STAKEHOLDERS OF THE COMPENSATION SYSTEM
By: Allen T. May, C.E.O. of Westwood Associates, LLC
Regardless of which company you recruit for, regardless if you're working as an in-house recruiter, contractual recruiter, or with an outside recruiting firm on a contingency basis, the HR dept. for which you are recruiting for provides services to stakeholders within and outside the organization. Stakeholders include employees, line managers, executives, and the U.S. government. Unfortunately, not everyone in the loop recognizes the other, nor appreciates there are other stakeholders at the table of the compensation  system. As an executive recruiter, its tantamount that you understand who all the players are. In doing so, you will have a clearer understanding when you are negotiating a compensation package for your candidate. The success of HR departments depends on how well they serve various stakeholders. Your 25% or 30% placement fee depends on how well you serve the HR dept as well as the stakeholders.
> EMPLOYEES: Successful pay-for-knowledge programs depend on a company's ability to develop and implement a systematic training programs. Compensation professionals must educate employees about their training options and how successful training will lead to increased pay and advancement opportunities with the company. These professionals should not assume that employees will necessarily  recognize these opportunities unless they are clearly communicated. Written memos and informational meetings conducted by compensation professionals and HR representatives are effective communication media. As the recruiter representing both the client and the candidate, it is vital that you have a clear understanding of these and other training options that will be made available to your candidate. This is information that you will share with your candidate. As a future employee with the company, your candidate is a stakeholder in the compensation system.
Discretionary benefits provide protection programs, paid time off, and services. As compensation professionals plan and manage employee benefit programs, they should keep these functions in mind. There is probably no single company that expects its employee benefits program to meet all these objectives. As the recruiter, it is your job to know what they are so you can communicate this information to your candidate far in advance of the initial interview. Compensation professionals as representatives of company management, along with you the recruiter, must therefore determine which objectives are the most important for their particular workforce. You play a role in this process so its important that you have a very clear understanding of what your client is offering.
> LINE MANAGERS: Compensation professionals use their expert knowledge of the laws that influence pay and benefits practices to help line managers make sound compensation judgments. For example, the Equal Pay Act of 1963 prohibits sex discrimination in pay for employees performing equal work, so compensation professionals should advise line managers to pay the same hourly pay rate or annual salary for men and women hired to perform the same job. As the recruiter, this is an area of compensation that you must be familiar with, otherwise you could yourself in an embarrassing situation with your candidate as well as your client. I have been in various situations where the line manager was clueless to the Equal Pay Act of 1963. Sometimes, the HR dept was not effective in communicating this information to the line managers. And, sometimes, the line managers disregarded this information. As the recruiter, it is critical that you ensure your candidate is receiving an offer equal to what a candidate of a different gender would be offered. It is good policy for line managers to turn to compensation professionals for advise about appropriate pay rates for jobs. Compensation professionals oversee the use of job evaluation to establish pay differentials among jobs within a company. In addition, they train line managers how to evaluate jobs properly. As the recruiter, you need to understand this function between HR and line managers.
> EXECUTIVES: Compensation professionals serve company executives by developing and managing sound compensation systems. Executives look to them to ensure that the design and implementation of pay and benefits practices comply with pertinent legislation. Violation of these laws can lead to substantial monetary penalties to companies. Executives also depend on compensation professionals' expertise to design pay and benefits systems that will attract and retain the best qualified employees. As a recruiter, it serves you well to maintain an open channel of communication with the compensation professionals at your clients' offices. In doing so, will better enable you to assist in the negotiation stage of the hire.
> U.S. Government: The U.S. government requires that companies comply with all employment legislation. Compensation professionals apply their expertise regarding pertinent legislation to design  legally sound pay and benefits practices. In addition, since the Civil Rights Act of 1991, compensation professionals have applied their expertise to demonstrate that alleged discriminatory pay practices are a business necessity. Worth noting, the burden of proof to demonstrate that alleged discriminatory pay practices are not discriminatory rests with the compensation professionals.
Having a solid understanding of the compensation system will better allow you to communicate to your candidate the total benefits package being offered by your clients. Its never good to be in the dark on these matters so I encourage all fellow Headhunters to get their head around this area of compensation.