By Mary Dunlap
Well-planned compensation packages can provide the support and make the difference in developing employee career paths and driving business results.
When hiring a new employee, what you want this person to do in his or her job — experience, knowledge, skills — factors into the compensation. If a person has the abilities (initiative, ownership of the position, excellent client service skills, anticipation of trends, works independently, etc.) but lacks experience and knowledge in the financial planning industry, you'll have to pay for this development. In many instances, it makes sense to hire the person with better abilities than knowledge.
Tie these skills and abilities into accomplishing specific objectives for the position. A good job description would outline what knowledge, experience, skills and abilities you absolutely require — and ones that you can educate or train toward.
On the other hand, many people are looking at a second career instead of full retirement. These people come from higher management, or professional or technical positions. You won't always pay for all their skills, abilities and experiences, and you need to be upfront with candidates about this. Some candidates have done their homework and will expect to be paid according to the position.
Studies, surveys and local data
Compensation surveys, such as the recent InvestmentNews/Moss Adams Adviser Compensation and Staffing Study, can help firms benchmark fair pay. Be sure to look at firm performance and financial statements for compensation budgeting. Not everyone receives raises, and not everyone has incentives. You want to reward the people who can drive results, who add to the performance and image of your firm, and who have accomplished their objectives.
Also use local data. Not every metropolitan or rural area matches with regional data in surveys. The Labor Department's Bureau of Labor Statistics is an excellent free resource for economic data. It may be necessary to adjust for information that could be one or two years old.
When you hire a new employee, look ahead. What could this person be doing in the future, and what would their compensation be? If you hire near the ceiling for a position now, later on, you could run into issues around not being able to reward performance. Look at each person on your team, and plan options for their future position and compensation.
Employees need to know all the components of their compensation and how you arrived at it. Because numerous compensation surveys are available online to the public, employees should know how you evaluated the data and arrived at your numbers. Define what work, experience and skills make up someone at the 25th percentile, at the median and at the 75th or 90th percentile.
Mary Dunlap, a certified financial planner and owner of an eponymous consulting firm, helps financial planning firms attract, develop and retain the best people for their teams. She is a member of the Society for Human Resource Management. You can reach her at firstname.lastname@example.org.