Outliers - Its Not All Good!

3866580875_a98f2dffd1There has been a lot of talk in the past year about outliers. In large part this is due to the fabulous book Outlier by Malcolm Gladwell in which he explores what is behind those few people that seem to excel beyond all others. He highlighted success stories like Bill Gates and the Beatles to show that 10,000 hours of hard work and practice will result in expertise.

Sometimes success does not pay. Many corporate environments promote a “pay for performance” workplace. My experience indicates that this simply means a cost of living increase is provided to anyone that can meet some minimum requirement as defined by the corporate cultures version of an annual or quarterly review. This percentage is then tweaked and adjusted slightly up for those that have excelled in performance or politics. For those out of favor or performing badly, they are given what is left.

Exceed the corporate expectation and you will receive a higher rating, along with the rating you have the opportunity for a higher merit increase. Remain dedicated to your company and brand, continue to excel and exceed, recognized with year after year of positive performance evaluations and one day you might be rewarded with outlier status.

If you are a corporate employee you might be especially susceptible to this condition. The text books say that an outlier is an employee with income that is extraordinarily higher or lower than expected.

Odds are you will not wake up one day making significantly less, so if you are notified as being an outlier, you are making too much. At least, you are making too much according to their definition of what “much” is. It appears that there is more than one model used for calculating outliers. One model looks for standard deviations between actual and expected pay, another model uses a regression analysis, and some companies establish a set range and strictly compare the actual to expected salary for a particular role.

In at least 4 major corporations that I am aware of, they use an outside human resource and payroll consulting firms to calculate the pay ranges and outlier limits. Based on your job descriptions, these outfits categorize each job in your company roughly as compared to similar jobs in other industries.

$What Does It Mean To Me$

This all depends on your company. The use of outlier calculations to limit excessive incomes is not a law, it is your companies choice. For example, I found this document from the University of Sussex detailing how outliers would be addressed. Effectively a “one-off” or lump sum payments in excess of the salary limitation. In this case, it appears the outlier status was triggered by changes in grade levels.

In other companies the rules may vary from limits on annual merit increases, to static bonus payments to nothing.

$What Can Be Done About It?$

Again, your company has established the rules that guide your payroll. Your first choice is to accept that you are a highly compensated employee, appreciate that you have a job and move on. On the other hand, depending on the political climate of your organization you could also fight it.

To avoid the outlier status there are only a few realistic choices including an exception from management, re-classification of your role, and re-evaluating the comparison group.

In the end, your company management made the rules, and if they so desire they could bend, adapt or change them. Based on your outstanding service, exceptional level of education or long years of service they could provide special consideration.

Your future may be determined by a poorly written document. Your role was classified based on a number of criteria but mostly your job description. Ensure that it accurately represents what you do.

Lastly, the comparison group should be closely reviewed. In the hundreds of job roles to be categorized it is conceivable that in some cases an accurate comparison is not being made.

Readers: Every work in corporate American and been faced with outlier status? Is it truly a career limiter or did you overcome it?

If you like to be challenged to see things with a fresh perspective, if you like to learn new ideas and different concepts, sign up for my RSS feed or enter your email address here to receive updates directly to your in-box.

photo by explorativeapproach


Daily Yakezie Short Carnival

How to Get Cheap Airfare
by Young and Thrifty

Amish Finances
by Frugal Confessions

Marriage and Managing Finances
by Rainy Day Finances

These posts have been chosen as one of their best post by the bloggers who submitted them or hand selected. Please check out each of them and let me know what you think!

6 comments to Outliers – Its Not All Good!

  • I worked for an IT company that had salary ranges. No matter how great you were, you couldn’t exceed the upper band. Therefore, no outliers there! However, I did make sure I maximized my income by advocating for myself. The thing I realized was, if you didn’t suggest a raise (along with supporting documentation of your accomplishments and such), they would just stretch out salary increases as long as possible. So, I got raises every 8 months or so while people that were performing similarly to me were waiting well over a year. That created quite the difference in salaries between me and some of my colleagues over time.

    So what I learned was, you cannot ‘trust’ you will get the money you deserve. You have to ask for it too. (At least where I was.)
    .-= Everyday Tips´s last blog ..What Do You Refuse To Give Up, Even If It Is Costly? =-.

  • Hmmm, not sure if I get it. If you are an outlier in terms of GREAT performance, and you get great pay increases/outperformance, isn’t that a good thing?

    I have a heart to heart talk every two years to keep my managers honest, b/c there is a loyalty discount unfortunately. Every year may be excessive, but every 2-3 years when you mention you are getting bid away, your manager’s ears perk up to listen.

    Best, Sam
    .-= Financial Samurai´s last blog ..Being Overly Content Can Be Detrimental To Your Career =-.

  • I have to agree with Sam on this one. Wouldn’t want to strive to outperform your peers so that you can take advantage of a possible pay increase? Maybe competition between peers is a bit aggressive but even just taking pride in the job you’ve dedicated yourself to would yield positive results and get someone noticed inside that corporate structure. If you aren’t proud or content with where you are then that’s a whole different story 🙂 Interesting take on companies hiring outside consultants to choose pay ranges and how to reward employees though.
    .-= Nunzio Bruno´s last blog ..Want to make more money, give it away! =-.

  • I’ve worked in lots of places with “salary bands” – it’s all a crock. I’ve had my bosses get around keeping me in the band by giving Above and Beyond bonuses and benefits like incentive programs that are presumably only offered to people outside of your category.

    My strategy was always just to move on and find another band to fit into if it wasn’t happening in my current job quickly enough. I never bothered suggesting that I’d be bid away. I’ve never really moved jobs for money though, it just happened naturally.
    .-= Single Mom Rich Mom´s last blog ..Getting by – or really living? =-.

  • While competition at work can be a good thing if things don’t get overly competitive, being an outlier can put a target on your back. I’m thinking about the tv show Hell’s Kitchen, and in this season it seems like every time one person is able to cook better than the rest they are targeted for elimination.
    .-= Moneyedup´s last blog ..5 Things You Should Never Say About Money =-.

  • […] Outliers in corporate life – Eliminate the Muda […]

Leave a Reply

 

 

 

You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>