Congratulations on that Developmental Downgrade!

We compensation professional can be at risk for getting caught in the weeds, stuck in the survey data or lost in our own worksheets.

Case in point: A scenario I bumped into just the other day where a job was being re-designed to both provide a growth opportunity for the incumbent and meet an organizational need.  A win-win you say?  well, not in the eyes of one compensation professional.  See the video short below; I've been experimenting a little with animation and this represents my initial rough try at using it to tell a pay story.  Thinking this might be the first of several, I am calling them Pay Pokes^TM.

And yes, names and other details have been altered to protect the "innocent."

Pay Poke #1 - The Developmental Downgrade
by: abares

We've all had our run-ins with an Alice.  Many of us, sad to say, have had our own Alice moments (hopefully earlier in our careers!).  There is undeniable comfort to be found in having data, rules and ratios to rely on in making decisions and taking action.  Unfortunately, maturing in our roles means knowing when it is necessary to step away from that comfort zone and apply judgment.  Unless and until we are able to put our data in the context of the bigger picture - considering what the business needs as well as what will ultimately create the conditions for employee and organizational success - we risk getting stuck in an Alice rut.  One dimensional pay cop.  Unwitting obstacle to progress.

I'm willing to bet you all have your own Alice stories.

What's That Social Media Job Worth? Part 2

In yesterday's post, I wrote about the challenges of trying to get valid competitive pay information for emerging jobs and job families.  I used social media jobs as an example of one emerging job family that is presenting this kind of challenge to today's compensation professionals.

Although no commenters (beyond the very cryptic offering of Lua Belle) have yet spoken up with specific advice and suggestions, I did receive emails from several colleagues who - without revealing their identities - I would describe as very credentialed.  This group (unbeknownst to one another) was in general agreement about the need to move beyond traditional salary survey data and consider more general market intelligence to guide the pay-setting process.

A few of the strategies recommended by the group include:

-Use surveys to price the core underlying functionality (if there is one) and then apply judgment to guestimate the need for a premium on top of that price.

-Check in with your internal recruiting staff handling these roles for anecdotal information on the market or to access records on candidate current pay levels or offers accepted and rejected.

-Work your external network of compensation and HR colleagues, particularly external recruiters who are sourcing and placing social media types, to gather information on pay practices. (Vested interest and anti-trust alert.)

-Seek out and take advantage of industry publications about pay levels. (Vested interest and data quality alert.)

-Look through recruitment advertisements and (free) internet pay data. (Data quality alert.)

In addition to highlighting some cautionary alerts, I'd like to point out that I listed the above strategies in an order reflecting my own comfort level and inclination toward them.  The first strategy shown closely parallels the "triangulation" approach I described in yesterday's post - focusing on data for a core functional element of the job (even new skill areas will typically have their genesis in a traditional function, as many social media roles do in marketing and PR) and then applying judgment to determine whether and to what extent a premium is appropriate.   I then advise keeping the position on a “watch list”, as traditional survey sources catch up with increasingly valid and useful info.

Beyond this, and the intelligence offered by highly trusted recruiting colleagues, I think you have to be prepared to take information gleaned with a hefty grain of salt.  Is it valuable to gather and consider this kind of intelligence about the state of the market for the talent in question?  Absolutely.  For me, though, I'd have to say that Strategies 2 through 5 are probably best used as a way to guide my judgment in applying Strategy 1.

But I may just be stuck in an outdated paradigm.

What's your take?

Update:  And the beat goes on.  Here's an interesting and related post, courtesy of Bruce Kneuer (@BKneuer)

What's That Social Media Job Worth? The Challenge of Pay Data for Emerging Jobs

Have you tried to market price a social media job lately?  Then this post is for you, with my sympathies.

Emerging jobs and job families often bring their own particular challenges when it comes to market pricing and our attempts to get a bead on a valid, consistent "going rate".  The problem is that the market isn't very consistent in the early stages of valuing a new job function, a time when the definition of the job and its key responsibilities, as well as the credentials deemed necessary to perform it competently, tend to vary significantly from organization to organization.

I can remember this happening - for instance - in the early days of web jobs, when salary levels might vary $40,000 or more for what seemed to be a similar role, even in the same metro area, and when different surveys produced very different mean and median pay rates.  Contrast this with what you'd find in trying to market price a job like Staff Accountant, where pay practice is more stable and tends to fall within a pretty narrow band of possibilities.

This is the phenomenon we encounter today, in trying to value social media and other new jobs.  Although it is my sense that pay surveys (notorious for lagging reality - just see how many of them still use the title "Secretary") have been tightening their learning and response times on this front.  We also see a related phenomenon at work in surveys that cover developing markets like those in many Asian countries.

My advice to clients, when they are dealing with volatility in market pay practices for emerging jobs and markets is to:

1. Recognize what is happening and why.
2. Respond to market value volatility for emerging jobs by using multiple sources, where possible, in an attempt to triangulate the most likely market value point.
3. Stay flexible and fleet of foot on pay practices for emerging jobs, knowing that market levels are likely to zig and zag a bit on the road to a more stable pattern.

