What’s Driving Compensation In Your Market?

what drives compensation

LeBron James famously once said that he was going to take his talents to South Beach to play for the Miami Heat. That was three years ago and the results have been pretty good since then—assuming you call two championships, two MVPs and an Olympic gold medal pretty good. His reasons why were pretty clear: there are worse places to live than Miami (rich athlete + no state income tax = win!) and, in going there, he joined a team poised to win.

He joined a winning employer in a location with lots of built in advantages.

Compensation pros spend lots of time producing spreadsheets with tons of analysis based on market data and evaluating current or prospective employees against that data.  Most of the resulting discussion tends to be about what market position we need to target to attract or retain the talent we want or need.

But did you ever stop to think what’s driving that market data? Who are those employers that are paying at the 75th percentile? Why are they paying so much more than average? Who are those employees who are earning at the 90th percentile? Comp pros think about the “whys” and not just the “whats.”

The articles below give us some insights into the “why” and “who:”

1)   The Washington Post recently produced a study on what they call “Super Zips”—a metric that combines earnings and education (the higher both levels are, the more “super” the zip is).

2)   Happier, a UK company, produced a pretty neat graphic detailing how much top technology companies earn per second (hint—it’s a lot).

The #1 US-based company—Apple—headquartered in a Super Zip.

#2—HP—Super Zip.

#3—IBM—Super Zip.

#4—Microsoft—Missed it by one percentage point.

Either way, there seems to be a pretty clear pattern here. I don’t know which created the other, but I do know that certain companies exponentially out-earn the rest, that education and income levels seem to be pretty linked together, that either companies go to where the talent is or the talent created the companies, and that people are getting paid.  Either way—that’s what’s driving the compensation market.

Winning employers in great locations.

That’s why it costs more to hire an employee in Boston (Zip 02210, Super Zip rank = 99 out of 100) than it does in Bentonville, Arkansas (Zip 72712, Super Rank = 66 out of 100, HQ of Walmart… but that’s another compensation discussion).

That’s why it’s going to be tough to hire from Apple. Or keep them from poaching your talent—especially if you live in Bentonville.

FOT Background Check

Editor's Note: Kent is currently the Director of Global Compensation for Red Hat, the first billion- dollar open source company, and works out of their Raleigh, North Carolina, headquarters. Prior to Red Hat, Kent worked in a variety of (mainly technology) companies focusing on compensation, benefits and M&A. He spends most of his time taking care of his three kids and atrocious number of pets (just ask the neighbors!) with his great wife, or running off to catch live music (don’t get him started on Fishbone or The Replacement). Connect with Kent on LinkedIn or email him at ktpritch@gmail.com. PS: Kent thinks that most compensation issues can be summarized through words spoken by a pig and written by George Orwell – “All animals are equal, but some animals are more equal than others.”

8 Comments

  1. So now we know that demographics plays a significant part
    in the targeting of the campaign, but what about the material itself.
    How are you going to make your products and services known.
    Your interest will be best served if the business plan for your
    company specifically mentions the target audience it has in mind.

    Reply
  2. Younique says:

    If you are getting hats only for you, it is a incredibly basic procedure to measure you hat
    size. Great good quality watches often have wonderful brim which can make people today seem energetic.
    You know; share all the short cuts & secrets of your business
    you’ve learned along the way.

    Reply
  3. s face it, you are going to have to introduce this to many people.
    A Look At The Javita Coffee Network Marketing Comp Plan.
    Everyone loves cream and there is nothing to be feeling ashamed off.

    Reply
  4. It is so easy in network marketing to set a goal and not do it because
    the only person who is really holding you accountable
    is YOU. Here we will check out the advantages and
    disadvantages of registering with USANA. Before getting started
    with the program you should think about some things.

    Reply
  5. youtube.com says:

    The growth and success of the company and the
    returns rely on the kind of information offered to the customers.
    ACN is a direct marketing company selling telecommunications services.
    But as I say, it will require some training and education.

    Reply
  6. You need to choose a location which is so strategically placed that competitors will not be a cause of concern.
    The training can be delivered as a PDF ebook or in audio or video
    format. Some people want to supplement their current incomes.

    Reply
  7. Nerium Skin Care will provide its products to Nerium International from
    which Brand Companions will get their share of items to sell to consumers in profitable price ranges.
    Then there are those who want to bring in a full-time
    income working online. By being an Alpha Networker both offline and online, learn to build your
    network marketing downline.

    Reply

Trackbacks for this post

  1. Career Success Knows No Zip Code | Bob on Jobs

Leave a Comment