Your Job Title Should Not Determine Your Value of Salary

I received some information from Morgan McKinley, a well-respected and global talent and recruitment agency. The information had a link connecting me to a 2023 Salary Guide Australia.

It asks me to put in my Title (CEO) and it will tell me what I should expect to earn.

The only problem with this approach is the use of “Titles”.

My Title means very little when it comes to setting a value or salary. It’s a position in an organisational.

The Risk of using the Job Title

As a business owner, please be careful when you consider what to pay someone based on their Title. It’s fraught with DANGER.

Let me explain with an example and then how you can easily overcome the problem.

Let’s say your title is General Manager. You have 20 people in your team and one of direct reports is an Operations Manager. Your area turns over $2M

In a different company the Operations Manager has 50 people, and is responsible for $3.5M.

Who should be paid more? I think you know the answer.

So using a Title to determine a salary is possible, but it’s meaningless.

How Corporates Manage Remuneration

Large organisations pay HR Consultants thousands of dollars to work out salary scales and remuneration strategies.

They use a more scientific method to come up with a more equitable way to determine a salary. In 1950’s The Hay Group (now Korn Ferry Hay Group) developed the Job Evaluation Methodology. In 1989 Australian based Cullen, Egan & Dell (now Mercers CED System) came out with their own version (innovatively called CED).

Both are licensed and restricted to use by client employees. So a monopoly. But it’s not rocket science, I know because I’ve been trained in the Hay Methodology.

Basically you look at three areas. Knowledge, Problem Solving and Accountability.

Knowledge is basically, what you need to know to do the job.

Problem Solving is how complex are varied are the problems

Accountability is what is the size you look after and what impact do you have.

Drilling into the knowledge piece, let’s look at the Finance Division.

An Accountant, Accounts Payable or Receivable, and Chief Financial Officer all need an Accounting Degree to do their job.

The difference is in the breadth of knowledge needed. A CFO needs to know all the components of Finance, whereas an Accounts Payable Officer needs a narrower knowledge base.

Problem solving is essentially the frequency complexity, and variability of the problem.

An Account Officer might have 5% of their day solving unknown or infrequently repeating problems, whereas the CFO might have up to 30% of their job solving complex variables.

And finally, Accountability, is effectively the size of the operations and the level of autonomy you have to make decisions and the impact those decisions have on the business.

The Accounts Officer follows a narrow set of guidelines or has minimal impact on the organisation whereas the CFO’s decisions have significantly more impact and they have more staff to manage.

The Hay model is basically a mathematical equation where you punch numbers in and you get a score and a profile.

How can SMB's get under the guard of their Competition?

Larger organisations have to go down a formal pathway. It makes sense for them. However smaller businesses would find it hard to justify a full scale remuneration strategy, but non-the-less it is valuable to have this framework.

It solves so many issues as you build an Employer of Choice environment.

  • Recruitment becomes not about money but about purpose and culture

  • You remove the threat of Internal Inequity

  • Your staff know what income increase they can expect from a promotion

  • There is a transparency that removes money from the conversation

It’s not fool proof but it does set a context where everyone knows where they stand and they make a choice to be with you, or not.

Better to have a team who wants to be with you, than a team that is continually bitching about their conditions.

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