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Exploding Some Comp Department Myths

Exploding Some Comp Department Myths

by Frank Roche on January 29, 2009

in Pay

To: All Managers
From: Comp Department
Re: Exploding Myths — Here’s How Compensation Really Works

Dear Manager,

I thought it was time to explode a few myths and legends about Compensation. I’m not talking here about pay, which is what goes into paychecks. I’m talking about what we do in Comp. Let’s end the mystery.

  1. Myth: Everyone is underpaid.

    Reality: That’s nuts. We target our pay at the median for all jobs…and we meet that objective. Everyone thinks they’re underpaid, but they’re not. We look at tons of independently verified data from thousands of jobs and companies. It’s real data. There’s a distribution of pay, but not everyone is underpaid. In fact, almost no one is unless their performance warrants it. It’s our job to make sure that’s the case.
  2. Myth: Everyone’s pay situation is unique.

    Reality: Snowflakes are unique, trust me, your employee’s story isn’t. Every manager tries to work a deal and get “just a few thousand more dollars.” Multiply that “unique” situation times 10,000 people. A million here and a million there and pretty soon you’re talking about real money. (To paraphrase Sen. Everett Dirksen.)
  3. Myth: There’s a slush fund. Comp controls it.

    Reality: There’s no extra money laying around and we don’t have it. We’re accountable to the Board about all the money that we need to provide competitive compensation. The Board doesn’t give us a slush fund to spend how we like. We’re not holding anything back from you.
  4. Myth: My employee could get lots more money elsewhere. He’s going to leave if we don’t pay up.

    Reality: If that’s the case, your employee should go and get the money. Ask about where your employee is compared to the market. We know enough to tell you about total compensation. We know what’s happening. Someone’s cousin’s uncle isn’t a place to get reliable comp data.
  5. Myth: You’re just trying to spend as little money as possible.

    Reality: We spend the appropriate amount of money for total compensation to attract and retain employees. We have a fiscal responsibility in Comp to spend every bit of money in the most efficient way possible. Throwing bushels of cash at people isn’t a way to get motivation or meet our business objectives.

That’s a few of the myths and realities, folks. We’re on your side — we’re not the enemy and we’re not little generals. We spend a lot of time with data. We know what other companies are doing. We work to link pay and performance. And we are employees, too.

Best regards,

Your Compensation Team

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