It Doesn't Pay To Have In-House Compensation Pros

I was reminded recently why is doesn’t pay to have your own Compensation Professionals in-house. I’ve always seemed a little put off by Compensation people to begin with – stems from my first job as an HR Manager. I was responsible for HR issues across 17 states, all leadership hiring, employee relations, communications, performance management systems, etc. – heck, I think I even had to empty my own waste basket now that I think about it. Sitting in the office next to me was the Compensation Analyst/Manager – basically the one person in the company responsible for Comp. He was responsible for coming up with the amount of percentage of annual increases (ironically after 9 months of collecting data, working with consultants and spending close to my entire budget – it always came in at 4%), maintaining pay bands and deciding what we should offer new hires (which was always about the same as what I told him I was going to need to get them to accept).

The one thing that really got me to think that compensation pros were about as credible as Penny Stock Analysts was the fact that each year when the pay structures came out – somehow the Comp Guy’s pay band was always $10-15K more than mine. I mean, really?! You don’t talk to anyone, have a job description that is so narrow it can be written on a post-it note, and you're worth more than the big Tim cat! Please! Actually, I really liked my Comp Guy, and we ate lunch together daily – if it wasn’t for that relationship, I probably would have found a way to secretly steal his office supplies to the point it drove him insane.

The fact of the matter is, this has never changed, from Corporation to Corporation. Go out right now and search, and you’ll find Compensation jobs, where people are offering blank checks and BMW’s for people to come and tell them how much you should pay your employees. It isn’t like you’re asking them how we can put cats on Mars – we are asking a fairly simple analyst -- here’s how much money we bring in, what margin do we need for our stakeholders, and where do we want to be in relationship to pay and our marketplace/competitors/etc. If your people aren’t leaving in mass, your stakeholders are feeling good about the money the company is making, and the leadership team is still paying to stock the coffee machine – you’re probably pretty close to where you need to be in respect to pay.

The best comp people make it simple, understand they aren’t trying to reinvent Pythagorean’s Theorem, just keeping the balance of satisfied employees and satisfied stakeholders. The worst comp people act as if they are personally responsible for national security, the company’s profitability and how many bread sticks each person gets at the company’s annual Spaghetti Cook-Off. So, I say here, whether you run a company with 100 people, or one million people – there is absolutely no reason for a Comp Person/Dept./Ruler in your organization. If you really have a desperate need to overpay for information you can get on your own – use Hay or Mercer or some other very expensive firm that specializes in Compensation – and will set you up, for less than the salary of your own person/people/tribe.

And don’t even get me started on how the CCP is so much more difficult than the SPHR, Bar Exam, GMAT, and the $32,000 question on Who Wants to Be A Millionaire…

Editor's Note: Tim Sackett, SPHR is the Executive Vice President of HRU Technical Resources in Lansing, MI. Tim loves everything talent acquisition, and believes every corporate recruitment department in America can and must get better.  He has 15+ years of human resource leadership experience, across multiple industries, on both the corporate and agency side – so he gets it from both sides of the desk.  Want more?  Um, OK... He has a Master’s of HR and....well, he was recently voted #5 best assistant little league coach of his son’s five team league.

Comments

[KQ]

Thanks for putting into words what I have long wondered - I have even purchased some of the training manuals for the CCP and could not figure out what the big deal was - common sense and nothing I did not already know. All you need is a good salary survey and your good to go.

[David Anderson]

Tim another great post. Very fun to read your stuff.

[Dawn Hrdlica @dawnHRrocks]

My company, a solid Medium-large company is of a size where we are able to handle comp comparisons under the HR umbrella. It doesn't hurt that we

a) Have a director who was the comp/analyst for a mega company
b) budget for plenty of market data
c) Have an employee friendly culture. Are culture is not set up to stick it to the employee. You get my drift.

If you don't have these three components--then for employees sake---it may be the lesser of two evils to hire a comp guy.

But I agree--as you've described it--roi just isn't there.

[Darren Boarnet]

Tim,

Great post. In my career I have only found two comp people who actually helped me. Both kept it simple, wanted to understand the business needs, and wanted to know what the goal was. One of them is currently the global comp manager I work with. (Two comp people for a global company in seven countries.) Other than working with those two I have either gone outside and hired a consultant or did the work myself because comp couldn't do what I needed done. I even had a comp manager once tell me to do the analysis on a salary survey myself because he didn't have time.

Darren

[Deb McClanahan]

Tim,
You neglected to mention that great Compensation people who can help your organization tremendously don't have to be employed by the organization. Many companies recognize that they need help SOMETIMES on these issues - so they do the smart thing and bring in a senior level Compensation Consultant. This is often a cost-effective and efficient way to use organizational resources. Firms like mine have the bandwidth to provide services to multiple companies at the same time.

[Beth N. Carvin, Nobscot Corporation]

Ha - funny post.

I have little experience in the comp side of the house but isn't their value in creating job descriptions and determining relative value? ie. grading of positions?

Seems like poorly graded positions create a huge amount of angst for employees who spend too much of their time asking - "why does that position pay more than mine?"

Wait a minute....wasn't Tim asking the very same question in this post? ;)

[Penny Stock Lists]

I like how you compared compensation positions to Penny stock analysts because they both require plenty of diligence knowledge of their respective tasks, and adopting a pure "think tank" mentality. If you come across a good analyst, the advice you get from their respective Penny Stock Lists would yield you good profits with minimal risks.