Approaches compensation professionals can take to address pushback from management

As you already know, compensation professionals play a vital role within an organization by handling several important responsibilities, including

• Researching market trends
• Ensuring that salaries are both externally competitive and internally equitable
• Overseeing the annual merit process guiding salary increases, bonuses, and other forms of compensation
• Designing and monitoring employee incentive programs
• Ensuring that an organization’s practices are compliant with existing labor laws and internal policies
• Communicating compensation policies to both employees and managers
• Helping refine employees’ understanding of how their pay is determined
• Providing educational training to managers on related topics

Overall, compensation professionals help create a fair and motivating workplace that supports the organization’s success.

But when there is pushback from leadership or hiring managers in relation to these responsibilities it can create friction. This article explores some of the more common objections you, a compensation professional may receive, along with ways to overcome these objections.

Objection: “I’m not convinced that the market compensation data you’re presenting or referencing is accurate or relevant to our organization.”

Leadership and hiring managers may express reservations about the accuracy and relevance of the market compensation data presented to them, for several reasons. First, the data could be perceived to be based on broad averages, which do not account for the unique nuances of the organization’s needs. Additionally, leadership or managers may have encountered outdated or inconsistent data in the past, leading to skepticism about its reliability. Most often, however, they may perceive that the data does not align with their firsthand experiences or specific challenges faced in attracting and retaining talent. This skepticism can be compounded by a lack of transparency regarding the sources and methodologies you used to gather the data, which could corrode a hiring manager’s trust in the data’s validity for informing compensation decisions.

To alleviate these concerns, you as the compensation professional could take a few approaches. Aside from assuring leadership and managers that the organization relies on reputable, third-party sources known for their rigorous data collection and analysis methods, go a step further and share with them background on each survey source utilized. Reputable survey sources typically have one-pagers describing their survey data and often provide extremely detailed information on their survey methodology. Also, to emphasize the organizational relevance of the compensation data, you could educate the leadership and hiring managers on how you scope or “filter” the market data to ensure that it represents not only their industry but also similar, competing companies. Show them your salary benchmarking methodology. Explain how developing and consistently using this methodology allows you to draw comparisons that are not only accurate but also directly applicable to your organization’s unique hiring landscape.

If warranted, you could also propose engaging in a collaborative review process where discussions may lead to a consensus regarding which of the organization’s specific roles or functions may require deeper analysis. By involving leadership and hiring managers in this process, you can identify key competitors and refine data sources to better align with organizational needs. This collaborative effort should not only enhance their confidence in the data but also ensure that the organization’s compensation practices are strategically aligned with the goals and competitive landscape of the company’s operations.

Extra tip: This all may seem like a lot. However, these are all things that you will not have to do repeatedly. It’s very likely that once leadership understands all of the above, then they will not be so inclined to pushback each time.

Objection: “If I can hire talent at a compensation level below what the market data says, why do we need to take it into consideration?”

The rise of pay transparency laws makes it almost certain that employees will know if they are being underpaid. To counter this common objection from leadership, you could be to provide educational training on these internal equity and legal ramifications. Making sure leadership understands the significant long-term issues that can arise if employees perceive their compensation as unfair compared to coworkers or market trends. By presenting leadership with real data, you can help drive the point home that hiring talent below market rates may seem advantageous in the short term, but will ultimately lead to higher turnover rates, decreased morale, lower employee engagement and higher costs to recruit and train again as you must continuously fill roles.

It's also important to explain to leadership that many jurisdictions have laws regarding pay equity and transparency, which require organizations to maintain fair compensation practices. It’s one thing if an employee perceives they are being underpaid, but if they legitimately are then there could be legal ramifications. Ignoring market data can inadvertently lead to disparities that may expose the company to legal risks and reputational damage.

Objection: “Targeting the market median salary prevents me from hiring the top talent I need.”

Sometimes, hiring managers express concern that targeting the market median salary restricts their ability to attract top talent, because they perceive that high-performing candidates expect compensation that exceeds the median as a reflection of their enhanced skills and experience. They may have observed that competitors are willing to offer above-market salaries to secure the best candidates, and therefore adhering strictly to a median salary could result in missed opportunities to hire individuals who might significantly contribute to the organization’s success. Additionally, hiring managers may believe that the market median does not account for the unique demands of specific roles or the competitive landscape in which they operate, leading them to conclude that a more aggressive compensation strategy is necessary to entice high-caliber talent. This perception can be further fueled by anecdotal experiences where candidates have declined offers due to perceived inadequacies in compensation, reinforcing the belief that a median-focused approach is insufficient for attracting top-tier talent.

This common objection usually arises as a result of the hiring manager not fully understanding how salaries are determined within the framework of an organization’s salary structure. This is where it could be helpful for you to educate the hiring manager on how targeting market median is just that: a target and not necessarily the actual for the given situation. You could mention that while the company aims for the market median, each position is assigned to a specific salary grade that includes a range of compensation. Additionally, you could emphasize that the salary structure in place gives the company the flexibility to offer salaries exceeding the median for candidates who bring to the table exceptional skills, knowledge, and expertise. By evaluating candidates holistically, the organization can make informed decisions about compensation that not only align with market standards but also reflect the individual contributions of top talent.

It may also help relieve the hiring manager’s concern if you clarify how compensation is managed within a salary grade. When describing salary grades, it often helps to break down salary ranges into terciles, or bands. Explain that the first band of the salary range is often for candidates who have little to no experience in the role or have just some of the skills or knowledge required for the position. The second band of the salary range is often where candidates who have the organization’s required experience, skills, and knowledge are placed. The top band of the salary range is set aside for candidates who not only meet the organization’s skills, knowledge, and experience requirements for the role but greatly exceed them. Providing this additional context can go a long way in alleviating any concerns that hiring managers may have regarding an organization’s target compensation practices.

Looking for more advice?

Mercer has a team ready to answer questions about handling manager objections, finding the right salary surveys, and a number of other compensation and total rewards topics. Give us a call at 855-286-5302 or email surveys@mercer.com.

About the Authors

Robert Finder is a Sr. Associate Consultant within Mercer’s Career practice and is based in Houston, Texas. Robert works with clients to design, administer, and measure talent and reward programs that support their business strategies, as well as drive employee engagement and retention. His client engagements have covered a wide variety of industries that include, but are not limited to, professional services, technology, education, energy, healthcare, and consumer goods manufacturing.