Dear Evil HR Lady:
I just discovered your site, and it really is great! And as fate would have it I now have an evil HR question. My employer recently implemented an ERP system and took the occasion of scrapping all the existing HR data as an opportunity to reclassify every single position in the organization, not a bad thing in and of itself. Here’s the problem: back in the day (e.g. pre-ERP) we knew how to write job descriptions so as to maximize the paygrade that would be assigned to the position — a critical skill when trying to attract technical staff to positions in a tight, tight market for this talent. Now the whole compensation analysis criteria scheme is a mystery…nay it is a secret! The grades that our compensation analysts are assigning to positions that we know are high-five figure jobs in our market are just not competitive, and we’re facing having to hire and train bozos right out of college rather than being able to attract the high-level techies we NEED to run our crap. (And by crap I mean a complex server environment that houses several billion dollars worth of financial data.)
My question: Is it standard evil HR practice to keep the criteria by which a position description will be analyzed and assigned a pay level a secret? Do you have any advice for gaming on the system so that we can hire for newly created positions and replace high-level staff members at appropriate salary levels?
Geeks Cost, and Right Here Is Where You Start Paying
Methinks someone is on a cost saving power trip. To quickly answer your question, paygrades should be based on market data. Your compensation department should be looking at salary surveys to determine what other companies are paying for similar jobs. This should not be secret at all. They should be able to show you what the market rate for the job is and it should correlate pretty closely with the assigned pay grade.
Make an appointment with your compensation analyst, don’t be accusatory, just ask her to explain how she comes to a decision about the grade for any given job. She should be able to do so. If she hemms and haws, produce a job descriptions and say, let’s level this together! This will make her very annoyed, because chances are she’s operating under stupid rules put into place by the power hungry cost saver above her.
However, some companies think they can get by with a “cheap” labor force. This always cracks me up because a cheap labor force will cost you more money in the long run–for several reasons. I’ll start with my two favorite.
1. You get what you pay for. (Generally, we all know there are exceptions to this rule. We all wish we could be exceptions to this rule–being overvalued, that is.) If the market rate for one of your techie positions is $95,000 (not unrealistic in my neck of the woods either), and you can only pay $75,000 you aren’t going to have as many candidates to choose from. Sure, you’ll be able to hire someone (because IT jobs are frequent targets of outsourcing), but that person will lack the skills and experience of the person you could hire at $95,000. You will have to train. This costs money. You will have more mistakes. This will also cost money.
2. Once you get this person up to speed she’ll say, “why am I working here for $75,000? I can go across the street to the competitor and make $95,000. Plus they’ll give me a sign on bonus!” And so she leaves. Now you’ve got recruitment costs, overtime costs (sometimes) when others have to fill in and do her job until you find someone. And you are stuck with the same low pay grade, so you have to start with the under-qualified person (not a bad person, mind you, just an inexperienced one) and the cycle continues.
One of the big overarching HR problems is our lack of understanding of not only the financial side of the business, but everything else. Once upon a time I led a task force to determine how our business wanted to look at turnover. The consensus among the senior HR people was that we only really wanted to look at the professional population. The factory workers–an hourly, unionized group–didn’t matter. Heck, they’re cheap labor.
I was flabbergasted. The hourly factory workers made up a really high percentage of our workforce, and their turnover was quite high. I suggested we include them in our turnover. No, no, no. We only want to see the professional people.
Finally, a plant HR manager spoke up, “we have a really hard time filling positions” she said softly.
Everyone was shocked. You do? Really?
Here was a bunch of senior HR people who literally had no clue what was really going on. Factory labor is cheap, so they didn’t care about it. Except it’s not cheap and it’s necessary to keeping the business running.
If your business is in the business of storing financial data, your IT people are beyond critical to your business. But, HR may be focused on the sales force or the stock brokers or whatever is the glamor group for your company.
You may have to do some hard work to help them understand the critical nature of getting the right geek on board.