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Image Credit: <www.onsecurities.com

Image Credit: <www.onsecurities.com>

Throughout my time as a compensation professional, I’ve been exposed to a number of different pay philosophies. I agree with some philosophies more than others, but there are six things that I fundamentally believe have compensable value (and that every company should compensate for):

1. Technical Skill: Knowledge/education required to complete one’s job duties and responsibilities

2. P&L Impact: How one’s knowledge/education makes and/or saves one’s business money

3. Span of Control: Number of direct reports managed by the incumbent, the scope of their work, how much said direct reports rely on the job incumbent to complete said work etc.

Safety has compensable value. Image Credit: <www.123rf.com

Safety has compensable value. Image Credit: <www.123rf.com>

4. Scarcity of Skill Set: How many other employable people can do the same job as the incumbent?

5. Safety/Working Conditions: Is the incumbent’s life or health at risk in some way?

6. Human Relations Skills: Level of communication/ability to influence that is required to complete the job.

Using this criteria, a smart person will have noticed that someone having valuable (in the abstract) skills and education may or may not earn more money than his/her less skilled counterpart.

In fact, depending on the weight of each factor, an individual contributor Data Scientist in Clinton, Iowa working for a big cap company (with no knowledge or ability to manage its own internal data) can make more money than a private practice Surgeon in Chicago, Illinois.

…But that’s the way the world works. There are HR Representatives in some parts of the U.S. making $175,000 a year, while there are quality Pharmacists in others that can’t find work.

Maximizing compensable value is all about having the right mix of skills and being able to leverage that mix in the market.

What do you *you* think has compensable value? Did I miss anything crucial?

I don’t have all the answers, so as always please share your thoughts below.



If you have questions about something you’ve read here (or simply want to connect) you can reach me at any of the following addresses: 

SomethingDifferentHR@gmail.com OR rorytrotter86@gmail.com