For new ventures, create compensation that resonates within the new industry or sector.
By Hali Croner, President and CEO of The Croner Company
As businesses seek new ventures, entering a related industry seems natural. After all, similarities are apparent between local and national TV, media and digital technology, and gaming and entertainment. Shouldn’t it be straightforward to attract and retain talent across related industries?
Unfortunately, when entering a new industry, the rules you know governing compensation may not apply. To create pay practices that resonate, you must understand the new industry, its roles and its unique competitive characteristics, including role definitions, pay levels and practices.
FIVE STRATEGIES YOU NEED TO BETTER UNDERSTAND INDUSTRY-SPECIFIC COMPENSATION
- Pay Levels Vary Dramatically Across Industries
Participating in compensation surveys is a great way to get a clear view of how different industries structure pay. For example, The Croner Company’s industry-specific compensation surveys reveal that digital companies generally pay more than media companies do for the same roles. There are many benefits of benchmarking using industry-specific data.
Industry-specific surveys also illuminate the roles and organizational levels that each particular industry values. A film or TV company might be startled to learn that while it values senior management and dealmakers, gaming companies and animation studios place a higher premium on the “doers.”
The Croner Company’s survey data show that senior vice presidents and vice presidents comprise 17% of workers at film and TV studios. But SVPs and VPs account for only 2% of employees in gaming and 6% in animation companies. Contrast that with individual contributors (ICs, a.k.a. “doers”). ICs, essential for success in gaming and animation, comprise just over half of the workforce in those sectors. At film companies, ICs account for only about 25% of the workforce.
- Compensation Components Are Not Applied Equally
As you evaluate an industry, understand that its mix of pay elements differs based on competitive demands. While base salary, bonus, equity (if offered) and retirement are common elements of most total pay packages, their application varies.Consider equity or long-term incentives:
- Our surveys show that over 80% of companies in film, TV, cable, digital technology, gaming and animation offer long-term incentives.
- However, the levels of employees eligible to receive those incentives vary by industry, with media and entertainment limiting them to management while digital and gaming companies typically drive eligibility deeper into their organizations.
- Out of those that offer a long-term incentive plan to employees, more than half of digital companies and software gaming companies offer such incentives to IC and support levels.
- Comparatively, companies in the film, TV and animation industries offer long-term incentives to less than 20% of IC and support levels.
Or consider the case of a for-profit business starting a charitable foundation:
Though it would seem straightforward to offer the same pay at your new nonprofit as you offer company employees, tax exempt organizations must provide what can be justified as “reasonable” compensation to their employees. As a result, foundation executives usually receive lower base salaries than private counterparts. As an offset, charitable foundations often make larger retirement contributions for employees, potentially up to 15% of base salary (versus 4.5% to 6% in private industry).
Understanding these differences helps you stay compliant and competitive in the “new” sector.
- Educate, Educate, Educate
A new venture means learning about new roles.There is nothing more important in compensation than understanding the content of a company’s positions.This entails meeting with new employees, learning about their roles and uncovering what resonates with them regarding pay elements. The more you understand your new venture, the more you can make informed decisions – and explain those decisions to your stakeholders.
Communicate to new employees that you understand their compensation priorities. Clearly describe how they can earn competitive compensation, which may include different pay elements than they have had in the past. Meanwhile, current employees may need an explanation for how and why pay differs in the new venture.
Finally, share your research with leaders so they trust that you understand the roles and practices in both industries, and that you can design compensation plans which resonate to retain and attract the very best employees.
- Have Fun!
There is nothing more exciting and exhausting than learning about a new industry. Here are some ideas about things you can do and places you can look to ramp quickly up the learning curve:
- Use AI to summarize key issues in the industry
- Join associations
- Look for lectures
- Talk to your peers
- Participate in industry-specific compensation surveys
Industry-specific metrics and market data will help you navigate uncharted compensation waters. Of course, there are many industry-specific compensation surveys that provide a wealth of compensation practice, pay and benefits level data; if you are entering into one of the industries The Croner Company studies and surveys, please give us a call so we can help provide the resources you need!
The Croner Company Can Help
As your compensation advisory partners, our consulting team can develop a research-based, industry-specific geographic compensation policy that ensures your pay rates are competitive. We can develop a statement outlining your new policy and strategies for communicating with employees as part of your talent acquisition tools. We can also provide guidance on regional pay practices for specific industries and help build tools for HR, recruiters or employees to calculate geographic pay differentials.
The Croner Company’s surveys and consulting services are relied upon by organizations at all stages of growth to establish and modify pay practices and align compensation with mission, values and market.
- To learn more about our consulting services, please contact Kimberly Rochat, Managing Director, Consulting at the Croner Company, at +(415) 485-5526 or firstname.lastname@example.org.
- For more information about The Croner Company’s compensation surveys, please contact Laurie Krashanoff, Manager, Account Relations, at +(415) 485-5521 or email@example.com.