I'd be interested in hearing from readers who have dealt with this issue - what experience and advice would you offer for valuing emerging jobs?

Image courtesy of ehow.com

Screwy Midpoint Differentials Leads to Screwy Salary Management

Inconsistent midpoint differentials are a pet peeve of mine, as long time readers probably recall.

Midpoint differentials - for those of you who don't eat, drink and sleep compensation - are the jumps between salary range midpoints as you work your way up a traditional salary range structure.  I favor midpoint differentials that follow a consistent and logical pattern.  But I regularly encounter salary structures where the midpoint differentials look as though they came from a random number generator.  The tables below show examples to illustrate the difference. 
In many cases this chaos happens unintentionally over time, when salary ranges are added or tweaked on an isolated basis in order to address particular pay situations. 

In other cases, the uneven midpoint differences are actually created on purpose, the results of an initial design decision to create midpoints for groups of jobs clustered by current value (whether that be a market or internally generated value such as job evaluation points).  Although some consultants and compensation books do advocate tailoring structures and midpoint differences around job group values in this way, this approach is ultimately problematic in the real world where, over time and often even within the first year of the program, these job groupings will change as jobs are added, eliminated or altered in content and value.  In today's fluid labor market, it strikes me as silly to take a snapshot of current job inter-relationships and create a "permanent" structure which precisely reflects this, as if things were going to move in lock-step forever forward from this point.  How many organizations today operate in that kind of static environment?

Why - regardless of how it came to be - does it matter that midpoint differentials are inconsistent?

It matters because inconsistent midpoint differentials play havoc with an organization's attempts to manage promotions, job re-evaluations and/or job upgrades in an equitable and consistent manner.   If a one-grade promotion means a 5% increase in job value in some cases, and a 23% increase in job value in other cases, it is difficult to conceive and manage salary treatment guidelines that address each situation in a fair manner.  The same holds true for job re-evaluations or upgrades.  It might be easier to defend upgrading a job in a situation where moving up entails only a 5% difference in value versus the situation where a grade change entails a 23% leap, making it difficult to handle these decisions in an equitable way.

At the end of the day, screwy midpoint differentials create the conditions for screwy salary administration.  Who can afford that in today's litigious, discrimination-wary world of work?

Image courtesy of pmosblog.wordpress.com

The Job: Is it Bound for Extinction ... or Evolution?

For some time now, experts have been predicting the death of the job.

In many ways and from many viewpoints, jobs have become the symbol of all that ails us organizationally - the bureaucracy, the burdensome hierarchy, the title creep and confusion, etc. 

The job has long served as a key link between employee and employer.  The intersecting point between a person's capabilities and an organization's needs.  But has the notion of a job outlived its usefulness?  Is it bound for extinction, or must it - can it - simply evolve and change to meet the needs of today's speedier and more agile organizations?  What say you?

Click over to my post at the Compensation Cafe today and weigh in!

Image courtesy of malct32.blogspot.com

Are We Looking at a Job Evaluation Revival in '09?

I know.  In many places, for many organizations, job evaluation - of the traditional factor-based type - has kept its place as a cornerstone of the base salary program.  In most organizations, however, the dominant method of valuing jobs has been a market-based approach. 

A WorldatWork poll, conducted in 2005 (the most recent research I've been able to find on the subject), confirms what I have found to be true in my own travels.  The responding 450 member organizations identified their "dominant" job evaluation method as:

• Market pricing - 61.0%

• Point factor - 23.0%

• Whole job (e.g., ranking or classification) - 8.8%

• Job component - 3.8%

• Do not use (formal) job evaluation - 3.4%

I've written about the choice of market versus factor-based (or internal job content based) job evaluation approaches before, and have done some hypothesizing of my own as to our strong preference (at least in the past decade or so) for the former over the latter:

Why is market trumping internal job content as a job evaluation approach in most organizations today?  Primarily because most organizations today do not have the same luxury of disregarding, or giving "second fiddle" status to the labor market in setting employee pay that they may have had in the past. 

Job evaluation approaches which focus on internal job content (like point factor plans, of which the Hay Group had the brand name product for many years) came into prominence in an era when people stayed with the same employer for years, often their entire career.  Most hiring was done at the entry level, after which employees typically progressed through the internal hierarchy as talent and opportunity permitted.  Sourcing and recruiting talent from the outside, while certainly important, was not nearly as widespread or critical as it is for today's organization. For these reasons, the most important pay relationships were the ones between jobs inside the organization and there was little risk if the internal job hierarchy that developed was out of sync with the external labor market.

So ... market pricing appears to dominate today.  I wonder, though, if that might be about to change.

Pay equity is becoming an increasingly hot issue, with Lily Ledbetter having been signed into law recently and the Paycheck Fairness Act still on deck in the Senate.  And many of the approaches touted for assessing the degree to which pay differences are influenced by protected class membership rely on internal-relative-comparison methods which strongly resemble traditional factor-based job evaluation.

Does this mean that the tide is about to turn?  Will pay equity pressure serve to unseat market-based job evaluation from the top spot and put factor-based job evaluation in its place?

