People are up in arms regarding the outlandish paychecks that abound in both business and academia, not to mention the astronomical value in being fired.

More and more, employees are looking to join socially responsible companies, i.e., companies that do the right thing, and there is no reason that this shouldn’t apply to compensation.

Can you set compensation that measures up on the “doing the right thing” yardstick?

Yes. When compensation (be it cash or stock) is done “right,” there is an obvious, logical, elegant relativity between the pay of an MTS, a director, and a CEO.

Could following such a plan cramp hiring, making it difficult to land a particular candidate?

Possibly; but before you violate it, remember the old axiom, “Nobody can be duplicated, but [almost] anyone can be replaced.” Compare your candidate, relatively speaking, to the few, the very few, who are truly not replaceable—Steve Jobs being the most obvious.

The most common reason that managers hire outside their company’s salary curve isn’t that the candidate is truly a water-walker, but because in order to walk away they must be willing to continue the search—and they aren’t.

You can often overcome this if you take the time to explain your plan to candidates, including the values it represents and the logic upon which it’s founded; assure the candidate of the plan’s inherent fairness and that peer compensation is all in the same range; and that managers’ favoritism, or candidates’ charm and negotiating skill, is not the basis for compensation.

Finally, there’s an additional benefit to hiring the do-the-right-thing crowd. Generally speaking, you’ll find these employees to be more productive, more loyal, and more aggressively interested in their company’s success than the norm—attitudes that show up directly in your bottom line.

This entry was posted on Wednesday, January 10th, 2007 at 2:43 pm and is filed under Business info, Communication, Compensation, Culture, Hiring, Motivation, Retention. You can follow any responses to this entry through the RSS 2.0 feed.
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