HRExaminer Compensation Poll
Periodically, we ask the members of our Editorial Advisory Board to field a question. This month, the question has to do with the degree to which the sensitive information the HR professionals handle can or should be used for personal gain.  HRE is the place where external data, ranging from medical and background data to compensation norms meets the data in the company.

Among the critical and confidential chores that the HR executive must navigate, this broad access to employee and executive personal data is one of the trickiest ethical environments. It’s only human to absorb some of the data in a personal way. How one handles this professionally is the difference between a powerful bit of organizational leverage and effective execution of the role.

As you’ll see, each of the members of our Brain Trust approached the problem differently. Background, experience and role foundations all play a part in their perspective.

What would you do if faced with the same situation?

Question:

You are the VP of HR conducting compensation surveys in your company’s market.  You discover the executives in your company make about 80% of salary and stock options that the same people at comparable companies make.  But you make only 50% with no stock options.  What do you do?

Responses:

Marc Effron, President, The Talent Strategy Group:

Let’s start with the compensation philosophy of your company. Is the current state (both percentile and comp vehicles used) consistent with the expressed compensation philosophy of the company?  80th, 50th, whatever — meaningless numbers until compared against what your company said is their preferred way of compensating.  If they don’t compare, then you propose adjusting them. If they do compare, you do nothing.  If there’s no compensation philosophy, then obviously that should be your starting point.

Bob Corlett, President, Staffing Advisors

80% or 80th percentile?  Inquiring minds want to know.

I’m no comp expert.   That said, I’m more familiar with salaries expressed as a percentile

50th percentile being average pay across all employers

80th percentile being pay higher than 80% of similar employers.

So in my mind, your question is quite different as to whether this HR person is being half of what comparable earn (50%) or about what everyone else in a similar job makes (50th percentile)

My guess is you were framing the question around whether the HR person was worth average pay, not half pay.   That, to me, is a more interesting question to answer.

Internal equity is the hobgoblin of little minds.   Admittedly it is really common to pay an entire organization at the same percentile of what other organizations pay – where every single employee is at the 50th or 75th percentile for their job title.   But does this make sense?  In many organizations, one department has an outsized impact on your results.

So if  having average HR or accounting people does you no harm, should you bother paying above 50th percentile?   Probably not.  But if having the best software developers determines your very existence as a company, well then you should pay your developers more than the 50th percentile.   You just need to be clear about what you are doing, and why.   So first clarify with the CEO that this is their compensation strategy.  Then,  either accept your pay or go somewhere that HR really matters.

Bret Starr, Principal, Starr Tincup

Unfortunately, that question is above my pay grade (pun intended).

I start by questioning how executive comp aligns with the rest of the comp in the company.

IMO pay must be based on a responsible ratio of earnings, but should also be shared proportionally throughout the company.

So even if execs are making less at your company; if they are making outrageously more than every-day workers, I would probably cut their pay for the good of the business.

There is almost no evidence that suggests outrageous executive pay correlates to shareholder value.

Kris Dunn, Chief Human Resource Officer Kinetix, Editor HR Capitalist and Fistful of Talent:

“Ah yes… The sticky question of the person charged with comp analysis showing up as underpaid.  A morality tale that’s as almost as old as the workplace itself.

Here’s the skinny.  As HR pros, we have access to all the information, so you have to be careful regarding how you approach this.  The wrong way to claim you’re underpaid is to compare yourself  against someone else on the leadership team, which is a trap that lots of HR leaders fall into.  Start comparing apples to oranges, and suddenly the people you’re complaining to start wondering if you can handle all the access you have to the data.  This is especially problematic at the HR manager and director level in the field.  My saying to the HR managers and directors that have worked for me in the past: “With great access comes great responsibility – and the need for maturity related to pay data”.  Having all that access almost never feels good to those who have it in HR.

However, the situation outlined above is a rare opportunity.  Rather than comparing one-off’s, you’ve been asked to do a broad analysis of where your company might have issues.  So, you present your own data embedded with the other potential issues you discover, then make recommendations that are systematic rather than about you.  Example – we’re at the 80th percentile for most of our  executive team, but we have 3 situations we need to look at.  Recommend across time that your company seek to get those under the 80th percentile to that level.  See where it goes – if you’re presenting to the C level, they’ll appreciate the classiness you’re handling it with and if they like and value you, will seek to put a plan in place to rectify your situation first.

Don’t complain, don’t say you need to “take care of me”.  Present the data overall and make real recommendations that you will be positively impacted by.  If that doesn’t work, there’s a deeper question we need to explore before deciding what to do next.”

Claudia Faust, President, Improved Experience

Assuming I’m upset about this information, I’m not sure how its discovery changes the fact that I previously accepted (and possibly negotiated) the role for the stated compensation package.  Sometimes it takes moving to a new job to be paid what we believe we’re worth in the market place.

Todd Dewett, Professor of Management, Wright State University, President TVA, Inc.

First, sit on it for a few hours and speak to no one about that specific issue.  Let any and all emotions subside.  Next, make sure you are comparing your compensation to others within your functional area and at your hierarchical level.  You may discover you are, within reasonable margins, correctly compensated.

If you find otherwise, ask yourself whether you are willing to spend some or all of your social capital attempting to address the issue.  To move forward you must create conditions that support your case.  This includes detailing your performance history with well-documented achievements, above expectations, which favorably compare to your contemporaries who earn more.

Frankly, the best tactic is often to negotiate a performance plan the will clearly justify a future increase in compensation (for example, twelve months out).  You are not asking for a raise per se, but signaling your strong intent to earn a positive adjustment in the near future.  At the end of the performance period your odds of receiving the increase go up significantly, assuming you performed as planned.  If you do not receive an appropriate increase, you will have at least put your self (and your resume) in the most competitive position possible in terms of assessing your broader career options.

Heather Bussing, Employment Attorney

Just because other companies pay more, it doesn’t mean you’re entitled to more too.  Just because others in your company are paid more, it doesn’t mean you’re entitled to be paid the same.  This is true for a million reasons, including many that have nothing to do with you.

As a manager charged with obtaining the salary data, and as an HR professional charged with properly handling sensitive and confidential information, it’s a good idea to think carefully before using the data to promote your own agenda.

But if you believe you are being discriminated against based on a protected factor, look at the numbers and find out if your hiring and compensation practices have a discriminatory effect.  If they do, part of your job is to bring this to the attention of the CEO and make recommendations about what changes the company needs to make to eliminate discrimination.

If you are sure you are getting screwed and can’t get over it, then by all means get out.  It will be better for you and the company.   Besides, now you know who is paying more.