All You Ever Wanted to Know About Compensation (in One Simple Post)

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Let me start by saying I don’t really understand Compensation 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 do originally, followed by the hiring manager believing I have no idea what I’m doing.

But what do I know?

What positions drive the revenue?

If I ever get the chance to run a Compensation Department (please Lord, never let this happen!) I would concentrate on only one thing: which positions drive the largest percentage of revenue in my organization.

Now, figuring that out is much harder than you think.

First, I’m sure your 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, because I only want to look at the important people.

It’s not that I’m getting rid of anyone, because Comp doesn’t do that – we leave that to the HR Generalist!

No, my focus is on 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.

Compensation is actually pretty simple

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.

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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 that 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 that these two need to be on parallel paths.

My compensation philosophy is simple: overpay 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, because 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.

This originally appeared on the blog  The Tim Sackett Project.

Tim Sackett, MS, SPHR is executive vice president of HRU Technical Resources, a contingent staffing firm in Lansing, MI. Tim has 20 years of HR and talent background split evenly between corporate HR gigs among the Fortune 500 and the HR vendor community ? so he gets it from both sides of the desk. A frequent contributor to the talent blog Fistful of Talent, Tim also speaks at many HR conferences and events. Contact him here.

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3 Comments on “All You Ever Wanted to Know About Compensation (in One Simple Post)

  1. Tim, I fully agree with your statement, glad to know there a more people who think and act like I do.

    I have always stated that you need to define all your strategic and scarce roles and ensure they are being paid far above the market.

    To speak in C&B language these core positions which make up the essence of the company need to be in the top percentile of remuneration the others you can selectively put at the median or even lower if the run rate can allow for constant refreshment.

    In practice this has always worked to retain and attract top talent, there is no equality.

    there are grades as to how worried any organisation would be if they lost certain knowledge and experience, there are clear ways of qualifying and quantifying this.

  2. Brilliant! Pay for performance always leads to performance, which leads to profit, which is a rising tide that lifts all boats. GREAT observations.

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