Wednesday, July 22, 2015

Buyer or Seller?

I love compensation surveys. Okay, that was facetious, sarcastic and snarky. Most compensation surveys have little or no utility. They give you data without context. It's like seeing differing prices on products without being able to see the specs. Most surveys give a job title, pay range and median. It doesn't tell you anything. Some are better that they stratify the data a bit with experience and education, but they still lack.

Look at your 'average' laptop, or imagine your looking at your average laptop. I tell you that laptops sell between $100 and $10,000 with a median of $800. If you're looking to buy (read 'hire') a laptop, you begin thinking that your average laptop is probably closer to the $100 end. If you're looking to sell (read 'get hired') a laptop, you're thinking the laptop is closer to the $10,000 end. Buyer and seller have a conflict here. Until you dig into aspects like screen size, memory, speed, software, casing, security additions, environmental robustness, age, etc. you can't resolve the buyer/seller conflict.

Neither can employers and employees who use salary surveys. They can't see the context behind the data, such as: direct experience, relevant education, industry experience, other correlated/relevant experience (like lateral promotions), autonomy/need for supervision, judgment, performance, cultural compensation (e.g. dysfunctional organizations pay more to retain abused employees), annual increase components (COLA, merit/incentive, market-based, value-based*), job amalgamation based on organizational needs and personnel strengths that lead to disproportionate job classification elements (e.g. balance of internal/external contacts) and titles that don't match standard job descriptions, organizational philosophy/framework regarding internal and external benchmarks for wages (e.g. equal pay for equal work efforts), other compensation beyond bonuses and benefits, creative perks and bonus plans, tangential job quality like ability to collaborate/contribute to organizational and personal success/have input into decisions affecting the work and work area...and so on.

I've seen a survey that shows that people who are satisfied working at their job won't change unless it's a 20% increase in pay. However, 70% of all employees would change jobs now, but not because of pay...because of management. How do you use compensation surveys to help you fairly compensate employees for that?

*Check out Dan Price's bold move at Gravity Payments with their minimum wage of $70K/yr, costing the company $2M in profits but expecting to gain it back because of the emotional well-being of the employees and their increased performance, and more.

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