When it comes to compensation strategy, one size does not fit all. The type of company, the size of the organization and its culture, and the needs of your employees are all factors that impact how you can — and should — implement a compensation strategy. In order to hire an external consulting firm effectively, you should understand what they bring to the table as a whole before making any final decisions on hiring. The best executive compensation consulting firms will have experience in your specific industry or job function. They will also have expertise in a number of other areas such as data analytics, strategic planning or operational effectiveness. Any time you hire outside consultants for any reason, there are things you should look for before signing with them:
The interview process often happens before you even make any hiring decisions, but it’s still worth mentioning as part of the hiring process. The first step is identifying who you would like to work with to achieve your desired outcomes. You can find a list of compensation consulting firms through your preferred search engine or by asking your HR team for recommendations on local firms they’ve worked with in the past. Once you have a list of potential firms, the next step is to try to find out as much information as possible about each firm without actually hiring them. You can do this by reading reviews online, looking at the company’s website, and even reaching out to references of current clients. You want to find firms that can add value to your organization through their experience, strategic focus, and methodology. You also want to make sure you find a firm that works with your budget. At this stage, you aren’t looking for a firm to hire yet. Instead, you’re just trying to learn as much as you can about each firm so you can make an informed decision about whom to hire when the time comes.
Staffing and Expertise
Firms can have a large staff, but only a few of them might have real expertise in the area you’re hiring them for. If a compensation consultancy has an entire team dedicated to compensation strategy, it will show in the experience of those team members. Furthermore, they will have a breadth of experience in other industries as well. That is because compensation is not an industry in itself, but rather a function that is used in all industries. The more specialized the industry, the more important it is that the team at your firm have experience in that industry as well.
Company Culture and Company Discernment
Compensation is not just about money; it is also a statement about your company culture. While it’s true that you need to pay competitive wages, you also need to be mindful of what those wages represent. There is a fine line between being competitive and being exploitative, and that line is different in every industry and in every industry in each specific location. Furthermore, there is a difference between the average wage in your area and what you pay your employees. While you don’t want to pay your employees below the average wage, you also don’t want to pay them at the maximum wage. In order to understand what kind of company wage your employees feel like they work for, you want to make sure you find a consulting firm that has a discerning eye for culture. They should be able to work with you to make sure the wages you are paying are the correct ones.
Data Collection and Analytics
As we mentioned above, one of the most important aspects of compensation is that it is equitable. In order for it to be equitable, you need to measure it. This means that you need to have data on how much people are currently earning as well as data on how much people in various roles and with various skill sets should be earning. This data is what will help you make informed decisions about who to hire and what they should be earning. In order to have the data you need, you will likely have to work with a firm that uses data analytics. These firms have the tools and expertise to gather the data that you need. You can even have them gather data on hiring as well so that you can track your hiring and firing rates and see how they compare to the industry averages.
Recommendations and Strategies
When interviewing firms, you should expect to have some back-and-forth about your compensation strategy. This is important because you want to make sure that the recommendations the firm comes up with are appropriate for your industry, your organization, and your employees. Again, the more experience the firm has in the industry, the more value they will be able to provide. You don’t want to work with a firm that will blindly accept your current methods and practices. Instead, you want them to evaluate everything and make recommendations based on facts, not feelings.
The last thing you should look for in a compensation consultancy is their ability to make you a proposal once you decide to hire them. A firm that is worth working with will have a proposal ready for you as soon as you decide to work with them. A proposal should include things like services offered, pricing, timelines, scope of work, etc.
It’s important to note that firm rankings like the ones we discuss in this article are inherently subjective. Therefore, you shouldn’t take these rankings too seriously. Instead, use them as a starting point for your investigation into the best firms for your organization. No two firms are exactly the same, and that’s a good thing. Instead of trying to hire the perfect firm for your company, focus instead on hiring the best firm for your company. When hiring a compensation consulting firm, you want to make sure that you find a firm that has experience in your specific industry or job function, has expertise in a number of other areas such as data analytics, strategic planning or operational effectiveness and can provide relevant recommendations that will help you achieve your desired outcomes.