Deep in the middle of the 4th quarter, right around open 401K enrollment, HR professionals nationwide despair as they try to find the time and resources to update salary ranges. This is no weekend project. Those doomed to DIY it often have to beg for permission to buy more than one or two salary surveys yearly. Sometimes, survey data can have so few respondents that the midpoint becomes unreliable. Or, the jobs they are trying to benchmark are often hybrid roles, so the data doesn’t apply clearly. Aligning titles like Manager, Director, AVP, VP, or Chief can also feel nearly impossible to keep commensurate with fair and competitive salary grading. 

 

What’s at stake? 

All heads tend to point to HR regarding turnover, filling positions promptly, and allegations of disparate pay practices. This can be risky in numerous ways. For starters, many HR professionals already report feeling immense pressure to demonstrate the ROI value of their roles to stakeholders. Compensation is also often considered to be just one element of many that fall under general HR responsibilities, and an area in particular where many feel under-equipped through traditional education alone. As many feel a lack of compensation expertise, they seek external support, prompting questions like:

• Should we hire a compensation consultant?
• Does doing so mitigate the impact HR has on the company?
• Is it expensive? 
• What questions should I ask to determine the right partner? 

Step 1: Define your compensation philosophy

This initial question should be answered with direct input from the CEO. It should also be a formalized, recurring practice that is frequently asked and reassessed annually. Having a documented practice, which is likely to include, “We want to pay competitively to market,” will allow you to hold company decisions accountable to goals and be less inclined to respond with situational ethics. 

 

Step 2: Choose a partner

Once a clear vision for your strategy has been established, it’s time to choose a partner who is an industry expert. Knowledge of compensation practices in other industries is not enough. They need to have a deep understanding of the trends in banking and how they impact your organization’s job accountabilities, as well as determine the appropriate salary grade. When outsourcing a consulting firm, you’re hiring a team of experts. Therefore, you should expect a high level of service, quality, accuracy, and access to the latest software and technologies to make the most out of the service. Helping to develop competitive, equitable, and sustainable compensation structures that align with your strategic goals should be their primary function. 

However, if all the above is perfectly accomplished without developing buy-in from your executive stakeholders, the job is only half done. To trust it, internal stakeholders, senior managers, board members, employees, and even mid-level managers must understand the methodology. This type of understanding will equip your managers to answer internal compensation questions. An educational session to cover this methodology should be held at least every two years. 

Your HR department (even a department of 1) will feel empowered to know that they are supported by a team of industry professionals armed with precise data specific to your location and asset size instead of having to DIY a fundamental building block to achieve overall corporate success. As this is mutually beneficial for your risk department, compliance and worry over disparate pay practices or pockets of inequities can be a thing of the past. 

 

Step 3: The right consultant saves time and money

Hiring the right consultancy will not cost the company—it saves. It’s a guaranteed investment in the company’s overall success. According to the Bureau of Labor Statistics, the median salary of a Compensation, Benefits, and Job Analysis Specialist was $74,530 in 2023, moving at 7% YOY. The cost of outsourcing a team of compensation professionals, available year-round, is just a sliver of the cost associated with building an in-house HR team or even hiring just one compensation professional.  

Smaller HR departments already deal with unnecessary turnover. How could this investment contribute to your overall success? Time is money.

Bringing in a consulting firm allows for more time to focus on other business-related tasks, allowing peace of mind that your compensation strategy is in safe hands. These services can help take a significant number of workload tasks off your to-do list. You no longer need to spend the same time considering potential inequities associated with unintentional pay disparities, budgeting for salary increases, monitoring hot jobs, or analyzing Excel spreadsheets. Good consultants should have data resources essential for developing board and executive buy-in, ensuring everything flows seamlessly, and giving time back into your day.

Increased productivity is an inevitable outcome. When competitive compensation structures are in place, you are incentivizing your employees to work hard to reach their goals. When employees have clear incentives, it becomes a roadmap to success, fueled by their motivation. Motivated employees are less likely to leave their jobs, causing a decrease in overall employee turnover, and leaving more time to focus on achieving those goals. Not having to recruit, hire, and train new employees impacts all employees positively, leaving them to focus on what they are there to do. Employees aren’t constantly trying to keep up with yesterday. They are able to start planning for tomorrow!  

 

This is a relationship

You will likely have a long-term relationship with your consultant, who will be privy to many confidential issues around compensation. The key to a successful relationship with a compensation consultant is one where both parties can speak their reasoning, with all the veto power left to the client. This ensures no one is people-pleasing, which can be the kiss of death to accurate salary grades and ranges. It is not what occurs during the implementation that defines success, but the relationship and support provided after the initial project that will prove the long-term value and lead to sustainable growth. If your consultant charges for incremental job grades, you may be reluctant to request a job grading, and slowing your job architecture can be marginalized. 

“Take care of your employees and they will take care of your business.” – Richard Branson

Hiring a compensation consultant will make Human Resources a better business partner to the organization as they drive the total employee reward proposition. It will limit unnecessary turnover and allow you to demonstrate how pay compares to the market rate for better business decisions to be made. It is good for the company, good for the HR department, and good for employees. 

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