Sunday, July 3, 2011

Challenges Faced By The Wannabe Comp Analyst

Complexity, by William Whitehurst Corbis Does changing a light bulb make you an electrician? Or does replacing your car's oil make you an auto mechanic?

No? When it comes to Human Resources, though - that can be a different story.

For many an HR generalist working in a smallish company the role of Compensation is essentially one of market pricing. They want to know how much a job is worth out there in the marketplace. Nothing fancy, nothing complicated, just answer the question - how much? Given the easy access to survey information these days (the good, the bad and the ugly), many HR Managers tend to diminish the significance of compensation analysis with a shrug of the shoulders and a smug, "oh, we can do that."

To their view, market pricing is a simple process of matching a job description (as available) to a generic, boiled down paragraph from a survey source, then noting the highlighted figure that corresponds to that job. How difficult is that? Piece of cake.

How bad can it get, they figure, asking an HR generalist or even a department manager to flip the pages of the survey to find the "going rate"? Are they going to be that far off?

Yes, they can. Yes, they will.

Now I admit to having a bit of a bias, but consider this:

  • Survey complexity has been increasing, as customers demand ever greater degrees of "slice and dice" data analysis / market segmentation (your industry, your revenue, your geography, etc.)
  • Surveys no longer provide just "the number," but many figures to choose from. Which is best for you?
  • The HR Generalist already has a full time job, and not a lot of time to spend dabbling in the intricacies of market pricing. They're looking for the quick answer. Does quick suit your needs?
  • The periodic dabblers may also be affected by their own biases (they know the job holder) and a simplified grasp of the job under study (relying on title matches and / or abbreviated "descriptions")
  • What happens when a critical job isn't perfectly matched in the survey? Do you check off "no match" and move on? What if you really need the data? Is your ad hoc analyst able to triangulate other jobs into a reasonable assumption of the needed market rate?
  • If you're dealing with international jobs, there are a host of limitations on available data not commonly experienced in the US. Market pricing overseas can become more of an art than a science.

The risk is in misreading relationships between jobs, where a wrong job match or an out-of-context figure could become the single domino that starts a chain of distortions.

If a job evaluation system is being used, one can readily see the relationships that exist between jobs. So if a mistake is made with a Systems Analyst , likely that error will be compounded when coming up with the Senior Systems Analyst figure. And if you've historically considered a Financial Analyst similar in value to the Systems Analyst, you can easily peg the Financial Analyst to the wrong market rate. And so the story goes, for as far as you consider other jobs of equal value.

But perhaps the greatest challenge to the wannabe analyst is when they are challenged by two commonly asked questions.

  • Are you sure of these figures? In other words, defend them as if they were your own creation. What survey(s) did you use, who are the participants, did you properly match the job, let me see the data, etc.
  • What do we do now? Having the data is usually the tip of the problem, and like an iceberg there's always a lot more behind it. How do we take the knowledge of competitive market pricing and develop tactical strategies to move the organization from a problem zone to safer ground?

So have a care when thinking of flipping pages through a survey, or clicking through an internet source. The numbers can trip you up, even as you don't know what to do with what you have.

Remember when you need an electrician, and when you don't.


Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations. He is also associated with several HR Consulting firms as a contributing consultant. With over 30 years Rewards experience Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation. He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats.

Image courtesy of William Whitehurst Corbis

Thanks to Chuck Csizmar / Compensation Café

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