Why Recruiters Hate the Compensation Department!

I seldom use the word hate. As a kid I was scolded by my father if he heard me or my brothers use it. While I may dislike the Dodgers, tea baggers, and Simon Cowell, I wouldn’t say I “hate” them. There is one exception, one I share with many recruiters: I hate the compensation department. While there are a few departments in a few corporations I respect and the people in most compensation functions are nice, way too many seem to be oblivious of the many ways that they negatively impact recruiting performance.

I just returned from ERE’s Spring Expo in San Diego, California, where hundreds of recruiters were upbeat and positive (quite possibly the most upbeat in several years.) Regardless of the subject being discussed, the outlook by nearly all was optimistic; that is, until the compensation department was mentioned. Anytime the conversation touched on the working relationship between compensation and recruiting, the tone of the conversation turned darker.

Phrases like “hard to work with” and “out of touch” emerged frequently, and words like dislike, roadblock, and yes even “hate” characterized the relationship. It’s like water and oil. Compensation and recruiting don’t seem to mix well and rarely work together smoothly. Here are some quick reasons that justify being critical of the compensation department.

Slow Offers: As recruiters, we know that the very best candidates have multiple offers and that you have to act quickly to successfully land them. Unfortunately, compensation doesn’t seem to be aware of the negative consequences associated with a failure to respond rapidly. All too often it takes compensation days, and in some cases weeks, to approve a final offer. For firms with lengthy processes, the added delay from compensation means that all too often top candidates will have already accepted an offer at another firm before an offer can even be presented.

Lowball Offers: You would think that by chance alone occasionally a recruiter would receive an offer from compensation that was “too high,” but every recruiter knows that compensation professionals seem to take pride in undervaluing talent and generating “lowball” offers consistently. Undoubtedly, at some point in your profession you have been asked to present an offer so ridiculously out of touch with reality that you were embarrassed to do so, knowing in advance that the offer would not only be rejected but damage the candidate’s perception of the organization and the hiring manager in particular.

Equal Doesn’t Cut It: Compensation departments routinely set uniform market pay targets across the organization. Regardless of the mission-criticality to the organization of the role, all comp ranges are set at some percent of market. (I won’t dive into the lack of data-based decision-making used to determine that target rate, as the entire concept is flawed.) As recruiters, we realize that easy-to-fill roles or roles with little performance differential between top and average performers should be compensated at market, but also that hard-to-fill and mission-critical roles should have target compensation rates above market. A uniform pay target penalizes the most valuable talent and rewards the least valuable

Ugly Job Descriptions: Great recruiters understand that job descriptions are “sales collateral.” If crafted well, they can excite potential candidates, but the reverse is also true. History tells us that if the compensation department is involved in producing job descriptions, they will most likely be long, dull, full of generic jargon, and littered with antiquated compensable factors that do nothing to excite but are easy to benchmark. To make matters worse, the woefully-out-of-date job descriptions of job structures rarely get refreshed at the rate the business itself is changing. As recruiters and former candidates ourselves, we know that out-of-date job descriptions that include dated terminology and approaches can scare away even mediocre applicants.

No Brand Connection: Recruiters are always striving to make it easy for potential candidates to learn about what features position their organization among the best. Unfortunately, the compensation department is of little help in building brand image because they’re hung up with secrecy. Organizations rarely publish pay and benefits information that is honest and compelling. Even organizations that pay extremely well and offer a bevy of unique people programs that impact employees’ lives find it difficult to get compensation to package information in a way that potential applicants and employees can easily grasp.

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No Rewards: It’s well established in business that “what you measure and reward gets done.” Unfortunately compensation departments rarely if ever tie HR function and hiring manager compensation to great recruiting and retention. By not measuring and rewarding great talent acquisition/retention, compensation schemas send a clear message about the relative importance compared to those activities that are directly bonused. Because managers are not measured or rewarded on recruiting, recruiters end up suffering, as reading resumes and interviewing candidates is not a high priority. In order to increase their level of commitment, cooperation, and understanding, compensation professionals should have a significant percentage of their pay tied to successful recruiting.

Salary Survey Lag: The concept of using yearly salary surveys to at least partially determine market compensation is a sound one, unless of course, you’re in a market or region that is growing/evolving rapidly. In those cases, the rate at which market compensation is changing far outpaces the cycle time required to produce the benchmark data, making such research outdated upon completion. As many firms adjust such studies to account for aging using a uniform approach, it is likely that highly competitive talent areas where market compensation is growing exponentially will be undervalued in your schema.

