In The Workplace

We can’t afford to buy those expensive surveys by multinational consulting firms. Our hope was rekindled when I read your last column on the possibility that we could benchmark with some companies at least to compare the salaries and benefits of our executives. How is that possible? Could you give us more ideas? — Surprised Susan.

If you don’t ask, the answer is always no. The possibility of acceptance is possible if you ask more than 20 organizations to help you concretize your plan, not just for your company’s objectives but for all. Out of that number, there’s a better chance that two or three companies will respond favorably. That’s why it’s better to exhaust all possible options if you can’t afford to buy a salary report for $20,000.

As long as you understand the challenges, there’s always a big chance organizations will cooperate with you to gain a competitive advantage.

One caveat though. Some proponents of buying ready-made industry surveys say if you can’t afford to buy a $20,000 annual report, then how can you afford to increase the salary of people you care about? If you can’t afford it, then you can’t afford it. Period. You can’t make your compensation policy competitive the way you want it to be by starting on the wrong foot.

But I don’t want to disappoint you. To answer your question, I’m listing certain challenges that could make or break your plan to conduct a friendly benchmarking survey.

First and foremost, how would you define a competitive pay package? Let’s take a sober look using this simple definition — anything within the general average of an industry standard. If most organizations are paying $150,000 a year to an executive, would you consider that as a standard? It’s not that simple. There are many factors to consider, including the basic ones listed below:

One, be honest and objective with your industry peers. Salaries are strictly confidential. HR people are prohibited from sharing their pay policies because of this commonly-accepted policy. But there’s a solution. Propose to do a kaliwaan or a handover of documents detailing pay structures (in sealed envelopes) with at least three organizations willing to do the same. Do this in one meeting with other participants.

Two, raise your profile in industry associations. It might be difficult to cold-call various companies. That’s why CEOs or their HR professionals join organizations like the People Management Association of the Philippines, the Employers Confederation of the Philippines, the Management Association of the Philippines and business associations within the same geographical area, in which they can nurture relationships with other executives.

Three, choose companies that are of similar size and structure. The priority is to compare notes with competitors. But this is impossible most of the time. Therefore, your next option is to identify companies within your geographical area with nearly the same number of workers and similar revenue, profits, assets, business longevity, and many other such characteristics.

Four, focus on key jobs that drive organizational success. Limit the survey only to positions occupied by people with “hot skills” or key executive jobs that are difficult to replace. My rule of thumb is not more than 10 key positions below the rank of President, Chief Executive Officer, Chief Operating Officer, Executive Vice-President, General Manager, and Senior Vice-President. This makes it easy for other companies to accept your proposal.

Five, define or redefine your compensation philosophy. Would you like your key people to receive the salary of those executives who are on top 90th percentile, 75th percentile, or 50th percentile or the median survey result? This is important to know before you think of conducting a focus group discussion with other organizations. Of course, you don’t have to divulge your intentions with those who are willing to participate in the survey.

Last, list down all related factors in the survey. This includes the education and seniority of the incumbents, how they ascended to high-end, their annual merit pay increase, and other related issues. This is to ensure an apples-to-apples comparison between and among target jobs. Sometimes, it’s also a good idea to talk about pay-for-performance as part of your pay philosophy.

Some pundits say a person with six children is better satisfied with their salary than a childless person with six million dollars. Why is this so? That’s because money is not everything. If money is everything, then it’s only a matter of time before a dissatisfied person leaves for the highest bidder.

To avoid this, it’s important that an organization ensure the objectivity and fairness of its pay and perks policy. This can only happen if you buy an “expensive” industry study or by initiating a benchmarking survey with companies that are willing to participate.

Generally, people suffer from misconceptions about their earnings. It’s either they got their information from friends or people who know something about how organizations attract and retain their executives. The best way to put the issue to rest is by being professional with people.

And you can only do that if you’re armed with an annual survey.


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