Search This Blog

Friday, January 26, 2007

Ouch! I've Been Tagged

If you read Mike Hyatt's blog you'll know that I've been tagged. It now falls to me to reveal 5 Things You Don't Know About Me and invite five others to do the same. Here goes....

1. I was raised on a working cattle farm - It gave me an appreciation of nature, animals and hard work. My dad is a pharmacist who worked in town, so I grew up around farm hands and the "pin hookers" who bought and sold at weekly cattle auctions. I emerged from that experience as a workaholic (there's always something to do on a farm) with a really nasty mouth. Both of those have mellowed with age. Multiple hip surgeries forced me off both the farm and the football field.

2. My Hobbies are flower gardening and guitars - In a job where I deal with people almost constantly, my down time is generally solitary or with just immediate family. You can't tell that I like flowers by looking at our home right now; we moved last Christmas to Nashville and spent this past summer just trying to grow grass on hard clay. The fall seeding seems to have taken, however, and I have high hopes for the spring. I play a McKnight custom-built OM acoustic that I purchased at Artisan Guitars in Franklin about a year ago. I take lessons from a great young guitarist and instructor Danny Combs; during the winter its the highlight of my week.

3. I have a Master's Degree in Geography (of all the strange things!)- Actually, I specialized in regional economics for locational studies. My interests as a student were where to put the factory, or convenience store, etc.... based upon the cost of land, labor, utilities, construction, etc... in any given location. That interest in locational differences in labor costs eventually spun into a specialization in compensation studies that eventually led me into HR. I am still, however, and will always be a Texas Aggie.

4. I am the husband of a breast cancer survivor - Although you might think that's more about my wife Vonnie than about me, living with a loved one facing a serious illness shaped my life as a husband and father (of a daughter). She's 14 years cancer-free and blessed with good health. Still, once you've faced the possibility of losing the one you love, whatever the two of you were fighting about at the time becomes supremely trivial. That perspective helps keep me from getting overly excited about workplace problems as well.

5. My best buddy in the whole world is: Benson (our 9 year old Cocker Spaniel who follows me everywhere)

I am now tagging Joel Miller, Bob Cooper, Brian Hampton, Luke Gideon, and Dax Edwards.


Tuesday, January 23, 2007

Compensation III and IV: Building and Moving Within a Salary Structure

In our first two posts on Compensation we discussed what resources we have and use to price jobs. We also discussed how we calculate base pay. Here we combine the third and fourth of our projected 10 posts on how priced jobs are built into a compensation structure, why a structure is needed, what it does, and how it's administered.

What and Why?
In any mid-sized or larger company you'll have several different job families. These are groupings of jobs more or less defined by similar competencies or purposes to their work. Within Nelson, we have Publishing, Marketing, Sales, HR, Facilities, Production, Distribution, Customer Service, Accounting/Credit/Collections, Tax, Information Systems, and Conferences. Every job that serves in one of these functional areas is part of that job family. Support positions such as Administrative Assistant are more generic core competencies and exist in all of these families. However, they share the same purpose as do the jobs they support, so they are grouped in accordingly. The jobs within a Family are then ranked by pay grade, using the base pay calculations we discussed in an earlier post. The combination of grouping and ranking gives us our first look at the career ladder for each department or division.

Spacing and Movement Up the Structure
Within the job ladder or Family we then establish a reasonable progression between levels. Promotional steps should be available at intervals that allow for moderate and periodic promotions as the individual climbs the learning curve for each job. Sometimes we add steps into the program to insure that an opportunity exists for 8 - 15% promotional increases every 2-4 years. This is vastly preferable to 20 - 40% increases every 5-8 years that occurs in some companies. I say preferable, because a person who waits a long time for a "big win" promotion is a greater risk to leave the company. Also, the job value in the market of one step in the promotional ladder over the other (think Marketing Coordinator up to Marketing Specialist as an example) is generally 8 - 15% and has been for years. Now here's where I get in trouble, as doubtless someone will chime in with an anecdote about someone who left our company for a huge promotional increase. Yes, that happens but remember that we've set our base pay at the 50th percentile of the market. Exactly half of the companies where you apply for your same job duties will pay you more, and approximately half will pay less. Imagine a bell curve, and note that about 20% of those companies will pay substantially more and roughly the same proportion will pay substantially less. Its just that hardly anybody ever leaves a company for less money, and when they do you don't hear from them.

Demotions and Lateral Moves
Another purpose of the structure is to determine what adjustments need to be made when people move in ways other than up through promotion. Sometimes people either don't like their role, fail in their role, or their position is eliminated and they have to find another role. When that happens, we try to keep the employee at their current salary provided that it is within the acceptable market range for their job. We then consider, in calculating future raises, how high the person is paid compared to their peers. Often, slower or suspended increases bring the demoted person back into line within 2-3 years. In some cases the change is too dramatic and we offer the individual an internally fair rate based upon their peers in the new job. Lateral moves are the easiest; no change in pay just to get a change in scenery.

The Salary Structure is moved for cost of living about every 18 - 30 months. We get information from salary survey publishing houses or similar resources each year on how much and how often salary structures are being moved in the market. Those moves tend to be 3 - 3.5%, but can be much more for "hot" jobs. Sometimes the decision to move the entire structure is more art than science; when we reprice our jobs, if the majority of our market targets are above our 50th percentile line then we know intuitively that the 50th percentile has moved.

As always, your comments are welcome and encouraged; even those of you who disagree. I encourage you to post your comments and include your name; but you are also free to post anonymously or to email me directly for private discussion at or send an IM at jthom140 on AIM.