How to justify high pay

My human resource experience apparently has gone out of date as far as justification for pay or higher pay is concerned. Let me just recall some of the basic premises in designing the compensation package for employees. HR will normally look at the job specs, the qualifications needed, the skill, risk involved if applicable, health hazard, even look at environment. Then HR will mix these with the incumbent’s qualifications and skill, add in market comparables, stir them thoroughly in a pot, remove the flotsams, and there we have it, a pay package for the various jobs.

Today it is more complicated and complex and a totally new dimension. I am told that corruption is now a factor to be added in the pay package. There are a few variations to this. One is if other people are corrupt and the total income is more than their actual, this must be taken into account, eg the opportunities to receive bribe or under table money, to gain from issuing of licences or approvals. The other aspect is the infamous notion that since people are likely to be corrupt, let’s pay them upfront so that they need not be corrupt anymore.
Revolving door? I just heard of this new phenomenon. In short it is like jobs laying in waiting for top people who left their offices. The most common quoted examples are the American political leaders who have high paying jobs waiting for them after their terms in office. Actually in my time, or even today, this is nothing new. The top dogs are in demand when they quit their jobs. Many offers will come in from organizations or job hunters waiting in queue. Why should this be a factor to use to mark up pay of incumbents, I really dunno.

I am also told that if other people can go on lecturing circuits and collect millions, this is also a factor to consider. Also, along the same line of argument, people who can write books and sell because their country’s readership is big, and people like to read what they write, this can also be a factor to consider in working out a pay package. The reference point is always some American Presidents. I am just wondering what kind of conceitedness and arrogance would dare one to compare with American Presidents.

Oh, another thing, when one engages an employee, one must make provision for his retirement or his opportunity cost for coming on board. If he will lose out in terms of skill, seniority or contacts, this must also be compensated in the whole pay package.

The golden handshake is also quite a norm now for senior employees. Now this is fair as no one would want to move from their comfort zone to try out something new. This could be another substitute for the above. There have been many instances of great talents receiving a big payout for doing badly on the job or not even starting on it.

The most troublesome one is sacrifice especially in public service. How much to measure sacrifice? This is very tricky, trickier than trying to compensate for the temptation to corrupt. How to value what a person is sacrificing, family time, quality time with children or grandparents etc etc. Everyone it so family oriented. Another quality time which is ominously absent is time with mistresses or girl friends. But this is noted I am sure. And being ridicule in public forums and cyberspace surely command quite a price too.

Another thing to consider is to motivate the top management with a carrot dangling in their face. Do good work boy and the carrot will be yours. Blimey, top management needs additional carrot to do their very best. If not, even with out of this world salary, they will slack and not do their best. Is this motivation thing going a bit too far? In all my HR time, I have never doubt that the top management, with or without the carrot, will be there to do their very best, to lead by example. If their leadership example is to do mediocre work unless the carrot is big enough, they should not be hired in the first place.

I think I will be quite lost if ask to do the job again. I am already feeling inadequate. This will require new skills and mindset from the HR profession to be equipped to do a proper job in view of the new challenges and new social norms. Luckily I am no longer in the profession. I am sure I have missed out quite a lot of the new factors that I don’t even know.

During my time, HR’s job was much easier. You interview the candidate, lay down the package without having to worry what happens if the candidate decides to quit later. The responsibility is to offer the candidate a suitable package, agreeable by both parties there and then. If there is a separation for whatever reason, the candidate would have to look for a new job on his own merit. And that is a non issue as the candidate should be good enough to do that with his qualification and experience. The candidate is always a top dog or else he would not even be considered. Don’t they have any confidence in themselves to land another equally big paying job?