Exceptions are hurting your compensation strategy:

My least favorite question ever: can you make an exception?

Um, usually no. 

Why??

Because making exceptions tends to do more harm than good. 

Exceptions can:

• Create inequity 
• Erode trust in policies 
• Undermine company culture 
• Set precedents that are near impossible to undo in the future
• Lead to constant one off fixes 
• Breed a sense of favoritism 
• Increase legal risks 

And making exceptions to compensation decisions can do all of that and cost you $$$$ down the line. 

How you may ask?

You may have to eventually correct all inequitable compensation decisions and that could add up to a significant amount. 

More states are passing laws like California where you have to file equal pay reports. 

Sooooo, all this adds up to why I believe exceptions just aren’t worth it! 

If you have a culture of making a lot of exceptions here are two things you can do to stop that when it comes to compensation: 

1. Make sure you secure buy-in for your comp strategy
2. Get comfy saying no

Securing buy-in:

There is nothing more frustrating than building a beautiful compensation philosophy only to have to debate every compensation decision. 

Spoiler alert: your philosophy should help you make most of your decisions. 

But if you’re constantly debating decisions and being forced to make exceptions maybe you haven’t quite secured the buy-in you need??

Been there… 

3 easy steps to get everyone onboard: 

Step 1: Communicate. Talk about your compensation philosophy OFTEN. Share it with candidates, new hires and existing employees at every inflection point! Transparency is key here. 

⚡Level up: Ask for feedback! When folks feel like they have the opportunity to share their thoughts you’ll be able to more easily secure their buy-in. Trust me, employees want to feel like they are part of the solution. 

You’d be surprised how effective this is on getting everyone on the same page! Employees (cough leadership cough) will be less likely to ask for exceptions because they’ll understand that everyone is treated fairly and that by asking they are threatening the delicate balance of equity at your organization. 

Step 2: Bring on the pain. JK JK I’m not here for violence, I meant bring on the pain points. Having a transparent compensation philosophy that everyone understands AND follows sans exceptions alleviates paint points like: inequitable decisions, one off solutions, legal risk, and poor employee expectations. 

✅Pro-tip: See the list above for ALL the other reasons and the next time someone dares utter the words let’s make an exception and share the impact of that decision. Bet they get on board REAL FAST. 

Step 3: Train your managers. Listen, I’m FOREVER a woman standing in front of corporate America BEGGING you to train your dang managers. Your managers need to understand your system, why it’s important and how to address any questions they get about compensation. Tall order, I know but if they don’t understand your system you’ll never have their buy-in!

👋Sanity check: You can try your hardest to get managers on board and some will still fumble the bag. Your managers may disappoint you here, but don’t quit trying! Their buy-in might be the second most important after your executives/decision makers.

Say no:

IMO: Saying no can be one of the most powerful things to learn to do at work! And also life… 

But it can be really hard for some folks!

So here’s the tip: get comfy saying no. 

To get more comfortable with saying no:

✅ Make sure you have your WHY. Grab your data and be prepared to share why that exception should be made. See the above list for all the various reasons. 

✅ Share the big picture. Exceptions are often short term fixes and by following your compensation philosophy you are protecting the long term of the company and its practices. 

✅ Gather your support system. Find your leaders who get it and make sure they are involved. Even better if they have the ear of the final decision maker. God, I hate office politics but when it’s for the greater good, I’m willing to play ball. 

✅ Have an alternative. I like to think of no’s as “Yes, but” you’d be surprised how much better the interaction is when instead of saying no you throw out a yes but. 

An example:

No, I don’t think we should raise that employee’s salary. 

VS

Yes, we can do that but then the employee will be out of band for their role and scope and that would create inequity with their peers. We can re-evaluate their role and run a compensation analysis to better understand the market and their value. 

Hehehe 😈I loooove a good yes, but it really can make a HUGE difference. 

But I present you with a problem: you might STILL get overridden. 

Like when:

• An executive decides to not follow the compensation philosophy to give a bigger raise to an employee 
• A powerful manager demands a higher salary for a candidate they really want 
• An executive decides to add a variable compensation to someone’s compensation

If I was a betting woman, I’d put money down that you’ve experienced at least ONE of those three. 

UGH. 

The bottom line: It’s important to know how to say no but to also know when being overridden is a strong possibility. 

When exceptions might be okay… 

^^If you can recite this entire scene from memory, call me bc SAME. 

I know I just spent the whole newsletter bashing making exceptions and all the problems it creates. 

But sometimes… sometimes you have to make them. 

Especially if it’s critical to the business!

So, if you find yourself in a situation where you have to make an exception make sure you have guidelines for how to proceed. 

Guidelines could look like:

• What are the core criteria for this exception? This could be retaining a critical skillset or recruiting a talented employee.
• What are the levels of approval? Outline what the workflow is to request and fulfill this exception. There should be a few checks in the process. 
• What analysis have we done? This would be where data is verified and from what source. 
• Documentation: everything should be documented somewhere and shared with relevant stakeholders. 

Guidelines can differ from org to org, it could depend on your size and complexity of your compensation practices. But the four above are a good starting point. 

It’s also important to consider the following:  

• Is this critical for the business?
• How far/how much does this exception impact the organization?
• What are the repercussions of making this decision?
• At what point will any inequities be addressed? 

📝 Final note: It can be easy to get frustrated during this process. Don’t be too hard on yourself! You can try your hardest to build an equitable system and still be met with resistance or “critical business exceptions.”

What’s next: 

This whole quarter I’ve been focused on retention and aspects that impact retention. 

I’ve covered growth and compensation and up next…. 

THE ENVIRONMENT. 

Next week I’m covering red flags. 

Stay tuned…