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The 4 Biggest Myths about Compensation Consulting Projects

We understand that engaging a consulting firm to perform a compensation consulting project can be intimidating.

We know it can be a bit like being an 18-year-old and the first in your family to apply to an Ivy League school. What if you actually get in? There will be times when you’re uncomfortable and challenged but, ultimately, you’re going to get a great education and be in a position to succeed.

If you’re thinking about partnering with a compensation consulting firm, it’s probably because you suspect you have a problem. Are you not retaining top talent and watching them jump to your competitors? Do you believe you can get more productivity out of your employees but you don’t know how to do it? Are you hesitant to properly assess your situation because of perceived risks and concerns you have about a compensation analysis project?

Perhaps you are falling for the four biggest myths about initiating a compensation project:

Myth #1: A compensation project can make me look bad if it doesn’t work and we don’t achieve our goals.

The fact is, a properly designed and implemented compensation project has little likelihood of failing. A good compensation consulting firm will work with you to determine your situation, set your objectives and create the Key Performance Indicators (KPIs) to measure the project’s success.

Everything a company does must tie back to and support its business strategy. That’s true of a compensation project as well. The compensation consultant will ensure this alignment is achieved.

A warning: A compensation project will succeed only with the buy-in of senior management. This will allow you to overcome any internal resistance to the project and any changes that may result.

Myth #2: A compensation project may produce answers we don’t want to hear.

You wouldn’t undertake a compensation project unless you suspected, or knew, you had a problem. While you might need help pinpointing and then solving the problem, you know you want to find a solution, even if that solution requires uncomfortable steps. 

While some individuals in your organization may not want to hear the answers the project provides, senior management will – if you’ve gotten their buy-in and properly set their expectations in advance.

Myth #3: Compensation consulting firms provide a “one-size-fits-all”compensation plan for every company.

A good compensation consultant will gather information about your company and its existing compensation practices; analyze that information, perform a compensation benchmarking for your industry, provide comparisons to “like” companies in your sector; and deliver an objective conclusion and recommendations. They will consider factors such as whether your company is publicly or family-owned and its culture. The result will be a compensation program specifically tailored to your company, not a generic one that could fit any company.

Myth #4: A compensation project will be expensive. We can figure out what changes need to be made on our own.

While working with a good compensation consultant requires a financial investment, continuing to do things that are limiting your company’s success exacts a far higher cost. An expert compensation consultant will approach the project objectively and dispassionately. They will identify issues that are limiting your success and recommend the most appropriate corrective steps. Odds are, if you could do that yourself, you would have already.

How one manufacturing company got past the myths

Falling Prey to the Myth. Senior management at a manufacturing company and, in particular, its Human Resources Department, believed they could update their compensation program internally. They maintained that they had necessary knowledge and experience and could complete the update efficiently and cost-effectively.

Busting the Myth. They performed an overview of the project to identify the process and steps they believed they could complete internally and commenced work on the project. However, as internal priorities changed and new immediate crises arose, the project was sidetracked and delayed, bringing displeasure from senior management. In addition, one of the strategic objectives for Human Resources was to improve communications and relationships with middle management and employees, which were further strained by the delay.

Slaying the Myth. D.G. McDermott Associates was retained as the consultant to right the project and repair the damage. We also were asked to “expedite” the process to fulfill the commitment to both senior management and employees. The myth was overcome, the project was completed.

The Lesson. By wrongly maintaining they could handle the project themselves and then delaying its completion, HR lost credibility and undermined one of its strategic objectives.

Ready to learn more?

We help our clients overcome their perceived risks and concerns about undertaking a compensation consulting project by showing them the efficacy and value of our
process and the benefits the project can bring. If you’re ready to learn more, let’s chat. Contact us at or (732) 842-8634.

We can’t help you unless you reach out to us, and that’s no myth!

Learn more about our compensation consulting and organization design services.