Stay tuned, I guess.

Image: Creative Commons Photo "Measuring Time" by aussiegall

Grade Creep or Value Growth: Sorting Through the Facts & Circumstances

Back in the day when I had a real job in a corporate setting, I recall a period when my compensation colleagues and I were facing a particularly strong and steady onslaught from line managers regarding job re-evaluation.  It seemed every manager with an employee whose salary was above midpoint felt compelled to retitle the job, rewrite the job description and push hard for an upgrade.  Despite our efforts at control, the average salary grade across the company seemed to be ticking upward on a daily basis.  One manager in particular stood apart for his commitment to the continuous upgrading of his department's positions.  We christened him the Grade Creep. 

Well, we thought it was funny.

Nearly every compensation professional I work with faces some level of pressure on the job re-evaluation front.  It's tough to carve out time for the reward initiatives that will truly deliver value to the organization when you are forced to spend all your time as Pay Cop.

The trick, I think, is to avoid becoming too entrenched in our cop mentality (we are business partners, yes?) and to develop a process to sort through the requests in order to discern which are legitimate - e.g., from a functional area that is truly changing or growing in scope so as to require different roles and talent levels - and which requests are merely symptomatic of a lack of managerial discipline and accountability around salary management.

I have advised a number of my clients to introduce a brief survey or questionnaire into the process, asking the managers requesting a job review to provide some information and detail as to the nature and history of the situation. Specifically, I suggest questions like the following:

• Has the job in question gained additional job responsibilities since it was last evaluated? If yes, please describe these additional responsibilities in the space provided. Include information on where and by what other job these responsibilities were previously performed before being added to this job.  If these job responsibilities are, in fact, brand new to the department or company, please provide a brief background on why they have been added.
• Has there been any change in the education, experience and skills required to perform this job since it was last evaluated?  If yes, please describe the changed requirements in the space provided, and note the reason behind the change in qualifications.
• If new responsibilities or requirements have been added to a job which has current incumbents, please describe the steps that these incumbents have taken to upgrade their education, skills and/or experience to fit the changed position?

The point of the questionnaire isn't to discourage managers from requesting re-evaluations, although it may have that affect in some cases.  Rather, its intent is to force some description and documentation as to the presumed underlying value growth that would justify a potential upgrade.

Grade creep or value growth?  A tough call sometimes, but I think it is our responsibility to support the latter while helping keep the former at bay.

What do you think?

The Role of Job-Content Based Job Evaluation in Establishing Global Equity

A client and a reader's comment, both this week, helped call my attention to a need that is driving renewed interest in job content based job evaluation.

In response to my post When Is Job Content (e.g., Point Factor) Job Evaluation Appropriate?, a reader who heads compensation and benefits for an international company added another situation to my list:  the need for a tool to help structure an entire global organization through comparing jobs across countries in order to create a boundary-less organization.  In his mind, this is a key reason why many global companies are considering the move back to "traditional" job evaluation.

I had a number of discussions this week with a client who has hired me to help the organization figure out whether they should replace their current point factor job evaluation system with a market-based approach.  This company is in the early stages of what will eventually be a significant global expansion.  A senior executive confided to me that their current job evaluation system - for all the troubles it has been giving them in other areas - was absolutely instrumental in setting up a pay structure for a new Asian location where valid local market compensation data was very difficult to come by.

Perhaps globalization will indeed spur a new level of interest in point factor job evaluation.  This is a trend that I will watch with interest.

Poll Shows That Most Organizations Used Market-Based Job Evaluation

I was searching this morning for data on the prevalence of different job evaluation approaches for a client and came across this WorldatWork poll published early in 2005 (a few years old, but very relevant stil, particularly since this question does not appear to be addressed in any more recent research I could find).

The WorldatWork poll asked participants to identify the dominant job evaluation method used in their organization.  Nearly 450 members responded, as follows:

• Market pricing - 61.0%
• Point factor - 23.0%
• Whole job (e.g., ranking or classification) 8.8%
• Job component - 3.8%
• Do not use (formal) job evaluation - 3.4%

The data confirm my assertion in an earlier post that most organizations use a market or external-based job evaluation method.  There is also confirmation here, however, that point factor (or internal job content-based) approaches - while they are not currently and probably never will be (save a government mandate) the dominant method - continue to represent a valid choice for a certain minority of organizations.  (See also earlier post on when internal or job content based job evaluation is a good fit.)

Why Job Evaluation Won't Go Away

Job evaluation continues to be an important topic in compensation, long after many compensation experts decided to ignore its existence to pursue more exciting and "hot" topics like incentive pay.  The truth is, however, that job evaluation exists, formally or informally, in every organization that pays employees wages or salaries.  Since beginning an informal series of posts on job evaluation here, I have noticed that these are some of the most widely viewed on the blog - further evidence that the topic remains relevant and of interest.  Or, as another (Dan Purushotham, Ph.D., on the WorldatWork website) has put it so well-

As long as there is work to do, there will be a need to establish the worth of work.  And as long as human beings do this work, there will be a need to establish the relative worth of this work.