Compensation Insider - February 2012 posts

Compensation Insider - February 2012 posts
Compensation and Benefits with a Middle East flair - http://compensationinsider.com

Compensation Insider
Posts published in February 2012

page 1 / 31


Table Of Contents

A few career and life lessons from my last job in Italy ............................. 3
Compensation generalist or Compensation specialist ? ............................. 6
5 traps to avoid for your Compensation projects ................................. 8
Two uses of LinkedIn Groups for the Compensation professional .................... 10
Should you rely on free compensation data from magazines and recruitment organisations ?.. 12
Why the big pay gap between managers on the same grade ? ....................... 14
Why the Sales Director has less on-target incentive than the Sales people ............... 16
Understanding R-square value in compensation analysis .......................... 19
Before you jump into a technical compensation answer... .......................... 21
Even pictures have fine print .............................................. 23
Compensation provider Birches Group extends its reach in the region - an interview with Warren
Heaps .............................................................. 24
Share the knowledge - February 2012 ........................................ 29

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A few career and life lessons from my last job in Italy
http://compensationinsider.com/a-few-career-and-life-lessons-from-my-last-job-in-italy/

5 years ago I was in Italy for my third job in that country in less than 10 years. I love Italy, and really
enjoyed Turin. It's a great city with beautiful architecture, nice, contrasted weather with cold winters
(after all they held Winter Olympics there in 2006) and hot summers. The food is great, there are a lot of
art galleries and museums, and the people are friendly.

Yet in February 2007, I was six months into the job, and utterly miserable.

You see, when I accepted the role, I thought it would be easy. After all I was ready for a Director job, I
was an expert in Compensation & Benefits in the EMEA region, and I had alreay worked twice in Italy.
So I looked forward to the "International" aspect of my new job, being exposed to countries like India and
China, and having a chance to make a difference into my new organisation.

Well, it turned out that I was wrong. It was not easy. My previous experiences were in multinationals, and
there, I was working for an italian company. The culture was very different, much slower in
decision-making, with lots of bureaucracy, a heavily hierarchical (and male-dominated) structure, and a
lot of resistance to any form of change in HR.

For example, the company's vision of Compensation & Benefits was focused on 2 aspects : international
mobility for executives, and "costo del lavoro", which is the italian word for calculating labour costs. We
had to endlessly compute these costs, on an hourly, daily, weekly, monthly and annual basis - and to be
honest, it was a nightmare. We would spend hours producing these labour costs, only to be - each time -
told that our numbers did not match those produced by Finance, and we had to find a way to make our
numbers match.

I did consistently suggest that, if Finance numbers were the "right" ones, why did we waste our time
duplicating the effort and then manipulate our data in order to come to the same result ? We could simply
use the Finance results and free a lot of HR time to focus on more value-adding activities. Not that we
were lacking in challenges ! But every time, I was told that we couldn't change anything, because "things
have always been done that way here".

The workload was ridiculously high, with no recognition. Every day, my values were challenged. I was
asked to do things I fundamentally disagreed with. The Group CEO is someone quite famous for getting
results and engineering a true turnaround in the company. Internally, he was mostly (in)famous for
leading by fear, shouting at people, and had a reputation of letting go one top executive at every quarterly
meeting - a reputation that was only slightly overstated.

Then one day a few months later, my boss' boss did the same to me. He litterally shouted at me : "I have
a sh#@ life, and so you must have a sh#@ life too ! Who is the boss here ? I am giving you an order, and
you have to execute it !" and so on.

To me, that was the straw that broke the camel's back.

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I was overworked, tired, conflicted about my values, and not enjoying the work I was doing. And I will
NEVER accept someone - anyone - treating me with disrespect in the workplace. I decided enough was
enough, and the next day, I handed over my resignation.

It was the most liberating feeling ever. When I left his room, it felt like this massive weight had been
taken off my shoulders. I had no other job lined up, didn't know what or where I would go next. But I felt
at peace because I had decided to go with was deep within me. Better the uncertainty than the misery !

(By the way, a few weeks later, I had 3 confirmed, interesting leadership roles in C&B and had to make a
choice which one I would pick - not too bad an outcome for something totallu unplanned).

Five years on, what remains from this experience ?

I learned that you have to listen to your heart and your guts. I was not the right fit for that company and
its culture. I was not happy. My values were being challenged all the time. Yet, even though I was
miserable, I was not thinking of leaving. There were all sorts of "good reasons", from "I need to try a bit
harder", to "It's not even one year, what will people think and what kind of message will that give to
potential employers?". But in the end I was simply letting fear of the unknown take over my life.

