Real Talk: Working with a Compensation Consultant

CandorIQ recently featured a couple of blogs on using internal vs. external talent for compensation design work. I highly recommend you read through those when deciding if hiring a consultant vs. an in-house team member makes sense. What I would like to add to the conversation is how you, dear People leader, can help improve both the working relationship with a consultant and eventually the outcomes of any consulting engagement.

Disclaimer - This in no way refers specifically to any current or former clients, and I absolutely do not speak for all consultants. No, I don’t believe consultants are 100% innocent when engagements go wrong, but my focus here is to help companies understand how they sometimes get in the way of their own progress. 

Clarify The Why - I cannot emphasize this enough. You do not hire a compensation consultant to build a job architecture, a salary structure, a bonus program, etc. You hire them to help you drive your organization’s success. If you haven’t clearly identified and articulated what’s broken in your business or what audacious goal you’re trying to achieve, it’s unlikely any new tool or program will make a difference. Tools and programs are the “how,” but the “why” should be stated simply and in a way that doesn’t necessarily assume a solution. Here are a couple examples: 

• We’re losing our Software Engineers after they’ve only been with us for a year or two
• We are a small company and can’t compete with bigger companies when it comes to pay and other benefits
• We want to expand into a new geographic region and don’t know what local talent there expects when it comes to pay and benefits

As a People leader, you may have other data, opinions and hunches as to what needs to be done to help fix these issues, but I encourage you to be open to discussions with potential consultants who might have other ideas. In the first example, if you automatically assume pay needs to be fixed to retain your Software Engineers, any consultant worth their value will make sure you’ve first ruled out other issues like manager relationships, working conditions, etc. Consultants don’t say “it depends” to be coy or mysterious. It’s just an easy way to say, “I don’t have all the facts I need to make a definitive decision. Let’s dive deeper.”

Manage Misalignment - It is not uncommon for a freshly hired consultant to start meeting with other leaders during the kickoff of a project and immediately hear opinions that either confuse or straight-up conflict with the project scope. This isn’t really the problem, however. The problem is when the project sponsor (e.g., CHRO or People leader) doesn’t address these mismatches. If other leaders or stakeholders have a difference of opinion, that’s fine. We’re all adults and can work through those, but the project sponsor needs to make firm decisions on how much or how little to listen to those other opinions and change the project scope, if necessary. 

One example that comes up pretty regularly in compensation consulting is the dueling priorities between People and Finance leaders. Investing in talent obviously costs money, and it’s important for a People leader to know how budgets may impact an organization’s ability to afford increases in compensation or new benefits programs. It’s actually pretty rare for a compensation consulting project to save a company money, so the People leader really needs to understand how to position the other cultural and productivity benefits with other company leaders. 

Stick The Landing - Every consulting engagement has an end point, and, even if the consultant has agreed to help with implementation, it will be you and your team who has to support and maintain it for the long-term. Some People leaders choose to shield their team from the consultant’s work, because, “Hey, everybody is busy, and we brought on the consultant because we didn’t have the bandwidth to do this ourselves.” That’s a sure-fire way to frustrate your team when it comes time for knowledge transfer. They won’t have enough time to understand why the consultant did what they did, and they will definitely fumble the execution if they aren’t bought-in on the solution. Here are a few areas where the implementation often breaks down: 

• Project Management - A designated internal PM can help manage the progress of the consulting engagement, include the right team members when needed and keep everyone up to speed on why, when and how the change is happening. 
• Communications - Crafting communications often falls to the People team, but internal Comms teams should also be utilized to help make sure communications are clear, succinct and focused on the correct audience - execs, managers, employees, etc. 
• Systems - Anything important enough to bring in an outside consultant will need to be measured to make sure you successfully address the original issue. This means your systems need to be ready to accept any new data and then analyze and report out on that data. 
• Operations - Introducing new or changed programs rely on your People team’s ability to fold them into your existing operations model and raise a flag on anything that may require retooling. 

Hopefully this is helpful and not too harsh. Everyone wants to avoid hiring a consultant who, as the cliche goes, “borrows your watch to tell you the time." Approaching a consulting relationship with diligence and preparation is the best way to make sure they are adding value to your organization.