In response to PayScale 2011 Compensation Practices Survey, we interviewed Mr. Metzger about how he can best be helped by his HR team in planning and implementing compensation at PayScale. Towards the end of the discussion, he offered some advice on possible pitfalls in the compensation process, especially around communication with employees, and how to avoid them.
Q: What are possible pitfalls to watch out for with compensation planning?
A: I think one of the interesting things about across-the-board increases is that they send the message that, whether you bust your butt or you don’t, it doesn’t make a difference. People notice that. They pick up on it right away and that’s very de-motivating.
I think it is important to be transparent about your process. I think it is important to be transparent about what you’re measuring and why. I think it also important to say, “Look, this is not an egalitarian thing.” You try to be fair and equitable but it’s not a co-op.
I think the other thing is that people tend to lose sight of the fact that if the business isn’t healthy it doesn’t matter. Meaning, everybody can be doing their job and doing a great job at doing their job but if the business isn’t healthy, there isn’t anything that people can do. And, that’s just the reality.
Q: You mean, the business is just going to tank?
A: If the company is not doing well, it’s not like they have a lot of money to play with. People need to get invested in figuring out how they can help the company be healthy because a non-healthy company can’t contribute. Don’t get tunnel-visioned into your particular role.
Q: Can you talk a little bit more about the benefits of being transparent?
A: Sure. It’s hard for someone to feel like you are being fair if they don’t know how they are being evaluated or if they don’t know what the process looks like. Or, it’s hard for them to feel like things are fair if it’s unclear that you are using the same approach to evaluate them as you are using for everybody.
You have to try to be as transparent and open about your process as possible, both because it helps people understand what is going on and, more, because it is the right thing to do. It’s part of operating with integrity. It’s respectful.
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