I work with HR and compensation professionals as part of my day job and often come across folks who have inherited comp plans that are somewhat of a mystery to them. Some I can figure out but some are a mystery to me as well.
Usually, the plans were set up by consultants or former comp managers who knew what they were doing but just didn’t provide needed information about the plans’ structure to make them sustainable. As a result, the client or the current comp manager finds it difficult to update the data and continue with the plan.
I recently encountered a plan that used “zones” stating something along the line of Zone A is 103%, Zone B is 98%, Zone C is 92%—and absolutely no clue indicating what each zone is a percent of. Were they a percent of the national rate for a given position?
There was no way to tell so the comp manager was struggling to make sense of it and looked to me to figure it out. As a CCP (Certified Compensation Professional) I’m sad to say that I couldn’t figure it out either. All I could do is suggest that she scrap it altogether and start fresh with current market data.
So what’s the take away here?
Two things …
If you’re a comp manager, include documentation about how you developed the compensation structure so the next comp manager can continue to use it.
If you’re a consultant, provide your client with details of how their comp plan is structured. You don’t have to give away the farm but they’re paying for some acreage so they should get enough information to maintain the plan, not just the end result. There are better ways to make yourself indispensable to your client than to keep how their comp plan was structured a secret from them. Besides, if you’re charging thousands of dollars to create the plan and thousands more to come back each year and update it, you’re not really helping yourself long-term, at least not these days. The Internet has made it too easy for HR and comp professionals to find what they need to manage compensation in their organizations. If you want their repeat business, make managing comp easier for them, not harder.
Just my two cents.
And, a tiny little plug for my day job.