I learned as well that this turned out to be one of the best decisions I ever made. I eventually took on a
global leadership role for a company in Dubai, and had a blast. Knowing that I had the strength to follow
my convictions and live up to my values gave me a great foundation, a level of confidence that I think
anyone who meets me can identify. It is also a great support in any negotiation with senior management
on Compensation & Benefits projects, because they know I will only go for something I am fully
comfortable with.

I learned that, just because you've already lived in a country, you won't necessarily blend in into another
job in that same country again - company culture is very important. Actually, I believe that the more
senior you get, the more important the company culture is - because if you are not aligned, but your role
entails making decisions that impact the lives of others, then you will feel at odds all the time and won't
be able to produce your best work.

Finally, I learned that there is truth in the old saying that when one door closes, another one opens. You
never know where you will be in 5 years, and whatever your plans were, life will most likely force you to
modify them. As long as you keep your sense of direction, you will be fine. And that applies not just to
your career (in Compensation & Benefits or any field), but also to your personal life. Remain true to
yourself, and the rest will take care of itself.

Liked this post ? Why don’t you share it on LinkedIn or Facebook ? Simply click on the link below and
help your friends and connections benefit from it too !

Related posts :

Fresh professional goals for 2012 as a Compensation leader

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4 skills to master for influential Compensation & Benefits
Compensation generalist or Compensation specialist ?

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Compensation generalist or Compensation specialist ?
http://compensationinsider.com/compensation-generalist-or-compensation-specialist/

Did you ever think that Compensation & Benefits can be a generalist role, not necessarily a specialist one
?

Of course, in the GCC most companies don't have a massive HR team, and even having one C&B person
on board is not always a given. Often, mid-size companies have an HR Generalist or the HR Director
taking on the C&B hat at the time of salary reviews and bonuses, and that's it.

But once the organisation reaches a certain size or complexity, a Compensation person is needed to
address all the questions related to job descriptions and evaluations, salary ranges, promotions,
international assignments, benefits, bonuses and incentives, recognition, performance management,
setting up in new countries, due diligence for M&A, hiring salaries for new roles, retention strategies etc.

Now, in the very large organisations such as multinationals, sometimes the C&B people are becoming
more specialised. For example, experts on pensions, on global mobility/tax, on Mergers & Acquisitions,
on sales incentives and the like. But given that these roles are relatively rare in the GCC (except maybe
in the larger airlines), that's not the kind of specialisation I have in mind when comparing to the
"Compensation & Benefits generalist".

Most GCC compensation experts are in fact generalists of C&B, with experience in multiple aspects of
the role, but not necessarily the deep functional and technical expertise acquired through years of
designing sales incentives, managing retirement arrangements or implementing performance management
systems. And that's perfectly fine - the market in general does not need many of these super-deep experts
who are focused on a very specific functional niche within C&B.

But for the rest of the C&B experts in the region, how much of a generalist are you really ? I am talking
of the generalist view that you can gain from working, as a C&B person, in multiple industries and/or
multiple countries.

For example, you work in high tech, then Oil & Gas, then real estate, then pharma. And even better, you
combine that with being based in the UK, then UAE, then Singapore, then KSA. This kind of experience
is, in many ways, much better than if you start as a Compensation Analyst in a bank in Bahrain, then
move up the ladder to another bank still in Manama, and end up, a few years later, being the
Compensation Manager yet in another bahraini bank.

Of course, building experience in a given industry is a good thing. It gives you depth of thinking, a good
reference system, and a specialist network to tap into when you have questions.

However, there is a lot to be said for the Compensation professional who has had exposure to different
industries and geographic areas. This person demonstrates a sense of adaptation, the capacity to put
herself out of her comfort zone, a sense of curiosity, an extensive network and, as a result, is much more
likely to come up with innovative solutions when confronted with issues in her organisation.

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Indeed, as a true generalist C&B with experience in diverse companies and countries, when you get a new
job then you really know that you need to learn about your business. You can't be set in your ways,
thinking like every other Compensation professional from the industry - because you are not influenced
only by that industry. You have seen other things. You have been confronted to other ways of thinking.
You have friends and peers who implement different solutions and can tell you about their approaches.

As a result the true generalist Compensation person will have a better chance to design truly unique
solutions and systems for the challenges faced by his or her business. This gives the company a real edge,
a differentiating factor.

So think about it for your next career move. Will you remain in the same industry and country, building
deeper expertise in your niche, or will you expand your horizons and get confronted to new situations, but
with a lighter touch ? Both have their advantages. What matters is that you make a decision based on
what you want to achieve.

Related posts :

How to get started in your new Compensation job

Fresh professional goals for 2012 as a Compensation leader

Why every word counts in Compensation & Benefits

4 skills to master for influential Compensation and Benefits

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5 traps to avoid for your Compensation projects
http://compensationinsider.com/5-traps-to-avoid-for-your-compensation-projects/

You have to manage one or more Compensation & Benefits projects and want to achieve success as they
form part of your objectives for the year.

