a preference. Find yours.  So many people get this wrong and stay in a culture they hate.

These four reasons make up about 99% of why people decide to leave a company.  People always want you to believe they left for money or a promotion, but all of that can usually be had at their current employer with a little patience and some conversations.

 

7 Realities for Negotiating Salaries

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I think we all know that one person in our life that thinks they get the best deal on everything!  They consider themselves the ultra-negotiator, the person sales people hate to see coming! You know the person -they go and buy a $40,000 car and call and tell you how they got it for $27,000, and the car dealership actually lost money on them.

These are the same people that believe they can also ‘negotiate’ their salary.  There are some realities we face as HR Pros that most candidates don’t get.  While we have rules and processes and salary bands, quite honestly, very little negotiation goes into any salary offer.  Younger people are always told, usually by their Dad or some cheesy uncle, to “Negotiate” their salary, “Never take the first offer!”

To me, there are 7 main realities about negotiating salaries, and here they are:

1. A good HR/Talent Pro will pre-close you one what you are expecting. This is truly the point where you should be negotiating. The first call and 99% of candidates miss this opportunity.  This is also where you can truly find out what the position pays by playing ‘the game’. Go in super high and work backwards, you’ll eventually get to the ceiling.

Example of what this looks like:

HR/Talent Pro: This position is ‘wide’ open for the right person and skills, we just wan to judge your interest.

Candidate: I’m interested. I’ll need $350K!

HR/Talent Pro: Oh! My! That is above our range!

Candidate: Okay, give me  ballpark.

2. Health Benefits, 401K match, holidays – are all non-negotiable, unless you’re negotiating a C-suite offer.

3. Vacation days are usually negotiable, but only if you’re coming in with experience. Most entry levels have no room to negotiate this, and if you did negotiate, as an entry level, and get more vacation than they originally offered, calm down, they were willing to give this already. It was a test.

4.  In most positions you have a 10% range within a position to negotiate salary for an experienced professional. This means if they offer $60K, you can probably get $65K without much hassle.

4a. There are 2 schools of thought on this:

-The fewer the people in a position, the easier it is to negotiate salary. The theory being we can hire Tim at $65K, we have  Jill is already hired and working at $60K. but it will only cost us $5K to move her up to that same level. Everyone’s happy.

– The more people in a certain position, the harder it becomes to negotiate because the example above, pay inequity now becomes very expensive, and ‘pay creep’ is more of a concern when you have 200 people in a position vs. 2.

5. You can raise your salary up quickly by moving around early in your career and jumping from company to company, but it won’t help you move ‘up’ in your career.  Congratulations you’re making $95K as an Engineer, but you won’t be the first choice to a manager or director position. That will go to the person who has been there for 8 years while you were working for 4 different companies.

6. HR/Talent Pros (the good ones) expect you will negotiate something. They usually are holding something back to help seal the deal.  If you don’t negotiate, you missed out an opportunity to get something and that will follow you as long as you are with that company.  The $5K you left on the table initially, compounds each year like bank interest. If you’re with the company 20 years, that one little $5K negotiation will cost you $100K+.

7. The best HR/Talent Pros will tell you up front if they have don’t have room to negotiate. Very rarely are they lying.

Share some of your salary negotiation stories in the comments below.

Delivering Benefits Bad News

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Hey, gang! I wrote a book! Well, to be fair it’s an eBook. I don’t think that actually counts when being considered for a Pulitzer but none the less it’s something I wrote!

The good folks at Alex help me get this done. Meaning, I did the writing and they did all the rest!  The concept is how do we as HR pros deliver bad news during open enrollments.  Most of us have been in this situation. As we begin to prepare for the next open enrollment, like many of us are doing right now, or very soon, we already know we have some challenges.

Costs will increase, we might have to get rid of a popular benefit, or reduce benefits, etc. These are things HR and Benefit pros face every year. It’s the rare individual that just keeps getting the opportunity to give more. Let’s face it, the majority of us don’t work at Google, or companies like Google flush with cash.

Real HR pros have to deliver messages that are tough.  That’s why I wrote this book.

You can download for free at: http://info.meetalex.com/Tim-Sackett_Benefits-Bad-News_LP_Benefits-Bad-News_A.html

It’s a quick read and because it’s written by me, there might just possibly a bit of snark! I hope you enjoy it, and that you can use some of the practical advice I give.

(I am not being paid for this promotion.  I think ALEX is a pretty cool piece of HR technology that many organizations could use to help them communicate their benefit message out to their employees.  We like to talk about great employee engagement, and culture, etc., but what is proven is that employees who actually understand their benefits are more likely to stay with your company. That’s real HR.) 

Ladies, would you prefer not negotiating your salary?

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An article recently written on NPR speaks to a ‘new’ trend in organizational compensation.  What’s that trend? Apparently, companies are now not negotiating new hire or promotional salaries.  Basically, here’s what we pay for this position, take it or leave it.

Do you believe this would work?

Here is more from the article:

When it comes to negotiating salaries, the research is pretty clear: women are less assertive than men. It’s one reason women who start their careers with a narrower pay gap see it widen over time.

Carnegie Mellon economics professor Linda Babcock, who studies the gender pay gap, says men are four times more likely to negotiate their pay. That keeps women at a disadvantage, though they’re not always aware of it.

“The standard now is that people don’t really know what each other earns, that some people negotiate and some people don’t, and so there’s tremendous inequities in salary,” Babcock says.

Here’s what I’ll say, Yes, we have inequities in salaries.  Having non-negotiable salaries can help these inequities, but this isn’t a solution. The reality is organizations need flexibility to negotiate salary, especially when it comes to attracting hard-to-find talent. Organizations that take a hard stance on this, will lose in the talent attraction game.

What organizations need to do is have a policy on making quicker market compensation moves when they begin hiring in individuals, male or female, at higher rates than someone who might have started a few months prior. Most organizations are very weak on this practice, which causes most of the inequity.

You hire someone last year at $50K, and this year you hired someone into the same position, doing the same job, with a very similar resume at $58K. You now need to go back to your employee making $50K and give them an increase to $58K.  This hurts, but it needs to be done. That’s why it is critical for your talent acquisition team to have great negotiation skills.

It’s not a $8K increase to your budget, it’s a $16K increase to your budget. Now, think about in terms of a company that has hundreds, or thousands of employees in the same situation.  That $8K dollar negotiation can turn into hundred’s of thousands of dollars across the organization in market increases.

This is why most companies turn a blind-eye to market increases, and why so many organizations have pay inequalities. If females are less likely to negotiate higher salaries, and your organizaitons is going to ignore the difference, you’re going to have a growing problem that only gets worse the longer you ignore it.

I recently had a situation with a Fortune 500 client you completely gets this, and refuses to let it becomes a problem. We had a female candidate interview and get an offer. She wanted $47K. She was way under market for the position, and for the company. They knew she only wanted $47K, and they came back and paid her $63K! That was the value of her position to the organization and what similar people in her role were going to make, with her experience.

Like I said, this isn’t a salary negotiation issue. This is a do-you-want-to-do-the-right-thing organizational issue.

What do you think?