Not everyone thinks this way though. See the recent article in CNN Money, where a not-so-scientific research from printer, Moo.com, shows off some rather uncommon job titles.

So what’s the big deal? Especially in light of low merit budgets and layoffs. Why shouldn’t organizations throw their workers a proverbial bone and let them be creative in coming up with a title that let’s them stand out? Afterall, job titles are free, right? Not.

While it may be tempting to cut loose a little, most companies of any significant size will quickly realize that trying to keep up with creative job titling and making sense of their organizations in fact, carries a real cost. Those costs are felt as both administrative costs, but even more importantly, as drains on organizational efficiency. To achieve organizational effectiveness, it is far more important to have anyone from any part of the process see a job title and have a reasonably good understanding for the nature of work done and the true level of accountability held by the person doing the job. This allows everyone to focus more effort on achieving results vs. coming up with the next best original title.

A reasonable compromise we’ve seen at a couple of our clients is to have standardized job titles that are stored in the system of record as the official job title, but to allow for more personalized and creative titles that folks could use on their business cards (that maybe they order from Moo.com).

In the end though, the HR leadership has the accountability for establishing the purpose for a job title that fits their organization’s culture. And if appropriate, defining the job titling criteria and naming conventions to consistently meet that purpose. The only thing worse than defining your job titling framework as a creative writing exercise is to abdicate the accountability for defining the purpose and remain silent on the issue.

Towers’ Data Always Runs High – I’ve actually heard this one on several occasions. My response is always, “Really? Do they have bigger calculators or something?” I think not. It’s better to look at the participant lists and see if there’s a driving force behind why there may be data differences between survey vendors for the same benchmark job. Towers Watson does have a very high percentage of large companies and better representation amongst a few of the higher paying industry groups which offers a better rationalization for why their data might be higher. But what if, just maybe, that is the relevant labor market where you compete for talent. Conversely, what if you’re a smaller firm in a notoriously low paying labor market? You would likely be looking to compare to a different set of participating companies. The real story here is make sure you select the survey vendors that are the best reflection of the labor pool where you swim and don’t just knee-jerk react to some off-handed comment that one vendor “runs high”.
Susie is paid at the 75th Percentile? I knew she was overpaid! – Not so fast. While most companies do set their overall pay philosophy to be competitive at the market median, just because one person is paid at, or even above, the 75th percentile doesn’t mean they’re overpaid. In fact, one could argue that perhaps Susie is the only one in the bunch who is under paid. Each organization has to establish their own point of view about what drives individual pay decisions, but usually it can be distilled down to three factors: sustained performance, scope of the individual’s role, and potential for moving to higher levels.
Can your software handle up to 15 market matches for a job? – Well, actually, KnowledgePay can handle an unlimited number of market matches. But that’s not the point. You seriously gotta ask just how many market matches does it really take to figure out a market composite? There is no right or wrong answer. Some organizations firmly believe that having one single market match from a high quality survey is all that is needed. Other organizations will look to have two or three matches assigned on the belief that a larger sampling of surveys will yield a more reliable output. Which approach you take will boil down to philosophical choice, but seriously, fifteen?
So what’s your favorite funny or quirky story involving market pricing?

FedEx Ad: Two Sided Paper

I don’t disagree with Ann’s advice at all, but rather wanted to add some additional perspective.

Understand the Labor Market: Know where people come from and/or go to when trying to fill those emerging job families. The social media job family that Ann has queued up is a fantastic example because five years ago, these jobs didn’t even exist. Think about it…no kid was playing in the sandbox twenty years ago saying, “When I grow up, I want to be a Community Moderator.” Yet today, there are thousands of people making a living by doing just that.

So, where did they come from?

Clearly, there’s no single answer, but when I look at the survey job summaries, the Monster job postings or the LinkedIn profiles of people doing this type of work, I see threads of both journalism and marketing. This prompts me to study the market data for those job families as well. Granted, this is not your typical “70% of job duties” type of job match for the social media jobs, but it does provide some insight on the wages paid to people in a nearby talent pool. If the tasks and qualifications are reasonably similar, the market data for these adjacent, but more established, job families will tend to track with the emerging field.

Salary Surveys Used by the Competition:  By now, we should all know that the Department of Justice frowns on gathering pay data directly from other employers (understatement), but there’s no harm in either directly or indirectly knowing which reputable salary surveys the competitors use to market price their jobs.

Here’s an example from a recent project using this type of research. Step one involved getting the hiring executives’ perspectives on who they felt were the relevant labor market competitors. By studying the participant lists of four of the established salary survey sources having a variety of e-Commerce and Social Media jobs, it was easy to see where the market competitors were going to get their wage data. In this case, it was the Croner Digital Content & Technology Survey that rose to the top. But this post is really about the process you could use for a wide range of emerging job families.

