You have decided to hire a new regional security manager who currently works at a very reputable competitor. After months of advertising, searching, interviewing and discussing the position with many candidates, you are ready to make an offer. You feel this individual will fit your organization well and will provide the necessary talent to accomplish your group's mission.
The only issue is that this individual's compensation is significantly higher than your position requisition, or your company's compensation target for the position. The candidate expects at least a 15-percent salary increase to make the move, but you are eager to show how much you value the candidate's qualifications. You call your Human Resources representative, and you expect them to make a competitive offer — after all, you need this individual yesterday, and you assume that paying 25 to 35 percent above your requisition is just a minor inconvenience.
Human Resources disagrees. “We cannot afford this individual at this salary,” they tell you. “Perhaps you have a backup that's more in line with our compensation philosophy and the target for this position.”
You go back to your office unsatisfied and disappointed. What is this compensation philosophy that they are talking about?
Most organizations have a defined compensation philosophy that determines where they will target their compensation elements, such as base pay, cash bonus, long-term incentives and employee benefits. A compensation philosophy is typically a comprehensive statement that indicates how the organization wants to structure its overall compensation program in relationship to its competitors and the current labor market. For example, the target pay practice could be the average, median or 75th percentile of the competitive practices. Most companies will establish a salary/wage grade structure to accommodate their targeted compensation position in the marketplace.
The compensation philosophy will be directly tied to the overall business goals and objectives of the company.
In this scenario, if the hiring manager had understood the organization's compensation philosophy, he would not have wasted significant time and resources to pursue a candidate that was not a good match due to salary requirements. If you understand your company's compensation philosophy, you will better understand the parameters within which you can attract and retain the talent necessary to accomplish your company goals and objectives.
Steve Walker is co-author of the book Security Careers , founder of leading compensation consulting and research firm Foushee Group Inc. and content expert faculty for the Security Executive Council. For information about the Security Executive Council and Security Careers , visit www.csoexecutivecouncil.com/?sourceCode=std .
-------------------