Before you rush into implementation mode, here are 5 fundamental traps to avoid :

1 - Lack of executive buy-in

All projects require a clear sponsor. This is especially true for Compensation-related projects, as they
involve very personally sensitive matters that affect directly all employees. Everyone cares about how
they are compensated, and everyone has an opinion what should be the end result of your project.
Sometimes, they even want to tell you how you should go about it, even if the employee has never had
any exposure to C&B matters ! The right sponsorship is paramount to achieving success as it will help get
the right decisions made and will untangle any sticky political situation you will, for sure, encounter
during the lifetime of your project.

2 - Wrong, unskilled or not dedicated resources

This one is pretty self-explanatory. Yet, especially in emerging markets where there is a real scarcity of
actual, proven C&B talent, very often you end up having to work on your project with people who are not
knowledgeable enough. This is often compounded by the fact that those resources are short of time to
allocate to your assignment. Compensation & Benefits projects often require a lot of cooperation in order
to be effective and propose solutions that are realistic and easy to implement. You need to work with
Finance, Marketing, IT, employees, Sales, management, HRBPs.... If the representatives from each
stakeholder are not really involved in the project due to lack of time or lack of skills, your end-result will
be thoroughly impacted and it could derail your whole work.

3 - No communication on progress throughout the project

It is easy to get caught up in all the activities related to the project. The to-do list is long, there are a lot of
necessary interactions, multiple strands of work to handle at the same time... As project leader, you focus
your attention on ensuring that things are under control and progressing as planned. There are so many
things to do, that you don't take the time to maintain the communication channels open with all the
constituents of your project : your executive sponsors, your natural supporters in the business (the ones
who were loudly requesting you to work on the topic), the representatives of employees.... sometimes
even your own boss ! Well, this is a major oversight. Keeping the communication line open throughout
the life of the project is one of the best ways to spend your time as it ensures that you are staying aligned
with the needs of your internal customers, you get feedback on regular checkpoints, and you build buy-in
for the end-result before even announcing it officially.

4 - Inappropriate project management processes

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When you don't manage your Compensation project properly, obviously you end up missing deadlines,
not delivering or delivering something which does not fit the requirements. One aspect of project
management which is often overlooked at the beginning of the assignment is the clear establishment of
decision-making rules. Governance is crucial in projects. If you don't set the rules at the beginning,
confusion will reign, you will lose time, and may end up having to re-do whole sections of the work,
because decisions were made at the wrong level and are being overturned by the actual owner of the
decision. So take the time to get agreement on who decides what and when, ensure that you have access
to the decision-makers, and your project will not be delayed or derailed because of wrong decisions.

5 - No change management before and during implementation

Compensation & Benefits projects tend to be highly technical in content. You have to understand legal,
fiscal, financial, mathematical/statistical aspects of HR and the impacts and limitations of HRIS and other
IT systems in the development of the solution. A lot of people who specialise in Compensation &
Benefits are actually the "geeks" of HR. They love these specialised aspects of the job, and naturally
gravitate towards them. So the risk is relatively high that other sides of the project may be slightly
neglected. For instance, psychological aspects of the changes introduced through the project could be
under-estimated. If change management actions are not introduced early enough before the project comes
live to the organisation, and during the deployment, the whole thing could fail. The organisation will
reject the most beautifully designed and technically perfect solution if its launch and implementation are
not supportive of the company culture and presented in a manner that is acceptable for the population
impacted.

Keep in mind these 5 traps and you will greatly increase the chances of your project being a success, well
accepted by your organisation and adapted to its needs.


Related posts

Are you benchmarking... or copying ?

7 steps to compensation programme design - the basics


Compensation Data vs Compensation Intelligence

Socialize your Compensation & Benefits annual business plan

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Two uses of LinkedIn Groups for the Compensation professional
http://compensationinsider.com/two-uses-of-linkedin-groups-for-the-compensation-professional/

In today's edition of Sunday Skills I want to cover a little-used source of information for Compensation &
Benefits professionals.

With over 150 million members, LinkedIn is a great repository of knowledge and goodwill. An obvious
source of information and expertise is to browse the Answers section and look if anyone has asked a
question relevant to your needs today. Or simply use your 10 questions per month to see what your peers
have to say on your request.

There is another source of good information for you, though a bit less direct.

Once you have completed your profile and connected with relevant people, you have surely joined one or
more Groups, related to HR, Compensation & Benefits, Emiratisation, Employee Engagement, Global
Mobility, Performance Management, the country you are in, the countries you cover or will enter into etc.

Once you are a member, you can see and search all discussions, or create one if you wish. The advantage
of Groups over Answers is that yes, they are smaller and the discussions are not visible to all LinkedIn
members, but they are more targeted and a good question therefore has an increased chance of receiving
relevant answers - or for you to browse these relevant discussions.

