A Compilation of Compensation Biases - Compensation Homilies
Bias: an inclination of temperament or outlook; bent, leaning, inclination, partiality, preference, proclivity, prejudice, propensity, tendency.

Compensation consultants normally write long, dry articles. In the tradition of Benjamin Franklin’s Poor Richard we have documented some of our pithy insights about a wide range of compensation and consulting issues in a white paper.

	To do anything well, you must first care.
	Be careful what you incent, you may get it!
	Remember who your competitors really are - don’t use compensation programs that pit one group of employees against another.
	How do you know that the CEO’s ideas for a new program are right? Every idea needs to be challenged regardless of the source.
	In designing incentive programs, always look for the weak link: try to figure out how the participants could earn a payout while leaving your CEO unhappy.
	Always determine what a program might cost and what the potential benefits might be before implementing it, then monitor the costs and benefits periodically after it has been adopted. Don’t forget to periodically consider the cost/benefit of alternative
	Arm employees with the information they need to make intelligent decisions and they will (if you let them).
	When selecting a consultant, don’t let fees be the primary criteria . . . if you have a limited budget, tell each of the consultants your budget and your needs and let them be creative in determining how to provide you with the most value.
	Remember that while people may work in teams, they are each concerned about their individual paychecks and careers.
	One firm we know had a policy to only hire the best employees - all employees had to be in the top 10% of their high school, college and master’s programs . . . including employees hired to work in the mail room. It also has repetitively had some of the best financial results in its industry. Given this policy, it was reasonable for this firm to have a pay policy to pay at the top of the market.
	You get what you pay for (both in recruiting and performance reinforcement).
	Too many titles can divide employees who might otherwise work together as an effective team.
	If you want consistency, have supervisors conduct all salary or performance reviews at the same time for all employees . . . they will tend to spend more quality time and do a better job (like they do with budgets).

We anticipate that you have agreed with some of these items and disagreed with others. Hopefully you found at least a few items stimulated some thoughts about some of your own biases and perhaps about some elements of your compensation program.

We find that many client situations require us to put our biases aside since the facts and circumstances are unique. But we tend to accept the adages in this booklet in the absence of specific facts in the situations that we encounter.

If you have some biases that you think would be good additions to this list, or you would just like to discuss compensation issues, please contact us!