Compensation is one of the most obvious elements of defining one’s success – everyone has a keen eye on how it is shaped, how it compares with peers’ and whether or not it is keeping pace with the latest surveys and trends. Determining your marketplace value begins with knowing what your compensation is relative to your peers, both from a tangible skills perspective and an intangible leadership perspective. Let’s explore both.
In the IR profession there is a wide variety of expected tangible skills, from financial acumen and analytical processing capabilities to written and oral communication skills. The key to understanding your tangible skills is to identify what is important at each level of seniority, whether director, vice president or otherwise. Once you know the overall skills required at your experience level, you can begin to frame your value. Keep in mind that titles across industry sectors and market cap sizes of companies can vary widely.
Many people do not clearly understand the importance of intangible leadership traits. At the same time, management teams increasingly see their inherent value to the organization. Why? Because as you advance up the employment ladder, your intangible leadership skills increase in value relative to your job performance. CEOs, CFOs and directors want executives who interface regularly with the C-suite to be savvy partners, advisers and confidantes. Intangible leadership comes from developing:
- The ability to be an organizational influencer
- Passion for and the pursuit of knowledge
- The ability to be considered a peer and business partner across the enterprise.
Where to begin?
The first step is to do your research and absorb as much content as possible from surveys and the numerous articles written about compensation. Whether it is information specific to the IR profession, or general articles about how to think about compensation overall, educating yourself about the topic is a smart beginning.
As an IR professional, one of the important datasets you should investigate is the compensation surveys the major consulting firms conduct. Often this research is not IR-specific, but it does focus on direct reports into the CFO – of which you are one. As the IRO role continues to gain importance inside corporations, you should leverage data about the compensation levels of other direct reports as they are one of your peer groups. In fact, there are several peer groups to consider:
- Direct reports to the CFO
- IRO peers within your specific industry, those with the same level of experience, and professionals in companies of similar market cap
- Board-sanctioned peer groups – typically, the list of companies boards use for comparative purposes for the management team’s compensation.
Remember, the more relatable your research is to your management team, and possibly your board, the more you increase your likelihood of successfully determining your marketplace value and negotiating an appropriate increase.
Once you have done the research, you can assess what it is realistic to expect. If you find there is a gap between your value and your compensation, you have to be flexible about how that gap gets corrected. If it is significant in size, you will have to become comfortable working with your boss (or future boss) to determine how to increase your package over a one to three-year period – rarely is this reconciled in one transaction.
As far as the notion of pushing back during negotiations goes, if you have done your research and can present a good case for it, most executives will take you seriously. If you simply decide on a whim that you feel underpaid, your credibility goes out the window. And remember the golden rule of negotiation: it’s easy to negotiate down but you can never negotiate up, so bear that in mind when you enter the negotiations.
Finally, remember that every discussion you have with management (even if your voice is heard through the recruiter retained to do the search for your role or an HR professional) is a reflection of your executive brand. My best advice is to be smart, not greedy. The former will continue to validate to management that it recruited the right talent and you will be rewarded along the way. Greed will only undermine your brand and how others view you.
This article originally appeared in the Summer 2018 issue of IR Magazine.