The one section which is widely under-used though is not the Discussions, as these are the prominent
feature of any Group.

It is the options you find under the More tab of the Group. There, you can see all recent updates in the
Group, or those only of people you follow. You can also go to Your Activity and get an update on all the
Discussions that you follow, have participated to, or initiated. Or you can get to the people you follow
through this path as well.

Why do I focus on this ? Following specific Group members is a great way of getting a passive flux of
information about what your selected peers are involved in, and can open the door to a deeper relationship
once you get to connect with them directly.

So who could you decide to follow ? By default, all your first degree connections (you can decide to
unfollow them, it's a simple as the click of a button - and they won't be notified). But also, from the
Groups you belong to, you could decide to follow a whole range of people :

Influencers, the ones that participate actively to the Group
The people asking questions on topics of specific interest to you
Journalists, writers etc
Providers
Peers in your industry or your country
Your competitors if you are a provider….

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They are not notified that you follow (or unfollow) them. But what you get can prove to be a superb
source of information, which you control :

You see their activities displayed on the stream of Updates on your LinkedIn home page (and can
decide to hide them if you want)
You can choose to receive an email for all their activity (not recommended if they are very active or
if you follow a lot of people).
You can see their recent activity from your list of all people you follow.

I have included a quick Powerpoint to show you the visuals.

In short, as a complement to Alerts and RSS feeds, use the Discussions and More sections of the Groups
on LinkedIn. You will get information on topics relevant to you, be able to establish relationship, ask for
advice and get invaluable free support.


Related posts :

Get laser-focused Compensation information with Alerts
How RSS Feeds and News Readers can help Compensation & Benefits
Create the best rules in Outlook to boost your productivity

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Should you rely on free compensation data from magazines and
recruitment organisations ?
http://compensationinsider.com/should-you-rely-on-free-compensation-data-from-magazines-and-recruit
ment-organisations/

Recently a few recruitment organisations have issued free "salary guides" for certain countries or
industries. Magazines, whether business oriented or focused to the individual consumer, also run regular
reports and guides with exciting titles like "Are you paid enough ?". There are even websites where you
can get free pay information (say, regarding a position that you're interviewing for) provided you give the
same information about your salary in your current role.

Often, hiring managers, employees or even other HR people will show me these numbers and ask me
some variation of "how come our salaries are not the same as the ones mentioned in here ?".

I have nothing against these guides and reports. Actually, in the odd case where you are setting up in a
new country and can't access professional data from legit survey providers or through informal
conversations with peers, they can be a useful first source of information to get you started on your cost
of employment simulations.

I do however have some reservations when it comes to these guides.

The ones sponsored by recruitment agencies tend to have high salaries because, well, ultimately,
agencies are often paid a percentage of the salary they negotiate for the candidate they get hired for you -
so the higher the pay, the higher the fee for them. And it makes the positions they advertise more
attractive to candidates. So it is in their advantage to indicate salaries that tend to be, not false, but on the
high side.

The websites providing salary information based on visitors' feedback have little to no quality
control. The data is based on goodwill and the assumption that people will provide exact information on
their current pay. The idea is, 1 - that people know exactly their current package (which in my experience
is often not true) and 2 - that they will tell the truth and not inflate their stated compensation in a bid to
appear more "important" or "senior" than what they really are. And, well, people are people... so without
these built-in control mechanisms, the data they provide can't be trusted fully.

I described in an earlier post what kind of safeguards and quality control processes are put in place by
compensation survey providers. They are based on anti-trust and privacy laws, but also on statistical as
well as methodology controls - and the size of the data sample also matters.

One of these important points is the job matching approach. There are job descriptions as well as
reference points (based on the provider methodology) to make sure that the data provided for each job is
similar. This way, the companies participating in the survey are sure that the results are comparable :
salary information is relevant.

Most of the surveys provided by recruitment agencies or self-submitted information, are not as rigorous in

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their approach to job descriptions and job matching. Often the matching is based on job titles only, and
this is where a lot of the discrepancies can come from. A Director in a company may be the equivalent of
a Vice-President in another, some organisations may call Manager someone who holds an individual
contributor role, an Assistant in an organisation may be a deputy department head while it is may be a
secretary in another organisation....

Similarly the size of the population being used for producing the results indicated in these guides, is
never really explained. Is an average based on 3 employees data points really relevant ? What if the
recruiting company takes into account the salaries they have gotten for candidates in only 2 organisations
? Do they really represent "the market" ?

