January is a busy month for most aviation managers and compensation professionals. The typical rewards cycle for large companies begins with closeout of the previous year and is followed by an examination of the performance of both personnel and the company versus the targets that the company had set for that year. That is when short-term incentive payment levels are decided upon and merit increases for personnel are allocated. It is also a time when compensation reviews take place and meetings between supervisors and subordinates occur where compensation is discussed.
So, let’s say that you’re in one of these companies and your compensation review is coming up. You believe you’re underpaid, and you want to discuss that with your boss. How do you have that difficult conversation?
Understand the References
The first thing to understand is how you’re underpaid, i.e. in reference to what. There are essentially two arguments to be made for higher compensation. One is based on proficiency and experience, and the other is based on the market.
The proficiency and experience argument relates back to some of the charts I presented in my previous article, but in the event you don’t have access to them, I’ve reproduced one of them below.
All formal base pay structures have ranges at each level. The chart illustrates how employees should be paid. As they progress in their jobs and their experience grows, they should be paid higher in the pay range that their job falls in. For example, if you’re a pilot and you’re recently type-rated in a particular aircraft or new to the mission the aircraft flies, your pay level should be closer to the bottom of the range. As you gain experience and proficiency, you move higher in the range. As you become an expert, instructor and mentor, you reach the top of the range. How would you be underpaid in this scenario? Let’s say you are an instructor and mentor in a particular aircraft. In fact, you’re the one who flies with new pilots, or you’re the one trusted to fly with contract pilots when those are required for missions. But your pay level is below the midpoint or market-composite average of a pay range, that’s obviously not where you should be in light of this mechanism. If that was your case, the argument you would focus on is that you’re not paid in the proper region of your range.
The market argument is about where your particular range lies in relationship to what other companies pay for similar jobs. To continue with the scenario above, let’s say you’re a mentor and instructor in a particular aircraft and you’re paid near the top of your pay range. But you have peers in other companies, flying similar aircraft and doing similar missions, and you’re paid much less than they are. That means the compensation structure of your company is lagging the market. There are two ways for the company to address that deficiency. One way is to revamp or revise the base pay structure itself. That is extremely difficult to do given the time and effort required to build the base pay structure in the first place. Unless you’ve got HR comp professionals who are willing to build a standalone base pay structure for the flight department, this option is both time consuming and challenging. Another way to address the deficiency is to focus on variable pay: short-term incentive payments, long-term incentive payments, and/or bonuses. It is much easier for HR to make changes in variable compensation than in base pay, so this is here where innovation can take place. Something to consider here is that often aviation department employees, particularly pilots, can be somewhat myopically focused on base pay. That is probably not the right approach. Given the way pay structures are created, the comp levels of certain flight department employees may be commensurate with those of junior executives in the company, and hence subject to a greater focus on variable pay and a lesser focus on fixed pay, i.e. tied into the success of the company. Aviation professionals should be as engaged in the success of their companies as those in other functional areas. To try to detach from that structure can be a short-sighted approach.
The bottom line here is that if you think you’re underpaid, know how you’re underpaid and make your argument for higher compensation based on that.
Get the Data
If you’re going to argue for higher compensation and you have a market issue, you’re going to need data to make your case, and that data needs to have a certain pedigree. Spoiler alert: numbers from a magazine, a job website, a pilot networking website, or even a site like salary.com are both anecdotal and biased. Hearsay data from Jill or Joe across the field won’t help your case either. (Here’s where a shameless plug for the AirComp Calculator comes in.) The AirComp Calculator uses a scientific methodology that has been honed over seven years and hundreds of compensation studies for business aviation operators that comprise a who’s-who list of well-established companies in the industry. The Calculator uses data from multiple scientific compensation surveys as well as data from the U.S. Bureau of Labor Statistics (BLS) to generate precise compensation ranges at the 10th, 25th, 50th, 75th, and 90th percentiles for base salary, total cash compensation (with and without 401K match), total direct compensation (if applicable) and total compensation. To date, the Calculator’s methodology has not been challenged by a single compensation professional. It allows the business aviation professional complete transparency on what he or she should be paid and allows that professional to make a data-driven argument for higher compensation.
So, if you’re going to argue for higher compensation, know why you’re being underpaid and have the data to back it up. If you need us, we’re here for you.
References:
World at Work. (2021). Base Pay Administration and Pay for Performance. Phoenix: World at Work.
