From Fun to Frantic: How the Head of People/ HR is Set Up to Fail

Any successful pre-IPO company knows that a good head of HR is worth their weight in gold. Getting someone who has strong expertise in leadership, recruiting, talent management, programs management all while fostering culture and fun should be a number one priority for any pre-IPO company wanting to get off the ground. Unfortunately, no matter how good that head of HR may be, they often come with a big blind spot—compensation planning experience.

Without a solid compensation plan in place, what is normally a fun, busy job can quickly turn frantic. Daily firefighting on high turnover, employee dissatisfaction, and stiff competition can really stress the head of HR person to the max if he or she is constantly reacting to the problems that a growing business faces every day.

While compensation isn’t usually the first priority, it ultimately affects everything else that HR has to do. When hiring decisions aren’t made with respect to the market, pay levels get skewed, and messaging gets bogged down with inconsistencies. After all, how can HR explain to a new hire how they’re different if they don’t really know how they compare to the rest of the market? How can they effectively lead without clear market data to corroborate their salary decisions? Before long, HR is stuck as the monkey in the middle, trying to navigate between demands from managers, employees, and new hires.  

Most HR leaders aren’t compensation experts, and with everything else they have to do, it’s not fair to expect them to also have a handle on compensation planning. Nothing can put cracks in the foundation of a business faster than a shaky pay system, but when there’s a comprehensive study of pay levels, many of the decisions that the head of HR has to make in a normal day are off-loaded onto a cleaner, simpler way of doing business. A compensation plan can help HR to make faster decisions and react nimbly in a competitive market place. What’s more, getting in front of engagement and retention issues—and guiding management on appropriate measures to correct it—is something that can happen much faster than when there’s a strong compensation plan in place.

So, does your compensation plan and spend align with the areas that matter most to your company—whether it’s research, sales, or product development? How do you stack up to your biggest competitors? Are pay levels staying consistent with your over-all strategy, or are new hiring decisions impacting internal equity? While it’s no small job to establish a compensation plan, it could be the most important step to help you get back to the business of getting people in the door, having fun, and standing out from the crowd.

Clifford Stephan founder and principal consultant for OneCompensation has shaped and implemented compensation strategies for Fortune 100 and other emerging companies in some of the fastest growing industries.