Salary guides issued by recruiting companies, magazines and websites can be useful at times, when you
have no other data point and are looking for a rough idea of what market trends are. However, you need
to use them carefully as the job matching method as well as the statistical controls are not always as
thorough as the ones used in compensation surveys designed and developed by specialist providers.
Ultimately, relevant data comes at a price, and can't always be found for free.


Related posts :

The safeguards in salary benchmarking
Compensation Surveys - the ultimate buyer checklist

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Why the big pay gap between managers on the same grade ?
http://compensationinsider.com/why-the-big-pay-gap-between-managers-on-the-same-grade/

In my career in Compensation & Benefits, I have often heard this question or a variation upon it : I see
managers getting twice the pay of other managers from the same group and same job grade... Why is this,
and how can you explain it ?

This is a fair question on the differences in salaries for people in the same grade and salary range.

First, if your company has created salary ranges (ie banding jobs together, doing the market research and
designing a range of salaries considered acceptable for each band), and if these 2 managers both sit within
the salary range, then you don't have a fundamental flaw with respect to your official company policy.
What may be the problem is a salary range which is too wide because it can range from simple to double.

Usually at the manager level, the salary range will be wider than at junior staff level. Why ? Because after
years of work, your individual profile matters more than when you are a young graduate or in your first
years of working. Your experience, the kind of industries you worked in, the projects you participated in,
your managerial capability, even your personality and soft skills, will make a big difference in how much
you are valued by your organisation at the time of hire.

Also, your tenure in the company and proven past performance (resulting in larger salary increases and
bonuses if you are a consistent high performer) will have a cumulative influence on your salary and I sure
hope that, all other things being equal, a great performer should receive a higher pay than an average
performer.

It could also be that one of the 2 managers is in the wrong band. Maybe the one with the lower salary
should be in a lower band. Or maybe the one with the higher salay is ready to move on to bigger
responsaibilities and be promoted to the next grade up.

In any case, without knowing the specifics of each case, and without a proper internal and external equity
analysis performed by your C&B manager, you can't know for sure if this salary difference can be
explained by logical factors.

And, let's be honest. In all countries and all companies, you will also see some examples of some people
being underpaid or others being overpaid for no apparent or logical reason... Not always will you be able
to explain differences of salaries based on experience, profile, past performance, tenure and readiness for
promotion.

Enjoyed this post ? Why don’t you subscribe by email to make sure you receive my articles 3 times per
week ?

Related posts :

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From job evaluation to salary scales - the basics
New hire vs employees : 3 salary situations and how to handle them

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Why the Sales Director has less on-target incentive than the Sales
people
http://compensationinsider.com/why-the-sales-director-has-less-on-target-incentive-than-the-sales-people/

At previous organisations with a sales force, we had to determine rules regulating the split between fixed
and variable pay for the population eligible to the Sales Incentive. Besides benchmarking with other
companies in our markets, we used an internal logic.

We would start from the bottom up ie define, first, what a sales role was for an individual contributor. We
would use a simple decision-tree approach to Sales Incentive eligibility that I described in a recent post.

A SIP-eligible position would be one where the jobholder's main accountability is about closing the sales
and making the revenue come into the company. The jobholder "owns the account" and owns the
relationship with the client(s).

So that usually takes out marketing roles, as well as some technical support roles responsible for
maintenance etc (these can sell some services too or even some products, but their MAIN responsibility is
customer service and maintenance ie not sales).

Then a Sales Manager is a person whose role is to team lead some Salespeople. He will also be in charge
of closing some deals, especially providing support to the Sales guys. Because his role starts to focus on
people management and territory management etc, there will be a higher base and lower on-target
earnings as there is less direct involvement in the actual sales process.

The Sales VP or Director is the manager of sales managers. His role is mostly about setting the strategy
for the organisation in terms of Sales, managing territory, liaising with marketing, product development,
HR etc... so he will have even less focus on actual selling himself. Depending on the company he will or
will not be on SIP and the Fixed/Variable pay ratio will be the same as that of any other top person in the
organisation such as the Finance Director or VP of Manufactiruing.

Lastly, I would say that the level of the top role (VP or Director, grade 25 or grade 26 etc) is determined
through the same methodology as job leveling / job grading for any position in the organisation. The less
direct impact on the financials/revenue is usually "compensated" by the focus on strategy and
direction-setting for the organisation etc so that the number of points (Hay or otherwise) is still higher
than that of the sales individual contributor.

Overall, job content is the driver of the decision on whether the role should be on the Sales Incentive or
not, and also informs decisions on the on-target bonus and ratio between fixed and variable pay. It is
important to have some criteria in place so that you can make informed decisions when the organisation
changes, or when an employee challenges the decision.


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Related posts :

page 17 / 31


Why am I not on the Sales Incentive Plan ?
Analyse my SIP !

