Should we pay the same at Corporate and in the Operating Companies ?

I often get the following question : “Should pay at our corporate headquarters be different from pay in our operating companies / in our Divisions ?”

My answer is always the same : “It depends”. I know, I know, this is a bit frustrating. So let me expand a little.

I have written in the past about the necessity to adapt your compensation approach to the needs of your specific organisation, not blindly copying what others are doing. This case is a bit along the same lines.

First let’s define pay. The concept encompasses the components of the packages at your organisation as well as your pay philosophy (who are your peers for benchmarking comparison, what your target position to market is etc) and the governance model you want to implement.

I don’t necessarily believe in “one size fits all”, but at the same time, I think that it is often best to try and maximise consistency wherever it makes sense for the business.

So, when trying to see whether pay should be the same or not, consider the following :

• Do we have operations in varied sectors (like a conglomerate for example) or are we all working in the same industry ?
• Are we based in one country or do we have geographic spread ?
• How much operating freedom do the Units have vs Corporate in daily business activities and do we want to replicate that in HR ?
• Are there specific areas in which we struggle to attract or retain talent ?
• Are/will our employees move a lot across different parts of the company ?
• Can we reach economies of scale or make things easier to understand for our employees by having some elements that are consistent throughout the organisation ?
• How much differentiation do we feel comfortable with given our corporate culture ?
• Can we learn from some similar organisations (not necessarily direct competitors) ?
  

I advise you ask these questions to your most important stakeholders, not just internally in HR. This will help you assess if there is some consensus in your company, or whether you need to build a common vision first.

Then, take what your customers and stakeholders have said, and build your pay approach accordingly.

So, yes, there is no blanket answer to the question. In order to decide if pay will be the same throughout your organisation, you’ll have to make some decisions and maybe reach some compromises along the way. In the end, what matters is that you build an approach that suits your business.

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Related posts :

• Are you benchmarking… or copying ?
• Before you jump into a technical compensation answer…