How Well Do Numbers Speak for Themselves?

On July 6, 2017, the Lansing State Journal reported this information about Michigan State University’s President, Lou Anna Simon.

  • Fiscal year 2106 total compensation was $860,198.
  • Base pay $750,000; bonus $100,000; non taxable pay $10,198.
  • Total compensation ranked fifth in the Big Ten, and three of those above her are being paid more than a $1,000,000.
  • Ranked as second highest paid female public university president nationwide.

Pretty transparent, don’t you think? But what does it mean, really? Is she overpaid, underpaid or fairly paid for her responsibilities? There’s no way to tell. The number of students at the various Big Ten Campuses would be a place to start. Size of endowment and development responsibilities would have also helped — especially the trends during her tenure.

We do find out about her character, and perhaps her leadership, from the reporter’s note that she’s declined two raises since 2014. In lieu of one of those raises, the Board of Trustees created a scholarship for first-generation college students in honor of the President and husband. And the vice-chairman of the Board of Trustees tells us, “We would pay her more but she won’t take it.” Not your typical employee.

The reporter’s approach to this story is worth a look, though. We often fall into the habit of thinking that numbers speak for themselves. That the statement, “$100,000 bonus,” means the same to you and me — especially when we’re sitting around a table with a Compensation Committee or executives.

It’s done with the best intentions, but it’s also clear that transparency doesn’t equate to clarity. What do we make of the published total compensation numbers if we don’t have insights into the President’s contributions to the university’s success?

Let’s look closer to home. How often do we hire employees based on the salary that they’re asking for, rather than learning more about the obstacles they’ve overcome in their past positions (or what they believe they’ll help your organization achieve) and why they think they qualify for the  salary. Often, once the numbers are on the table, that’s really all we talk about and even remember as we complete the hiring process — the numbers and the negotiation.

Same thing at the end of year. With the very best intentions, we often assume that the size of a merit increase or bonus speaks for itself. If we left more than 15 minutes for these conversations, though, one thing we could find out is what the employee thinks the increase means, and why.

Numbers and perceptions — what are the facts, and what do they mean? More give and take would be worth the effort in compensation communications, if we want hard enough on transparency to achieve clarity.

Margaret O’Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.

This post originally appeared on Compensation Cafe
Author: Margaret O’Hanlon