Compensation Crash Course: Job Analysis, not People Analysis! (Part 2)

It’s undeniable: An organization’s most important asset is its people.

But why do they come to work?  Goodwill?  Personal fulfillment? Nothing better to do?  Honestly, no matter what we want to think, people come to work to make money!

In addition to accounting for more than half of an organization’s expenses, employee motivation is why we talk about salaries, bonuses and incentives on end.  Our people want to make money.  But let’s forget about them!  If you’re going to design a really good compensation plan – a plan that supports your organizational goals and objectives while fairly compensating your employees – you need to forget about your organization’s most important asset… for a moment.  It feels uncomfortable and calloused, but let’s break it down.

Why do you pay your employees?

You pay them for doing a job.  That’s right.  THE JOB!  OpenView does not pay me because my name is Jessica Ray and I am a decent person.  They pay a Recruiter to recruit candidates to our firm and our portfolio and to do it well.  If I, the person, don’t do it well or at all, will OpenView still pay me?  It’s a silly question, but my point here is that compensation plans are developed by people.  If you ride the T in Boston, you might be surprised, but people like people and they want them to like them too.  When you’re developing a compensation plan, it’s easy to get focused on the person who is completing the job and not what the job really is.  The challenge is to develop a comprehensive plan that compensates for the role and responsibilities of the job.  This is why, when developing a total compensation plan, job analysis is a critical step in the process.

Job Analysis: How and why it’s important

Job analysis requires that an organization describes and observes the duties of the job and the necessary skills required to complete these duties.  A thorough job analysis will help you to understand the primary commensurable factors: level of responsibility, complexity of duties, and autonomy, along with the necessary skills, experience and education required to complete these tasks.  When determining a compensation plan for a position, focus on these factors, and you will be able to create a fair wage for the job, not the person.  Of course, there will be a point when you do need to consider the individual, and this is why most organizations will implement grade levels and ranges to compensate people for the experience level they bring to the job, too.  How they perform the job is the beauty of implementing an effective bonus, incentive and total reward component in your plan.  My argument to forget the people for a moment may sound “non-HR,” but ultimately, by defining a compensation plan that is just, fair and compensates your employees for the work they do is the ultimate form of human resources!

Analyzing the jobs that make your organization tick is important.  Your organization’s job structure is equally important, and the next step to defining your total compensation plan.  How are these jobs structured, aligned and ranked?  How does this job support the overall strategic goals of the organization?  Remember, we’re not ranking people…we’re ranking the overall impact of the job they perform!

Park Square Executive Search
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