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Understanding R-square value in compensation analysis
http://compensationinsider.com/understanding-r-square-value-in-compensation-analysis/

For this episode of Sunday Skills, I wanted to explain some statistical concepts used by many
compensation consultants when they produce compensation analyses for their clients.Very often, the
results are presented "raw", with a nice graph and a R2 or R-square value (or a series of values)
mentioned on the side.

But many HR Generalists, and even Compensation specialists, have not studied statistics, and as a result
they don't always understand what that really means for their business. So here is a plain English, simple
explanation of what the data means. Please bear in mind that I am not a statistician, so if you spot a
mistake, please let me know through the comments or the Contact Me page and I will do my best to
correct...

Now, let's imagine that you are interested in understanding how tenure, education and job grade influence
pay. So you perform a regression analysis, which allows you to "predict" the strength of the relationship
between the variables : tenure and pay, then job grade and pay, and education and pay. When there is only
one variable (tenure or job grade), the regression is called simple linear regression and is usually
represented by a line in the middle of the data points. That's the typical graph that you get from your
compensation consultants.

The R-square value explains the strength of this relationship. The closer it is to 1 (or 100%), the more it
explains the result. But in reality you never get 1. So for example, the R-square value between job grade
and pay is 52%. It means that job grade "explains" 52% of an employee's pay.

But life is never that simple, is it ? There is not only one factor which influences pay. As mentioned
above, for example you suspect that tenure also influences pay. So you perform another regression
analysis, and the result is that R-square is, say 29%. So tenure alone "explains" 29% of pay. Less than job
grade.

You then perform a multiple linear regression to understand how the two independent variables (job
grade and tenure) influence pay. Combined together, the R-square value is now for example 63%.

63% - 52% = 11%. It means that tenure explains 11% of pay, on top of job grade.

If you do this analysis multiple times, for each criteria that you think influences pay, you will be able to
build a model "predicting" pay based on these criteria. For instance you can combine, job grade, tenure
and education to explain pay.

Once you have exhausted all the independent, quantitative criteria, you may get to a total R2 value of,
let's say, 76% or 0.76. In our example with 3 variables, job grade explains 52% of pay, with tenure
explaining an extra 11% of pay and education predicting another 13% of pay. The final 24% (100%-73%)
are linked to qualitative criteria that drive pay.

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I hope you find this explanation of R-square interpretation useful and that it will help you understand the
results of your compensation analyses better so that you can make informed decisions in the future.

Liked this post ? Why don't you subscribe by email to receive all my future articles ?

Related posts :

Percentiles - an easy way to figure it out
How to compare average and median salary information

_______________________________________________

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Before you jump into a technical compensation answer...
http://compensationinsider.com/before-you-jump-into-a-technical-compensation-answer/

Here is a recent question on LinkedIn : "How does someone determine the dollar value of a benefits
package ?". There was no additional explanation or clarification.

Many of the answers provided were relatively detailed, covering different types of benefits, talking about
"net present value", referring to actuaries and the concept of value vs that of cost.

Typical C&B answers ! Technical, complex, a bit dry for most of them.

The best answer in my opinion ? A very short one, provided by someone outside of HR : "The annual
value to the recipient is simply what it would cost to purchase the benefits at retail."

That's it. One sentence.

And why is it the best answer for me ? Because the person who wrote it took the time to look at the
profile of the person who asked the question.

In that case, the asker is a professional resume writer. Someone who helps others be on the job market
and look for a new role. Most certainly, this person keeps hearing the question he just asked. Because the
new unemployed want to understand how much it will cost them to get an equivalent coverage. Because
they want to evaluate how much to ask for as a package when interviewing for a new job.

So the answer is provided from the angle of the customer of the person asking the question, which is most
probably what is most relevant to the asker.

I have written in the past about the importance of how to communicate in Compensation & Benefits.
Simple, direct, adapted and relevant communication is key for the credibility of our function. Never
forget to think about who is asking, and why. When you don't, the image of Compensation specialists as
pure "techies" continues.... and it does not help us get buy-in with top management when we want to go
ahead with projects.

Communication is key !

Enjoyed this post ? Why don’t you subscribe by email to make sure you receive my articles 3 times per
week ?

Related posts :

Compensation data vs Compensation intelligence
4 skills to master for influential Compensation & Benefits

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Socialize your Compensation & Benefits annual business plan

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Even pictures have fine print
http://compensationinsider.com/even-pictures-have-fine-print/

I'll keep it short today and will share a picture from the always excellent OneFTE.com.
In the post Even pictures have fine print, Stuart makes an excellent point about how presenting data in
graphics can convey a different impression based on the scales you choose to use. Make sure to try
different versions of your compensation graphs before distributing them, to make sure the visual
impression supports your point !


