Industry

How to use offers to build a winning comp strategy with Frank Wagner

July 10, 2024
6
Min Read
How to use offers to build a winning comp strategy with Frank Wagner

Key topics

In our latest webinar, Charlie Franklin hosted Frank Wagner, former VP of Compensation at Google & former Partner at Hewitt Associates, to discuss how to use offer data to build a winning compensation strategy.

With Frank's extensive experience, the conversation delved into the importance of analyzing market trends and patterns to make informed decisions that ensure competitive and equitable pay.

Frank highlighted the challenges of aligning incentives between compensation and talent acquisition teams, emphasizing the need for a robust data warehouse to store and analyze data effectively.

Frank shared insights on the future of market intelligence for comp teams, focusing on the integration of real-time and granular data. The forward-looking approach is essential for organizations aiming to leverage high-quality, relevant data to drive their compensation decisions and maintain a competitive edge.

The value of offer data for comp teams

Charlie kicked off the webinar sharing how unusual it is for comp teams to discuss, analyze, and use offer data. 

Frank responded that getting into offer data is a place where a lot of information about compensation trends is learned. 

He acknowledged that not every company processes 10,000 or 15,000 offers per year, but when a substantial data set is available, a lot can be understood about current trends. 

He noted that market data from established surveys still has a time lag, but offer data is closer to real-time - not entirely immediate, but the lag is shorter than with traditional surveys.

Frank talked about how trends can be observed over time by examining offer data on a granular basis. This approach provides an early warning signal for trends moving up or down.

Declined offers and why “it’s not always comp’s fault”

At one point, Charlie and Frank discussed the struggles of comp teams that don’t have access to real-time offer data. 

In Frank's opinion, one of the main challenges is explaining to executives why a certain high-level offer was declined. The usual assumption is that the problem was with the comp strategy. 

 “It’s not always comp’s fault” - Frank noted, adding that there are many factors that influence whether the offer is going to be accepted or declined. 

He went on to explain that with access to current offer data, comp teams can often prove that a declined offer was actually very competitive. This can reassure executives that the compensation structure is competitive, preventing the need for frequent, off-cycle analyses to prove the effectiveness of comp strategies.

Navigating the data landscape: combining surveys and real-time offer insights

The webinar continued as Frank emphasized that while traditional surveys provide a solid foundation and competitive benchmarks, they often lag behind current market conditions. 

He and Charlie highlighted the value of using offer data to gain timely insights into trends and patterns, which helps keep a finger on the pulse of the marketplace. This way, comp teams can both enhance the strategic alignment and credibility of their decisions and foster stronger relationships with talent acquisition teams. 

They also discussed scenarios where offer data might not be applicable. In cases of low offer volume or highly specialized roles, such as hiring a top-tier expert in a niche field, offer data may be less useful. 

Additionally, expanding into new markets with limited hiring data might require more reliance on external recruiters or alternative data sources. In such situations, the data might not come from robust or tested sources like surveys, making it less reliable. 

Holistic strategies for talent compensation

The conversation shifted around the importance of viewing compensation strategy through the lens of the entire employee lifecycle, rather than just ongoing structural adjustments. 

Frank stressed the need to consider compensation from beginning to end, factoring in cost, competitiveness, and fairness. He pointed out that a common issue is the drop in compensation after initial new hire grants, which are often higher than ongoing annual grants. 

By front-loading more compensation into the first or second year, companies can create a smoother progression, preventing early attrition and aligning new hires with their peers more effectively.

Viewing compensation through the employee lifecycle, including multi-year cash flows and stock grants, provides a powerful framework for making more informed and efficient decisions. 

Frank noted that if compensation teams only use offer data for approving exceptions or difficult hires, they miss significant opportunities for strategic alignment and optimization.

Staying ahead: Using real-time offer data for comp-adjustments

The discussion continued to emphasize the value of not overreacting to short-term trends in offer data. Frank and Charlie discussed an example from early 2022 when the market spiked for senior technology roles in the Bay Area. 

By analyzing offer data, they identified the need for targeted adjustments in specific job families. Frank noted the importance of verifying trends, such as premiums for AI and ML engineers, before making changes.

To avoid issues like leapfrogging, Frank advised balancing new hire compensation with existing employees through adjustments in sign-on bonuses and equity grants. He highlighted that off-cycle adjustments should be a last resort.

Charlie added that without real-time offer data, decisions are often reactive, based on anecdotal evidence. Real-time data provides early warning signals, enabling proactive strategy adjustments and better stakeholder communication. 

Watch the full webinar and discover all the insights Charlie and Frank explored. 

Subscribe to our Peer Group newsletter to discover more insightful conversations.

Back to Blog

Discover the future of compensation