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CompLab
Gregg Marshall Madness
What does basketball have to do with salary administration?
Basketball

Every March, a madness takes hold of our fair city.

Our men’s basketball team has been on a four-year upswing, making it as far as the NCAA Final 4, achieving an undefeated season, and breaking into the Sweet 16 this year. We’re quite proud of our Shockers, and their success is in no small part due to the head coach, Gregg Marshall. 

Even before the team was knocked out of the Sweet 16, we were all aware that Coach Marshall was receiving offers from all over the country. Local and national reporters started covering the opportunities as soon as they popped up. News centered around salary, what WSU could offer, and what the other offers would look like. Does this sound familiar? Do you have any star performers being hunted by your competition?

Coach Marshall is without doubt a star performer.

While WSU lost against Notre Dame this month, getting to the Sweet 16 for the third year in a row is proof of his performance being "above average.” His value to the university is greater than any of his historical predecessors. It has been reported that Gregg's salary was $1.85 Million (plus bonuses and perks), and that he was scheduled to receive a 10% salary increase, putting his new salary at $2.0 Million. The University of Alabama was expected to offer him more than a 33% increase with a starting salary expected to top $3.4 Million. While Gregg was completely satisfied with his WSU, he obviously entertained these new offers. To retain Gregg, WSU needed to do something other than rely on salary surveys, average market rate movement, and the average salary increase for a basketball coach.

What does basketball have to do with salary administration?

What does the going market rate have to do with the appropriate salary level for a star performer? What is the right salary for someone who can provide valuable results to the company?

In certain cases, the real question is the value of their contributions to the institution. For example, think about a bank's Commercial Loan Officer with a “rainmaker” level of effectiveness. If a star commercial loan officer has a $50M loan portfolio and the bank has a 4.0% yield on the loan portfolio, then the net value would be $2 Million. There are additional factors to consider as well, such as the deposits those clients would likely make and the organization's employment attraction to other star performers. Varsity players generally want team up with their counterparts, and underneath the direction of an effective varsity coach. 

If it's extremely difficult to recruit these Varsity CLOs, then the fact that the average base pay for your asset size is $115,000.00, with a 15% of base pay in incentives, may have nothing to do with a successful compensation strategy. Knowing these averages is still a critical piece of information, and appropriate for most positions. But these "special" positions require evaluation of which contributions are worth more than the market rate, relative to the employee's individual contributions and the position's overall value. They may warrant a completely different pay strategy. Relying on strictly market based pay may result in losing a star performer; a flagrant foul.

As we've said in prior posts,  there is more to the equation than cash. In the end, Gregg took an offer that was significantly less money, and stayed at WSU. Why would a star performer do that? Because money isn't always everything. High performers know that non-financial perks are also important; things like recognition, autonomy, or even a better office. Don’t neglect the benefits of your organization’s unique culture. Gregg is a local celebrity in Wichita, and the Shocker Nation loves him. That can't be easily replicated with dollars alone. Higher-paying offers still come with “cons.” Having a conversation with these sought-after employees can reveal what they truly value.

So, how should you determine the compensation for a “rain maker?”

The answer won't always be revealed by data. You should start with the numbers, evaluate the contributions of the person, and combine these with non-financial perks you've garnered are important to the employee. The win/win scenario you'll craft very well may have little to do with salary surveys.  

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