Image credit:a_kartha

Speaking (Tuesday) of corporate culture, one of the most important fundamentals of good corporate culture is fairness—especially in compensation.

Salary differences should be based on factual points, not charm, politics, or managerial whim.

So, how do you draw the lines to achieve fairness?

Number one with most people is peer relativity.

The people working in a small local company don’t compare their compensation to those working in a Fortune 500, nor to their bosses. They compare it to their peers, i.e., people with a similar job, background, title, company, industry and location.

Further, smart compensation policy recognizes that not everyone with the same title deserves the same compensation.

Fairness is also dependent on honesty. Over the years companies have adopted policies saying that compensation was confidential and not to be discussed; managers make candidates offers and tell them not to share it with their new colleagues—amazingly, they not only believe that it will stay private, but they’re shocked when it doesn’t.

They shouldn’t be—telling people ‘not to tell’ is like waving a red flag at a bull, it sets up the assumption that ‘there’s something going on’.

Want practical advice on structuring a fair compensation plan? We’ll do that tomorrow.

Are your compensation plans fair?

This entry was posted on Thursday, April 24th, 2008 at 12:47 am and is filed under Business info, Compensation, Culture, Retention. You can follow any responses to this entry through the RSS 2.0 feed.
Tags: Compensation, corporate culture, fairness, relativity
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