Don’t Fly Blind on Salary Decisions

Why a Data-Backed Compensation Strategy Gives You a Competitive Edge

Let’s face the truth: Sometimes compensation isn’t tied directly to experience or skills. Sometimes employers try to save money by offering inflated titles instead of actual raises. While this might seem like a quick fix, it often creates unrealistic compensation models. Without clarification, HR professionals often guess when it comes to defining industry-appropriate positions and setting salaries.

Compensation is a challenging element of recruitment — one that has a direct impact on your company’s ability to compete for talent. Without a clear compensation strategy, even strong offers can miss the mark.

Without solid data or analysis to guide hiring managers on salary ranges by role, industry and geographic market, compensation can quickly become arbitrary. Companies that pay below the market — often without realizing it — struggle to compete for high performers.

Similarly, an organization whose salaries have become artificially inflated end up overspending, especially when more qualified personnel might deliver better outcomes for less expense.

Addressing Ill-Defined Roles and Uninformed Salaries

How can HR really know where their compensation levels rank compared to their competitors? The truth is, it’s not an apples-to-apples comparison. Titles and nomenclature vary wildly from company to company when it comes to roles and responsibilities.

Many organizations fail to define executive positions clearly or document their job descriptions, which makes it tough for HR teams to fill internal spots — and just as tough for recruiters to hire from the outside.

When job titles don’t reflect actual duties, it sets off a chain reaction:

• HR can’t benchmark pay accurately
• New hires walk into roles they’re not equipped to perform
• Internal career paths become unclear or unfair
• Employees leave for roles with better-defined growth

Measures like bestowing an empty title only complicate the issue further. This tactic may deprive a worker of the learning experiences and skills development that come with an earned promotion.

A lack of acquired skills will only hinder that person’s future career growth. For instance, if the worker snags a similar position at a new company, they may find themselves woefully — and unexpectedly — underqualified.

Strengthening Your Compensation Strategy with Real Data

There is a way for HR departments to determine reasonable compensation levels for a roster of positions within their industry, in their geographic region and even across the country.

An in-depth Compensation Analysis evaluates a company’s positions and key leadership roles by examining duties, job descriptions, incentives, benefits and current salary rates. It then actively benchmarks these roles against industry, regional and national compensation norms.

The most effective models combine data analysis with expert insight to:

• Benchmark salaries by role, industry, region, and organizational size
• Identify pay disparities or inflated salaries that affect equity or profitability
• Guide executive compensation and strategic growth planning
• Support recruitment strategy and workforce scaling

The most effective approach is a combination of human-conducted research and compensation analysis technology which can deliver an accurate picture of current compensation levels. Some organizations may only need a quick snapshot to confirm they’re aligned with the market.

Others benefit from a deeper dive that explores hiring and salary trends, benefits optimization and even governance practices. The analysis should be scalable according to a company’s unique goals, whether that’s to develop better hiring policies, to prep for strategic growth or laying the groundwork for an IPO.

Of course, salary and compensation packages have to align with a company’s budget. But if they aren’t also competitive and appealing, the business risks losing out in today’s tough talent market. Although technology and algorithms can help HR professionals determine where appropriate compensation levels lie, remember that in the end, people hire people.

Put Strategy Behind Every Salary Decision

The human element needs to play a significant role in adding validity to any AI-assisted hiring process. A thoughtful Compensation Analysis that uses both technology and human expertise builds a compensation strategy that puts the right talent in the right roles, at the right cost.

If compensation decisions are slowing you down, it’s time for a reset. Let’s talk about building a data-backed strategy that actually works. Our HR consulting team helps organizations benchmark smarter, hire more strategically and stay competitive in any market.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.