Helping CEOs with Compensation Planning

How to Help Your CEO with Compensation Decisions

Our recent 2011 Compensation Practices Survey revealed some useful facts about how compensation decisions are made at companies of all sizes. We noticed that small companies consistently listed the CEO as the person most responsible for final compensation decisions. So, we decided to interview our CEO, Mike Metzger, about how he approaches and likes to be helped with compensation decisions.

Is your competition planning to hand out raises in 2011? Hire new talent? PayScale surveyed them to find out and now we’re giving you their answers. Download PayScale’s Compensation Practices Survey for 2011 and get up-to-date on your market.

The following is the transcript of an interview with Mr. Metzger about what information or support is most helpful to him during the compensation planning and implementation process.

Q: Do you consider yourself one of the small business CEOs who is heavily involved in the final conversations about compensation?

A: Yes.

Q: How can an HR team, or anyone involved in compensation, best provide a senior management person, like you, with helpful information for making final compensation decisions? What are you looking for from them?

A: I think what I look for is both quantitative and qualitative information. I want to understand where the company is at from several perspectives.

On the quantitative side, I’m looking for answers to the following questions. Where are we relative to market? Where do we feel like we have holes? Where do we feel like we have people that we really need to take care of, who either need to be brought up to market or deserve a merit increase? What is our overall strategy?

I try to put as much of that together as I can to answer the quantitative portion of the question.

Q: According to our 2011 Compensation Practices Survey, HR professionals are usually in charge of designing the comp strategy. Is that true here? Would consider yourself responsible for the overall strategy?

A: I think it is a dialogue. My preference is that someone else would come up with the strategy and the rationale for that strategy and I would interact with it. I’m not an expert.

Q: What makes up the qualitative part of the decision-making process?

A: The qualitative portion involves a different set of questions. Ones like, how are people feeling? What is the tradeoff between various pieces of benefits? What else is going on outside in the market?

For example, in 2008 it was not very hard to make the decision that we weren’t going to do much in the way of cash increases because, frankly, nobody else was either. And, a lot of companies were going down so we felt pretty good about trying to hold ground and keep our bennies in line. We felt like we were doing right by our employees. And, that’s important, right?

At the end of the day you want your team to feel like you’re doing the fair thing. People who are doing a really good job are getting a little bit more or a bit of an increase so people know they are rewarded when they need to be.

Q: You made sure you were rewarding your top performers, even in those tighter times?

A: Yes. We tried and sometimes it’s not cash. Sometimes you get creative.

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