1. FINDING TALENT EMPLOYER SERIES
TOTAL COMPENSATION-WHAT’S BEHIND THE BEST OFFER
Tuesday, March 8th, 2011
9:00-10:00 a.m., Central Time
(On-site networking from 8:30-9:00 a.m. with webinar program beginning at 9:00 a.m.)
PROGRAM FORMAT
ON-SITE NETWORKING (8:30-9:00 a.m.)
WELCOME & PROGRAM OVERVIEW (9:00-9:45a.m.)
Moderator: Bernice Allegretti, Assistant Director Employer Relations, the Alumni Career Center
Recruiters and the compensation department frequently are at odds with one another. Each group has
their own perspective with how compensation should be set and what the candidate should be offered
during the hiring process. Lori Wisper, Senior Consultant at Towers Watson whose special expertise is
developing and designing total compensation strategies and processes will discuss and provide…
1. A better understanding of how compensation is created and set
2. Insight in to how to work with the compensation functions to make the best offer
3. How to look at the total reward offer, salary being one piece of it, to present the best offer to the
candidate.
Q & A SESSION (9:45-10:00 a.m.)
(Webinar participants will be able to type and submit questions during the session via the question box.)
SUMMARY AND CLOSING (10:00 a.m.)
HIGHLIGHT OF OUR SPEAKER ON BACK
University of Illinois Alumni Career Center
312-575-7830
careers@uillinois.edu

2. HIGHLIGHTS OF OUR SPEAKER
Lori Wisper, is a senior consultant at Towers Watson. She has over 24 years of experience both in
consulting and corporate HR, primarily focused on Compensation. She has consulted with clients on
broad based compensation issues including global compensation strategy and design, total compensation
strategy, incentive plan and base salary design, sales effectiveness and sales compensation, performance
management and compensation processes and administration.
In addition to consulting experience with two other national compensation consulting firms, Lori spent
five years working as the Director of Global Compensation within the corporate HR function of several
companies. The combination of strategic thinking, technical expertise and practical experience has
enabled her to advise companies on how to effectively design and implement new reward programs,
processes and technologies.
Lori has a B.S. from University of Illinois and an MBA from Loyola University of Chicago. She has
written articles for World at Work’s magazine, WorkSpan and delivered speeches and workshops for
World at Work, the Chicago Compensation Association, the Human Resources Management Association
of Chicago (HRMAC) the Minneapolis Compensation Association, the American Financial Services
Association, the Milwaukee Area Compensation Association and the International Foundation of
Employee Benefit Plans. She has authored studies on Broad Based Severance Plans and Economic
Trends in Compensation and been quoted in the Wall Street Journal, Crain’s Chicago Business, and other
publications and has appeared on the television show “First Business”.

3. towerswatson.com
© 2011 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
Debunking the Compensation Department
Misconceptions and Myths Held by Recruiters
A Presentation to University of Illinois Alumni Career
Center
by Lori Wisper, Senior Consultant, Towers Watson
March 8, 2011
Slide 1
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© 2011 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
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Contents
 Setting the Context
 Misconceptions and Myths (and Some Truths!)
 Collaboration – the Ultimate Objective
BREADCRUMB (OPTIONAL)
Slide 2
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Setting the Context: Why Conflicts Occur
As with so many conflicts, the Compensation and Recruiting Departments
often have competing priorities…
Compensation Department Recruiting Department
Approvals
Appropriate Offer (often meaning
fair)
Offer that Takes into Account
Internal Equity
Comp Owns Jobs; Descriptions
are Another Story
Pay Information Should be
Communicated but Senior
Management won’t Let Us
Compensation Survey Data is
Appropriately Aged and Very
Relevant
Speed
Best Offer (often meaning high)
Offer that Takes into Account
Differentiation
Comp Owns Job Descriptions
Pay Information Should be
Communicated
Compensation Survey Data Lags and is
Therefore Not Relevant
Competing
Priorities
Slide 3
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 Misconception: The Compensation Department is too slow in
responding to offers
For certain levels, the Compensation Department has the autonomy to respond
quickly, but for higher level jobs (Director and above), most organizations have
strict approval processes
If the approval process means the offer will not be made fast enough, both the
Recruiting and Compensation Departments should work with senior management
(the Head of HR is a good place to start) to find ways to expedite the process
Misconceptions and Myths (and Some Truths as Well!)
Bottom Line: Don’t assume the Compensation Department controls
the speed to which offers are developed. Work with them to
understand the approval process and determine ways to streamline it.
Slide 4
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 Myth: The Compensation Department always gives what seems to be a
“Lowball” offer
It is true that the Compensation Department is ruled by market data. To
understand what this means, the Recruiting function needs a deeper understanding
of how market data is used
Base salary offers are typically governed by a salary structure that is anchored in
paying competitively or “at market”. It is typically not the intent of the Compensation
Department to give candidates offers that are anything less than competitive
Recruiters often want to provide the “best offer” which also often means a high offer
relative to market. The aforementioned approval process not withstanding,
Recruiters typically don’t have to deal with the aftermath of bringing in a candidate
that is paid much higher than veteran employees, also known to Compensation
professionals as “Salary Compression”
Misconceptions and Myths (and Some Truths as Well!)