Compensation professionals that know how to research the labor market to understand the talent dynamics are demonstrating compensation intelligence and are better equipped to serve the organizations of the future. After all, the pace of change for new types of jobs is only increasing, making this topic even more relevant for the future.

The most prolific is the WorldatWork…which has been used be virtually every company where I’ve worked or consulted.  But there are also many other sources that compensation professionals turn to, such as AonHewitt, Mercer, HayGroup, Towers Watson, etc.  Which ones are going to be right for any one company is really going to depend on their labor market and which salary survey vendor has the best representation within that labor market.

The cautionary note that I like to remind people of is that you have to keep in mind when that compensation planning data was gathered.  In most cases, the data is gathered in the April-May time period.  Granted, I can appreciate that it takes time to compile the market data and perform their analytics, but geez…ask a compensation person in April what they plan to do for increases a year out into the future and what do you think the response of many is going to be?  Seriously, many people are still wrestling with administering the current year’s merit increase and they may not have even seen their company’s Q1 results.  How can they possibly know with any degree of confidence what the budgeted increases will be for the upcoming year?

The lack of information that is available at the time that the compensation planning surveys are conducted leads me to believe that there are a number of participants that respond by saying, “we’ll basically do the same next year as we’re doing right now”.  Maybe a tick up or tick down, but virtually it will be the same.

Looking at the compensation planning survey data from that perspective, don’t act surprised then when the results come out and the trending is basically flat.  It takes a really traumatic event like the 9/11 terrorist attacks or the 2008 recession to disrupt the pattern.  Absent those kinds of tragedies, the survey results are more than likely to just continue the status quo.

In other words, take the compensation planning survey results with a grain of salt.

Jacqueline is one of the hardest working people in the field of human resource information systems. She serves us here at KnowledgePay as our head of Professional Services. Her incredible knowledge of the HR software landscape is tremendously valuable.

Congratulations Jacqueline on your much deserved award!
http://www.ihrim.org/index.php?option=com_content&task=view&id=429&Itemid=1

In her article, Ann accurately describes the history and migration that we have experienced in the past few decades surrounding the shift away from internal job evaluation methods (i.e., Point-Factor) and the predominant use of external job evaluation, aka, Market Pricing.

In her article, Ann is dead-on for why organizations have adopted market pricing as the primary method for valuing jobs.   To build on that though, organizations, starting back in the ’70s started to shatter that whole employment relationship paradigm of people going to work somewhere right out of school and then working there until they retire.  Prior to that time period, mass layoffs were very uncommon…now, we pick up the morning paper (or rather, log onto our online news sources) and read through to find out which company announced a major layoff.

What this has created is a “free-agency” labor market.  I’m sure there are a whole host of other social dynamics that have contributed to the paradigm shift, but now, the paradigm is much more about “This is the work that I do.  I do it for you today, but tomorrow, I might do this work somewhere else.”

Workers are much more focused on their work, instead of just being focused on who they do the work for.  As a result, the mind-set is much like that of free agent in sports who goes to play for the team who is able to maximize their pay.

On the flip side, from the employer’s perspective, there is the need to make sure that talent is in place in order to achieve results.  People have realized that it is penny wise & pound foolish to hold back on a bit on someone’s pay and risk loosing that person…because the cost of having the position open, refilling and then the ramp-up time with training is far more expensive than just the extra bucks that it would have taken to get the person to stay put.

So that helps to explain the movement towards market pricing, but what about the shortcomings of market pricing?  Why is it a bad idea to just completely ignore all internal equity considerations and just be a pure market pricer?

This question is out there and I think what I see happening is that the pendulum is starting to shift a little bit.  I don’t think that we’ll ever go back to just having Internal Equity as the primary driver for determining job value, but I do think that organizations are going to adopt more of a blended approach that looks at external competitiveness first & foremost, but still uses an internal point-factor plan to both validate the results and to take a more active role in looking for disparities.

So in the two years since the original post, what’s been happening?  First, we’re still clawing our way out of the worst recession in over 80 years and unemployment still sits up at just shy of 10%…all that translates to not a real compelling argument for change in how we do job evaluation.  Meanwhile, we see from our global reward compatriots an increasing trend for even more market pricing in other parts of the world.

Does all this debunk the theory of adopting a more balanced approach to job analysis and job evaluation?  I don’t think so.  It might have slowed the pace a bit, but I believe we’ll be seeing more organizations looking for a blend between external market pricing and internal job evaluation in the years ahead.