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Compensation provider Birches Group extends its reach in the
region - an interview with Warren Heaps
http://compensationinsider.com/compensation-provider-birches-group-extends-its-reach-in-the-region-an-
interview-with-warren-heaps/

My friend Warren Heaps is a Partner at Birches Group, an independent consulting firm specialised in
providing compensation information in over 180 emerging and developing countries.

Birches Group very recently announced that they have entered into an agreement with Aon Hewitt, one of
the major global compensation consultancies. Under the partnership, Aon Hewitt will make Birches
Group surveys in developing country markets available to their clients, expanding their survey coverage
to over 170 countries globally.

You can find the Press Release here.

Warren answered a few of my questions about what the partnership will mean for companies based in the
Middle East and GCC.

Warren, thanks for addressing the readers of CompensationInsider. First, can you please explain to us
the kind of services Birches Group provides, and in which countries of the Middle East ?

Birches Group is a global salary survey provider. We specialize in surveys in developing country
markets (148 countries in all). We have data for all of Africa and the Middle East, in addition to the rest
of the developing markets in Latin America, Europe (East and Central), Asia and the South Pacific.

In the Middle East we have surveys in all countries with the exception of Dubai (our UAE survey is just
for Abu Dhabi). But keep in mind, we also cover Northern Africa, elsewhere in Central Asia such as
Afghanistan, Pakistan, Kazakhstan, as well as Iran.

We also offer consulting services in the areas of job evaluation, competencies and performance
management. Our approach is a good alternative to the complex and heavy approaches that other
consultants offer.

Why did you choose this activity ?

Birches Group began as a private company back in 2005. But for 20+ years before, the founding partners
were responsible for compensation for the United Nations Development Programme across 133
countries. This experience was the foundation for our approach and methodology, as well as the idea of
creating a company to serve the needs of employers throughout the developing world.

What does Birches Group offer which is unique ?

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There are several things which make our surveys unique:

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1. We use a single, standardized methodology for all our surveys.
2. Our methodology is build to capture the unique requirements of developing country markets. It
works well with smaller sample sizes, and captures all of the extra allowances and in-kind benefits
that are common in the region. There is much more, but that gives you a good idea. The other thing
that makes us different is our coverage – all the countries in the developing world.

Tell us about some of your successes in the region.

We have had some good success in all parts of the world! We did a large project in the Middle East a few
years ago for an organization which has operations in Jordan, Syria, Lebanon, and the Palestinian
Territories. It was a major challenge, since we interviewed staff members in all those locations. We
developed a new job grading system, and a new approach for compensation, which included
competency-based broad bands for professionals, as well as performance-based pay for senior executives.

We hope to do a lot more work in the Middle East, as we know there are many organizations that could
benefit from our expertise, especially those which are themselves expanding into nearby countries in
North Africa and elsewhere.

What were the reasons that made you enter in the relationship with Aon Hewitt specifically ?

We are so excited about the new collaboration with Aon Hewitt. It’s a marketing partnership – we will
continue to be a separate company from Aon Hewitt – they did not purchase us or buy an equity stake.

There are several reasons why we think it will be a huge success. As you know, Aon Hewitt is one of the
largest human resources consultancies in the world. They have targeted the developing world, especially
Middle East and Africa, as one of their priority regions for expansion, much like they have had success in
India and China over the last several years.

We first got to know them while working on a project for a mutual client, who asked us to work together
on our respective pieces. Through conversations it became clear that we would be a perfect
complementary fit for them. Aon Hewitt is strong in the more developed countries such as Europe, US
and Australia, as well as many of the larger developing markets such as China, India, Brazil, etc. They
were looking for a way to expand their market coverage dramatically.

With the Aon Hewitt TCM survey now in about 45 countries, and with Birches Group surveys in 148, we
can together cover 181 countries (there is some overlap). No other consultant can match that coverage!

Another reason for working with Aon Hewitt is their approach to branding. They already have three
distinct brands in the market – Aon Hewitt (multi-sector surveys), McLagan (financial services) and
Radford (Tech and Life Sciences). Birches Group is a natural fit into this portfolio of offerings for their
clients as the developing markets option. Other major consultants always seem to combine their offerings
into a single one. Aon Hewitt has decided specifically NOT to do that – which allows us to maintain a
strong brand identity.

What, if anything, will change with the partnership ? What are the benefits for organisations in the
region ?

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The most obvious benefit for the region is the ability to combine our efforts to expand the surveys to the
most important employers in the Gulf region and elsewhere in the Middle East. We are hopeful that we
will be able to expand participation and provide clients with a better product going forward.

The partnership also will allow us to work cooperatively to serve clients in new ways. Already we are
formulating plans, for example, to work with groups of Aon Hewitt clients in specific sectors, who
require data in countries they do not cover with their own surveys. Our long-standing expertise with
international public sector organizations will be helpful for some of the projects they are working on for
clients. And, we hope to offer joint conferences and research as well.