Bottom Line: Knowing how market data is used and how the salary structure
works will help Recruiters understand the limitations naturally placed on the
offers that the Compensation Department can make.
Slide 5
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What is Market Data?
 A) Published compensation data that represents hundreds (sometimes
thousands) of companies and thousands (sometimes tens of
thousands) of employees
 B) Something the Compensation Group invents to tell us we can’t pay
more
 C) A new method of shopping for information on the internet
 D) Something that the Marketing Department uses
Slide 6
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Market data: One of the many supporting elements of all
pay decisions
Communicate
with Candidate
Final Pay Offer
Compensation Philosophy
 Informal/Formal
 Often built within a Total Rewards
Philosophy
Candidate’s Current Pay Levels
Compensation Information
 External
 Surveys and other analyses
 Recruiting feedback
 Trends and prospective
changes
 Internal equity
Slide 7
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Understanding How Offers are Determined: Questions to
Ask
 What is our organization’s compensation philosophy
— Base salary at market, above or below?
— Total cash compensation at market, above or below?
— If above or below, why?
— If above or below, what other rewards are impacted (in the total rewards package)?
 Are there specific segments that are paid differently?
— Mission critical jobs
— “Hot skills”
— Jobs of a certain organizational level (e.g., executives)
 If I bring a candidate in above or below market, what will it mean?
Slide 8
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The compensation data associated with a given percentile rank assist in defining
the range of competitive pay for a given job
To Understand Market Data: Some basic statistics
Half the employees in the market
are paid above the median salary
Half the employees in the market
are paid below the median salary
75th
Percentile
¼ of employees in the market
are paid above the 75th
¼ of employees in the market
are paid below the 25th
50th
Percentile
(Median)
25th
Percentile Your
Candidate
May be Here
The Comp
Dept Will
Always Look
Here
Slide 9
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Pay No Attention to the Man Behind the Curtain…I mean
Salary Structure
 A salary structure is:
 A) A way to use the going rates of pay (i.e., representing the supply and
demand of labor) for specific jobs which reflect the organization’s
hierarchy as well
 B) A way to manage compensation costs
 C) A balance between what the external market pays for a job and how
the organization internally values a job
 D) A way to manage employee growth and development
 E) All of the above
Slide 10
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Internal Equity vs. Market Competitiveness
Internal Focus External Focus
Typical Stance
• Public sector
• Higher education
• Union environments
• Organizations with long-
tenured employees
• High tech
• Consulting
• Start ups
• Executive level jobs
Slide 11
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Salary Structure - Basic Concepts
 Salary structure is composed of job grades and pay ranges established within
an organization.
 A grade represents a grouping of jobs that have similar value in an
organization
 external value
 internal value
 combination of both
 The range for that grade represents the market value associated with jobs in
that grade
Slide 12
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 Example of a Salary Structure
Salary structures are sets of pay ranges that define the minimum and
maximum pay rates for jobs. They provide guidance to managers in
administering pay, recruiting and retaining employees, and fostering
employee growth and development
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 Misconception: The Compensation Department doesn’t recognize
differentiation in hard to recruit for jobs; it treats all jobs equally
Internal equity does not mean equality but it does mean taking into account how
current employees in the same role are paid and providing fair compensation
relative to the value of the job
To Recruiters this often is a barrier to providing the best offer, but it goes back to
the compensation philosophy. If pay is targeted at median levels and current
employees are paid according to that, is it fair (and equitable) to offer new
employees pay that is targeted at above market levels?
Misconceptions and Myths (and Some Truths as Well!)
Bottom Line: Recruiters need to understand how current employees in
the position are paid, what the organization’s compensation philosophy
is, and realize the implications of creating salary compression.
Slide 14
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Salary Structure - Basic Concepts
 The midpoint of the range is typically closely linked to the market
Range
Minimum
Midpoint
Range
Maximum
Slide 15
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Why Can’t the Offer Be Higher?...Internal Equity
 What do you do with existing employees paid in the middle range doing the
same job as a new employee paid in the highest range?
— Bringing in new employees at higher rates than existing employees causes salary
compression and can have significant negative impact on the organization
Range
Minimum Midpoint
Range
Maximum
Slide 16
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 Myth: The Compensation Department creates ugly job descriptions and that
reflects poorly on the recruiting effort
While the Compensation Department does own “jobs” (job codes, job structure,
etc.) so to speak, they often are accountable for job descriptions by default. In
reality job descriptions are the “hot potato” of HR with no one group willing to take
responsibility
The definition of jobs (which is the essence of job descriptions) should be owned by
those most qualified to define them – line managers. Compensation can (and often
does) own the administration of jds, but it is the responsibility of line managers to do
the actual writing
Misconceptions and Myths (and Some Truths as Well!)
Bottom Line: Developing effective job descriptions should be a shared
responsibility across HR. Often, this means jds are developed by line managers
in partnership with their respective HR generalists, maintained by Compensation
and kept current by Recruiting, Learning and Development and other parts of
HR.
