I’ve been asked multiple times to put some of my rambling comments from my feed on LinkedIn into a more formal article. Of late, I’ve been musing about the rationale that HR compensation professionals use to justify not raising compensation levels when aviation managers meet with them and try to increase compensation levels for their personnel. That leads me to my “Top Ten List” of reasons that HR compensation personnel and flight department executives use to justify making market adjustment to their compensation levels. We won’t get to all of them here, but we’ll discuss the first three and get to the remaining reasons in subsequent articles.
1) We haven't lost anyone. Why should we pay more?
This is probably the reason I hear most frequently. The lack of vision communicated in such a statement is astounding. It prompts me to think of a similar statement. “We haven't had an accident yet. Why do we need to pay for a safety management system?”
In any situation related to people or operations, it is always better to be proactive (or even predictive) than to be reactive. The loss of one person is costly from both a morale and financial perspective, and it is always cheaper to pay people more and retain them than it is to replace them—ALWAYS! Then there is the impact of a new, unknown personality on the organizational dynamic to consider. A company or department that is willing to roll the dice on this matter is not one with a healthy culture.
I have multiple clients who check in with me on an annual basis to ensure their compensation levels are competitive because they want to stay ahead of the market rather than lose someone to it. They understand this equation. Beware of organizations that do not.
2) We're not competing with the airlines!
I actually heard this from the head of HR comp for a company based at the CLT airport! Seriously? Sigh. Yes, you are. You just refuse to accept it. Every flight department in the U.S. is competing with the airlines, either directly or indirectly. If you lose personnel to the airlines, that's a direct loss. If you lose personnel to an operator across the field because they lost personnel to the airlines, that's an indirect loss.
Yes, there will be ebbs and flows in the hiring rates from the airlines, particularly with aircraft delivery delays, but the demand will always be there in some form. Have you traveled commercially lately? The airports and the jets are packed.
In 2017, I did some research about why business-aviation pilots were leaving for the airlines. There were two major findings from that study. The first was that the primary reason pilots left for the airlines was for a more predictable quality of life. Close behind was compensation. The second finding was that pilots leaning towards an airline departure were a statistically distinct group from the pilots who were not. The two groups thought differently on every major retention issue. So, in practically every flight department in the U.S. right now, there are personnel who have quietly filed applications with the airlines and are waiting for a phone call. You just don't know who they are.
Can business aviation pay as much as the airlines do? Probably not and they shouldn't try. What they can do is pay enough to show their people that they matter, give them a workplace where they are a name and not a number, and give them a culture the airlines can't match.
3) We can't increase the compensation for these people! They're already at the top of their pay band! Our hands are tied!
If you're an aviation manager in a large corporation trying to go to bat for your employees, you've undoubtedly heard variations on this one, sometimes accompanied by grunts of exasperation and impatience.
To be fair, in my journey to attain the CCP credential, I learned a lot about how base-pay structures are developed, and that process can be long and tedious, making HR professionals very reluctant to amend them. The biggest limitation from which base-pay structures suffer in a flight department context is that they typically focus on internal equity in the various pay grades, i.e. putting A&P mechanics in the same band as computer technicians or pilots in the same band as subject matter experts or individual contributors in other corporate areas. In so doing, HR is not accounting for different market factors in the different job fields that might be in the same pay band. This can get particularly limiting when some “hot skills” jobs, like pilots, have market pressure forcing compensation upward at a rapid rate.
I would argue that trying to fit flight-department jobs into standard corporate base-pay structures is a lot like trying to force a square peg into a round hole, but it is still a common practice, nonetheless.
There are several ways to deal with raising compensation levels for employees who are at the top of their respective bands but command higher compensation due to market pressures. Here are a few.
- Incorporate end-of-year lump sum payments into their compensation packages, therefore not raising their base pay but still getting them to the higher number.
- Increase variable compensation elements, short-term or long-term incentive payments to keep base pay constant but still get to the higher number at the end of the year.
- Design a unique pay structure for the aviation department that isn't tied to other job titles at a similar “level” in the company but instead is keyed to market compensation levels.
In my consulting work, I encounter this phenomenon frequently and my advice to the comp people usually incorporates these recommendations, and I emphasize that the third one is the most effective.
Regardless of how companies deal with the pay-band issue, the fact is that they MUST deal with it. Relying on pay-band limitations to constrain compensation levels and making no effort to address the situation is a morale killer for employees and eventually they will leave. Count on it.
Next month in this column will be more from the top ten. Stay tuned.