When is your next upcoming survey in the Middle East going to take place, and where can our readers
find out more about the surveys for 2012 ?

Our survey schedule spans the entire year, but we have the ability to accommodate clients at any time.
Here is the schedule (subject to change, of course):

Lebanon – UAE : February

Kazakhstan – Kyrgyzstan – Uzbekistan - Mauritania – Sudan : March

Saudi Arabia – Syria – Tajikistan : May

Egypt – Tunisia –Turkmenistan : June

Morocco : July

Azerbaijan – Bahrain – Yemen : August

Afghanistan – Pakistan – Algeria : September

Oman – Kuwait : November

Iraq – Qatar : December

I would like to thank Warren for taking the time to answer these questions. If anyone wants to know more
about the surveys or check the schedule, they can reach Warren or visit the
company website at www.birchesgroup.com. You are also invited to join Birches Group on
LinkedIn (Developing Markets Compensation and Benefits), and check out the blog where Warren
contributes his thoughts on a regular basis at www.internationalhrforum.com - it is also on my blogroll as
one of the blogs I recommend in C&B.

Enjoyed this post ? Why don't you share it on LinkedIn or Facebook so that your friends can benefit from

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it too ? Simply click on the buttons below !

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Share the knowledge - February 2012
http://compensationinsider.com/share-the-knowledge-february-2012/

Like every month, here are some of the best or most relevant Compensation & Benefits,
performance management, HR and/or global mobility articles that I came across recently :

.... But let me start by sharing this job ad for a Manager of International Reward and Benefits for Qatar
Airways, posted a few days ago. Good luck !

At Davos, bankers resist regulatory restraint on bonuses
A Business Week analysis of how HR helped the transformation at IBM in the past decade...
...And the other side of the coin : HR biggest failure comes from over focusing on processes
TLNT explains how HR can support a culture of innovation
From Forbes, a very interesting (if controversial) take on why "maximising shareholder value" may
not be such a great idea
Again from TLNT, a great idea about an unusual use of performance appraisals… for recruitment
purposes
This HR Magazine article highlights different types of employee engagement, and how it can tie
with your performance management system
Draft white paper details European Commission's plans for pensions
Al Gore recently published a white paper on sustainable capitalism through his company Generation
Investment Management. During the presentation to the press, there was a lot of focus on long-term
investors and especially pension funds. His recommendations are discussed in this Investment &
Pensions Europe article.
Suzanne Lucas gives some answers to Why does your salary offer stink ?. The one reason I would
add is that maybe there is a relatively wide salary difference between her current pay and that that
should be associated with the new grade, and the employer could very wll have a cap on salary
increases for internal moves.

For those of you who are interested in GCC and MENA articles, here are some regional pieces :

Saudis who turn down jobs in order to stay on Hafiz nemployment benefits may be penalised
The Wall Street Journal on how Saudis push young people, including women, into jobs. The article
covers a number of initiatives and provides some insight on salary differentials between Saudis and
expats.
UAE confirms transfers of salaries. A view of the numbers of UAE Nationals who benefitted from
the salary revisions for federal government employees announced in December.
An overview of challenges and expectations of managers in the Middle East
New income tax regulations in Oman - this one is a bit dry but may be useful. Don't forget to consult
with a specialist !

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Best of the rest :

As usual, great example from Storytelling with data. This time Cole describes what NOT to do
when communicating using a table. The example is from a newspaper article, but the advice
definitely applies to anything you can present in a table in Compensation & Benefits.
In this HBR blog, the authors challenge the notion of an open talent market for CEOs, and the
reliance of compensation committees on peer benchmarking to justify high CEO pay. Even if, as a
human being and a compensation professional, I like their notion and think that CEO pay should be
driven by more factors than simply external benchmarking, I posted a reply to this post as I feel that
the idea needs to have more data to substantiate it. Check out the comments to see some of the most
immediate questions that came to my mind.
This Fistful of Talent post tells a story of how small things can have a big, long-lasting impact - read
it and write a note and ask for input today !
This article relates to a new (and still small - but enough for a book to be published) trend of
consumers choosing where they eat based not only on the quality of how the food was produced
(was it free range chicken ?) but more importantly on how the employees are treated in that
restaurant. An interesting concept !
Meeting Smart People, Rejecting Starbucks, and Making Memories : an interesting reminder from
Victorio Milian.

... And my special for the month : how to change the world with unusual ideas. Interviewed by Wharton,
Simon Berry wants "mothers throughout the developing world to be able to buy an anti-diarrhoea kit to
stop her child dying of dehydration from diarrhoea in all the places you can buy a bottle of Coke."

Enjoy your reading !


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Compensation and Benefits with a Middle East flair

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