Alternative sources of compensation policy data

by on June 30, 2009 · 0 Comment POSTED IN: HR Info Center

Industry contacts, internal intelligence can be a good starting point for hard to find compensation policy data

For certain positions, we can’t get very good information from surveys for our compensation policy. Particular matches are difficult ones to come up with because the data isn’t in a proxy or the data isn’t in surveys, the position isn’t an exact match. We will reach out to industry contacts that we have to try on an informal basis, understand how the compensation policy works for those people both in levels and the type of pay. Recruiters are – to us a pretty good source of getting that kind of information also.

Many companies use is internal hiring intelligence for compensation policy data. If you have an active recruiting process going on, you’ll find – you may be building a database better than consultants, and better than surveys because you can see what’s going on as you bring people through and you can almost assess the quality or background of the individual, which kind of payment that they’re receiving to get a handle on where the market is.

The data for a compensation policy is not 100% perfect
One of the things I think that’s extremely important in today’s world is to not view the data as perfect or correct or exact. When we now show compensation policy data to compensation committees or to the management – other than- back in the older days of these we used to present them with one set of numbers. Here is your median and 75th percentile, maybe 25th, maybe 90th percentile, for salary, for total cash, and for total remuneration.

Today, we don’t do that anymore. We actually give them a summary sheet but we’ll have many pages of back-up behind them that shows them every source of data that we got and where we got it from. Because what we find is concerns of the reliability of compensation policy data that management and boards are much more comfortable being able to see detailed background and at times say, “Well, I’m concerned about this industry survey. I don’t think it’s very reflective and so we would lower the weighting or eliminate it.” And likewise, if we are using proxy data where the person in x-y-z company is just nowhere near the quality of all persons so it doesn’t make sense to include them or they’re not as strong a company as ours and we shouldn’t include them.

The real thing to take away from all these is the data is a good starting point for compensation policy design but you’ve got to look at it based on your own circumstances and how comfortable you are with the reliability of the data.
Edited remarks from the Rapid Learning Institute webinar-Executive Compensation: What Worked and What’s Fair by Steve Hall

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