The 4 biggest myths about compensation consulting projects (Sponsored Content: D.G. McDermott Associates)

Engaging a compensation consulting firm to perform a compensation analysis project can be intimidating. It’s a little 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. Perhaps employees are complaining they are underpaid and you are losing them to competitors. Or perhaps you believe you can get more productivity out of your employees, but you don’t know how. In a previous post, we talked about the importance of properly assessing your situation. But you might be hesitant to do that because of perceived risks and concerns you have about a compensation analysis project.

Here are the biggest myths about performing 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.

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 only succeed 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.

Myth #3: Compensation consulting firms produce a one-size-fits-all program for every company.

A good compensation consulting firm will gather information about your company and its existing compensation practices; analyze that information, including 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 comp program 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 there is an investment required to work with a good compensation consultant, continuing to do things that are limiting your company’s success exacts a far higher cost. A consultant expert in compensation will approach the project objectively and dispassionately, identifying issues that are limiting your success and recommending corrective steps. If you could do that yourself, you would have already.

How a manufacturing vompany 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 they had the 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 in the project.

Slaying the Myth. D.G. McDermott Associates was retained 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 overcome, the project was completed.

The Lesson. By 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?

At D.G. McDermott Associates, 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

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