Platt Perspective on Business and Technology

Developing a rational compensation package policy – 3: structuring compensation to address critical needs positions hiring requirements

Posted in HR and personnel by Timothy Platt on November 9, 2011

This is my third installment in a series on compensation:

• On how it is and should be benchmarked and established, and
• On the consequences of policies commonly in place (see HR and Personnel, postings 63 and 64.)

In Part 2: structuring compensation according to the standard model I outlined a number of the key points that go into shaping and implementing employee compensation for most organizations. And I ended that by noting one of several specific challenges that this type of compensation policy can and does create for organizations that follow it.

• This type of system can begin to break down for positions calling for candidates with special and uncommon skills and experience, that are in high demand in the marketplace.
• And this situation is in fact the rule rather than the exception for many positions that significantly involve rapidly advancing technologies.
• I add here that this means people with hands-on experience in implementing and maintaining this cutting edge technology as a source of competitive advantage for the business. But it also means people with hands-on expertise in using this technology as end-users and certainly where there are significant learning curves involved in using it effectively.

There is a basic and fundamental conceptual disconnect underlying this as a real world problem. As I noted in Part 2, Human Resource department and overall business policy has to be solidly based on consistent adherence to standards if it is to work – ad hoc is a real killer, and both for its immediate inefficiencies and for its capacity to create real long term risk. So positions are tied to the table of organization and at specific levels, and compensation, by default at least, is set not to the specific position per se as much as to its level on that table of organization. I referred to this as creating a conundrum, where certain types of positions require that this basic and even core principle be violated. And my goal in this posting is to address that challenge, and I do so by proposing a basic principle to add to the standard model:

• Certain types of positions require that the basic and even core principle of determining compensation range according to level on the table of organization, must be violated where simply adhering to that rule puts the business at a competitive disadvantage in the hiring marketplace for securing crucial hands-on skills and experience.
• A systematic and rules based process needs to be put in place for identifying positions that would call for this type of exception handling, and for processing them and their hiring.
• As such, these critical needs positions would still be managed for compensation determination, and in the hiring negotiations processes according to mechanisms consistent for the organization.
• This calls for very close coordination between the hiring manager with their knowledge of skills requirements, and Human Resources, and of a type and degree not generally in place.
• And it is this basic communications disconnect that generally leaves hiring for these critical needs positions in the general hiring bucket – and with the hiring business seeking best candidates from a competitively disadvantaged position – unless they throw the book away and simply make a one-off, ad hoc hiring decision, guaranteed to become bad precedent.

I have recently started posting to a series on table of organization best practices, and cite yesterday’s Part 1: building and organizing from a basic conceptual framework in this context. As to the issues of communications between HR and hiring mangers – I have been writing extensively on communications and value sharing within the organization, and for a focused example of that, cite a short series I added to my HR and Personnel directory on Making Human Resources Relevant (see postings 4-6 there.)

I am going to turn to the hiring process and determining compensation (and level on the table of organization) for new hires, in my next series installment. I will continue discussion of the issues that arise when dealing with critical needs positions, turning to the challenges of employee retention in an upcoming series installment too. Meanwhile, you can find this and related postings at HR and Personnel.

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