Service Sector Organizations have Unique Compensation Needs

For twenty-five years, Merces has worked with a broad range of organizations spanning a variety of industries in the service sector, including these:

  • LibrariesMerces has worked with public libraries in the Metro Detroit area and nationwide, from those in relatively small communities to those in major metropolitan areas.
  • Credit Unions and BanksSome of our first clients were credit unions, and we’ve not only worked with these types of financial institutions, but we have also collected and published compensation and benefits data for both the credit union and banking industries.
  • HospitalityWe have worked with organizations providing a variety of hospitality services, including hotels, restaurants and recreational activities.
  • Construction and Environmental Services – Working with organizations nationwide, Merces consultants have experience dealing with diverse clients providing critical services for the country’s infrastructure.
  • Health Care – In addition to our Federally Qualified Health Center (FQHC) clients, we have worked with a number of health care organizations, including local and regional hospital systems, clinics, and other health care providers.

Our consultants have found our techniques easily transferable from industry to industry because we make it our business to understand the jobs and find the appropriate market data for each. Merces job evaluation programs and other systems and processes transfer easily between industries; we have learned that some of the best insights come from the most unexpected places.


Managing organizations requires an understanding not just of organizational structures but of the organizations’ missions and the communities in which they operate. Service sector organizations often grow from their founder’s vision and then evolve in response to changes in ownership, the market, and the environment. However, like any other organization, it is essential that they be staffed to deliver their mission, particularly at the senior management level. Growth brings about the need for more operational and administrative sophistication, which often calls for changes in organizational structure. Merces helps organizations critically review their existing structures and develop a path toward the future, working with both executive management and owners. We have helped organizations successfully address a variety of situations, including:

  • Aligning senior management structures to respond to staffing changes and new operational challenges
  • Preparing a succession plan in anticipation of senior management retirement
  • Developing new organizational models to manage growth
  • Working with Boards of Directors and owners to create new role definitions for the CEO and establishing programs for performance management
  • Creating accurate and effective job descriptions tied directly to performance management programs

While most privately owned organizations do not worry about the disclosure of their information, owners and Boards of Directors would be wise to be concerned about their CEO compensation program. Increasingly employees at every level, including executives, do not expect to spend their entire careers with the same organization, and with opportunities appearing through the internet and aggressive recruiters, companies must not be complacent. The truth is that, while nothing can guarantee the ability to keep a talented executive on staff, a well-designed executive compensation program will certainly help. It is now not a luxury to have a structured program, but a necessity. Merces works with owners, top management and Boards of Directors to:

  • Establish a formal compensation philosophy
  • Develop and implement procedures for determining executive pay
  • Collect and analyze competitive data
  • Set up formal salary ranges and incentive compensation plans
  • Develop approaches for managing performance and adjusting pay.

All organizations, particularly those going through growth and change, find challenges in compensating employees based on their contribution to the organization.   Frequently jobs are combinations of roles built around a particular employee’s talents, creating mixes of skill sets that do not often appear in nature. Compensation surveys are usually of dubious value, as titles often do not match actual responsibilities, and most jobs are not actually “benchmarks.” Without a structured approach to compensation management, organizations see problems such as:

  • Needing to pay more to new hires than experienced staff in the same job
  • Becoming training centers for other local organizations through failure to keep pay competitive
  • Having long service but lower performing staff paid well above the market

None of these problems are inevitable. With a broad scope of industry knowledge and more than 25 years working with organizations of all types, Merces has significant expertise in developing, implementing and administering structured employee compensation programs. Merces programs reflect the realities of the service environment.

Our approach to pay management involves considering three key elements of pay fairness and equity:

  • Internal Equity – A job evaluation methodology determines the relative value of jobs to the organization, ensuring pay opportunities match job contributions, even when no market data is available. A pay program that does not properly incorporate job evaluation is not only less effective, it opens the organization up to potential unnecessary liability.
  • External Competitiveness – Defining ranges that clearly outline the pay opportunities for each job helps organizations understand the nature of the market, as well as how their “non-benchmark” jobs fit in. Merces ensures that organizations properly define their “market” and collects the data that is most appropriate not just for their market but for their business model.
  • Paying for Performance – A fair and equitable pay program does no good if it isn’t administered fairly and equitably. Creating performance management plans that ensure appropriate compensation for employees’ contributions to the organization is crucial to effective pay management. Merces can show your organization how to use job descriptions to create customized performance management programs for each job.

Merces’ clients report high levels of satisfaction with the pay programs we develop – beyond solving immediate problems, they help management better budget and understand their cost structure, and promote a higher level of understanding among employees of how their pay is determined.

Many human resources programs and other organization initiatives fail, not because they are poorly designed, but because they are poorly communicated. Communication is not simply a matter of volume of information, but also effectiveness of delivery. Any new program – or any change – requires development of a strategy to ensure that information is effectively disseminated to the right population at the right time. The communication also involves gathering information from employees, whether it is for deciding which approach to take, or gauging the reaction to actions already taken.

We work with our service industry clients to:

Design strategies for communicating new programs and practices, preparing supporting materials and delivering information to employees
Collect employee opinions and feedback through surveys and focus groups
Help collect information on members needs and opinions through surveys and focus groups

Communications services can be provided as part of another consulting project, or as a stand-alone assignment.