Measuring the Value of a Good Worker

10/16/02
By: Allison Pries, The Record

Paul Dorf knows the value of a good employee. After all, a company's employees are what make a business, says Dorf, a veteran compensation consultant who holds bachelor and master's degrees in personnel relations.

"It's the drive, experience, and creativity of those people that makes the big difference," he says.

Dorf is founder and managing director of Compensation Resources Inc., an Upper Saddle River-based consulting business that specializes in human resource-related issues, such as executive and sales compensation, litigation support, and performance management.

The 19-year-old practice develops programs that help companies evaluate what an employee is worth, learn how to motivate a sales team, avoid discriminating practices, and implement gain sharing or job evaluation systems.

Dorf's staff of 20 works with emerging and midsize businesses to help identify their needs.

"My philosophy is to continually challenge people to grow," Dorf says

By bringing in an outside consultant, businesses can get a fresh perspective to reinvigorate employees. "What we try to do is step back and really understand what the nuances are of the organization - the culture - and really what they want," Dorf says. "Not just immediately, but longer term."

For $85 to $350 per hour, Compensation Resources develops plans to satisfy the needs of the worker and business owner.

"The mainstay of what we're trying to do is understand what people are getting compensated, or what they should be getting compensated, and then find a way to do it effectively," Dorf says.

"The dynamics of the world are that situations change, administrative capabilities change, finances change. A lot of things happen that [affect] pay in general. We try to make sure that we can help them through that, because sometimes the devil is in the details."

Compensation consulting is an industry populated by everything from one-man firms to big players that sell insurance or do accounting in addition to consulting. Dorf started his career with a large firm, but struck out on his own in 1983 and founded Compensation Resources. He sold the firm two years later but bought it back in 1989.

Compensation Resources is a midsize company that earns more than $2 million in revenue annually. It serves more than 30 clients at a time on projects that typically last three to six months.

Q. Who are your clients?

Our clients are very eclectic. We do a lot of work in insurance, with banks, manufacturing and distribution businesses, pharmaceutical companies, and research and sales companies related to those. We also do a lot of work for non-profits. For example, we're working with a large medical center in Philadelphia.

Q. What trends are you seeing?

One of the biggest trends in compensation is to provide more at-risk pay. You have fixed pay, which is your salary or hourly wage and on top of that you have a variable compensation, such as bonuses and commissions, which is based on performance. It's the combination of those two elements that companies are trying to strive for. We don't want to just give you a very high salary, because then why are you going to work so hard? You become very comfortable.

Q. How has the downturn in the economy affected your business?

After Sept. 11, everything came to a screeching halt. In the spring, we hit rock bottom. We had to let people go for economic reasons, but things are starting to pick back up. We just hired two people.

I think companies are starting to recognize the need to make changes. For a while, they didn't do anything because they didn't know what to do. They put off bringing a consultant, cleaned house and cut expenses. Now they're looking for a permanent solution to temporary problems. They're looking to motivate employees to work even harder, even though they can't give pay increases. Now is a time when companies may turn to profit sharing or gain sharing.

Q. Is there a particular service clients request in a slower economy?

Sales compensation is a very interesting arena. Whenever there's a downturn in the economy the first thing, after some initial cost cutting, is to get rid of some extra heads. Then companies will look at their sales and see if there is maybe a change they can make to their sales compensation program to get the salespeople remotivated.

Q. How long does a compensation program stay in place?

It can last quite a long time. I did one program in 1978 that's still in place and it's very effective. The program was built with sufficient flexibility to allow them to change many different features including their product mix and their direction. Clearly this product has stood the test of time.

Q. Any plans for the future?

I expect to be here for another eight to 10 years. I continually get offers to sell but I want to grow the company the way I want. In the next four years I expect to double the firm in size.