Slide 17
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 Misconception: The Compensation Department keeps compensation a secret
making it difficult for Recruiters to create strongly branded offers
Once again, this misconception assumes it is up to the Compensation Department
what does and does not get communicated. The compensation philosophy, a
reflection of senior management’s desire and willingness to communicate pay will
drive this, and while they provide input, it is usually not the decision of the Comp
function
There may actually be sound business reasons for not fully communicating
compensation to either candidates or employees in general, but if there are not,
Recruiting can again collaborate with the Compensation Department to make the
business case to senior management to be more open
Misconceptions and Myths (and Some Truths as Well!)
Bottom Line: This is another area in which Compensation and Recruiting can
collaborate to ffect change in the organization. It typically means developing the
business case as to why compensation communication would provide a positive
result for the organization overall and presenting that to senior management.
Slide 18
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 Myth: The Compensation Department uses published survey data that lag
making such data irrelevant, especially when it comes to jobs that are moving
faster than the market
As part of the market data collection process, the Compensation Department will
use published survey data that reflects pay rates that may be several months old.
However, most also use a process that appropriately “ages” survey data
And, for those jobs that are moving faster than the market, there is often “ad hoc”
surveys available that occur more frequently and can supply the Compensation
Department with more current information. However, this data can (and did in Y2K)
turn into a trap, setting certain jobs up to expect faster and higher increases even
when the market for such jobs slows down
Misconceptions and Myths (and Some Truths as Well!)
Bottom Line: Recruiters need to keep the Compensation Department
informed of jobs that might be moving faster than the market so that they can
either procure more recent data or conduct their own custom survey. However,
the aging of survey data is usually an effective approach to ensuring that
compensation structures and rates are kept as current as possible.
Slide 19
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The Bottom, Bottom Line: Collaboration is Key
By sorting through the misconceptions and myths, Compensation and
Recruiting can work together to get better results…
Compensation Department Recruiting Department
Faster Approvals
Competitive Offer
Offer that Takes into Account
Internal Equity and Differentiation
Line Management Owns Job
Descriptions; HR maintains them
We’ve Made the Business Case to
Communicate Pay
Compensation Survey Data is
Timely and Relevant (but not
Perfect)
Timely Offers
Competitive Offer
Offer that Takes into Account
Differentiation and Internal Equity
Line Management Owns Job
Descriptions; HR maintains them
We’ve Made the Business Case to
Communicate Pay
Compensation Survey Data is Timely
and Relevant (but not Perfect)
Collaborating
Priorities
Slide 20
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towerswatson.com 21
Lori Wisper is a senior consultant in Towers Watson’s Rewards, Talent and Communication practice. She has over 24 years of
experience both in consulting and corporate HR, primarily focused on Compensation. She has consulted with clients on broad
based compensation issues including global compensation strategy and design, total compensation strategy, incentive plan and
base salary design, sales effectiveness and sales compensation, performance management and compensation processes and
administration.
In addition to consulting experience with two other national compensation consulting firms, Lori spent five years working as the
Director of Global Compensation within the corporate HR function of several companies. The combination of strategic thinking,
technical expertise and practical experience has enabled her to advise companies on how to effectively design and implement new
reward programs, processes and technologies. Prior to coming to Towers Watson, she was the Director of Global Compensation
for Discover Financial Services and for Underwriters Laboratories Inc. Some of the projects and initiatives that Lori has led include:
• Setting global compensation strategy and pay philosophy along with the creation of a global career banded salary structure;
• Leading the HR related aspects (compensation, benefits and HRIS programs) as Project Manager for the spin off of a major
division of a Fortune 100 company;
• Global sales compensation framework that consolidated 14 diverse sales compensation plans into one globally consistent
framework;
• Developing and administering international assignment policies, international relocation policies and negotiation and creating
offer letters for international positions;
• Working with executives and other business leaders to design annual incentive plans and other variable pay plans directly
tied to business strategy;
• Redesigning salary structures and supporting salary administration programs (including performance management systems)
to better support business and human capital strategies; and
• Developing and delivering compensation related speeches, training and education sessions.
• Education and Credentials
Lori has a B.S. from University of Illinois and an MBA from Loyola University of Chicago. She has written articles for World at
Work’s magazine, WorkSpan, and delivered speeches and workshops for World at Work, the Chicago Compensation Association,
the Human Resources Management Association of Chicago (HRMAC), the Minneapolis Compensation Association, the American
Financial Services Association, the Milwaukee Area Compensation Association and the International Foundation of Employee
Benefit Plans. She has authored studies on Broad Based Severance Plans and Economic Trends in Compensation and been quoted
in the Wall Street Journal, Crain’s Chicago Business, and other publications and has appeared on the television show “First
Business”.
Lori Wisper, Senior Consultant
Towers Watson, Chicago
Slide 21
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© 2011 Towers Watson. All rights reserved. Proprietary and Confidential. For Towers Watson and Towers Watson client use only.
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Contact Details
Lori Wisper
Senior Rewards Consultant
Towers Watson
71 North Wacker Drive, Chicago, IL 60606-3414
T 312.201.5797
F 312.445.9790
lori.wisper@towerswatson.com
towerswatson.com
Slide 22
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