Integration and Accountability: Most interdependent business functions are willing to work together to ensure that their efforts work toward accomplishing a common goal. To improve their chances of success, many leverage clear communication channels, documented processes, service-level agreements, and shared performance metrics. While service-level agreements and shared performance metrics have become common in recruiting, I have yet to see a functional example of such efforts emerging from compensation that unite the two departments under a shared set of goals.

Final Thoughts

Successful recruiting truly requires an integrated team effort. It takes a high level of cooperation between interdependent HR departments and hiring managers to produce optimal results. Each of the players need to understand how their actions directly impact one another and the overall success of the hiring process. Recruiters need a compensation department that provides a higher level of customer service and that accepts accountability for their role in ensuring that the organization attracts and retains the very best talent. Should that ever occur, “hate” would transition to “love” rather quickly.

Dr. John Sullivan, professor, author, corporate speaker, and advisor, is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high-business-impact talent management solutions.

He’s a prolific author with over 900 articles and 10 books covering all areas of talent management. He has written over a dozen white papers, conducted over 50 webinars, dozens of workshops, and he has been featured in over 35 videos. He is an engaging corporate speaker who has excited audiences at over 300 corporations/ organizations in 30 countries on all six continents. His ideas have appeared in every major business source including the Wall Street Journal, Fortune, BusinessWeek, Fast Company, CFO, Inc., NY Times, SmartMoney, USA Today, HBR, and the Financial Times. In addition, he writes for the WSJ Experts column. He has been interviewed on CNN and the CBS and ABC nightly news, NPR, as well many local TV and radio outlets. Fast Company called him the "Michael Jordan of Hiring," Staffing.org called him “the father of HR metrics,” and SHRM called him “One of the industry's most respected strategists." He was selected among HR’s “Top 10 Leading Thinkers” and he was ranked No. 8 among the top 25 online influencers in talent management. He served as the Chief Talent Officer of Agilent Technologies, the HP spinoff with 43,000 employees, and he was the CEO of the Business Development Center, a minority business consulting firm in Bakersfield, California. He is currently a Professor of Management at San Francisco State (1982 – present). His articles can be found all over the Internet and on his popular website www.drjohnsullivan.com and on staging.ere.net. He lives in Pacifica, California.

 

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8 Comments on “Why Recruiters Hate the Compensation Department!

  1. Great question Kevin. And the paucity of responses to this posting is evidence of the discomfort caused by the use of this degrading and nasty term. Not to mention the HATEful nature of its use.

    “Thought leader…?” I think not.

  2. On the Definition: In John’s defense… I believe his reference has more to do with the Democratic Party and the Boston Tea Party, than the more modern meaning of this term.

  3. “…degrading and nasty term. Not to mention the HATEful nature of its use.”

    What’s so degrading, and nasty, and hateful about “Compensation Department?”

    😉

    But seriously, while I have found these difficulties to be very prevalent over the years, I typically find them originating from other areas than Comp.

    Cheers,

    Keith

  4. Personally, I felt this article paints our Compensation partners is a bad light. Compensation has to rely on market data and where the wind may be changing, but yet keep focus on the direction and needs of the business.

    My experience to date has been solely dependent on the relationship you build with Comp and how to share both meaningful dialogues about their individual perceptions on what market is bearing for a particular skill set or professional. Whenever my Comp partner and I sat down to discuss salary offerings, I always felt that he or she was on my side. Now realistically, there were times where we were not in agreement, but at the end, we either came to the conclusion that we did not have the right candidate or there was a bona fide need to change our Comp philosophy.

    I would throw the honus back on the recruiter, if they are eexperiencing lags in communication with Compensation, to nuture and develop that relationship with their Compensation partners. Recruiters by nature rely so much on energy, momentum and passion to get things done that it is hard to get a good grasp on the big picture, but it is our Comp partners who provide a great deal of grounding for us from the statisical standpoint, or companies would be just spending like fools on the next bright and shiny candidate.

    Don

  5. Just a final comment: As a corporate recruiter, I do not hate Comp. They have saved my bacon on numerous times and I would gladly support them any day.

  6. I have never had any trouble with Compensation and have partnered with hiring managers and/or Compensation to analyze jobs, and write job descriptions, compensation plans and job/compensation solutions. Recruiting and Compensation should be integrated, strategic, market aware, compliant and tied to corporate goals and objectives.

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