AIN Staff

Managers in corporate flight departments face a variety of challenges as they seek to retain personnel in the current compensation environment. As they battle to pay their employees competitively, one of the most common and frustrating constructs they encounter is the fixed compensation structure and its associated “pay bands.”
A little background is in order. Compensation professionals are trained in the practice of building pay structures in organizations. Typically, the process starts with a look at the organization’s values and total rewards philosophy for orientation; then, the nuts-and-bolts work occurs. Building a pay structure requires individual job analysis, a process that can include deep dives into job descriptions, internal and market-based comparisons, and ranking within the organization.
When the dust settles, a pay structure with clearly defined levels of responsibility and expertise has been produced and with it, appropriate levels of compensation based on two approaches: internal equity (inward focus) and market-based (outward focus). Companies that favor the inward focus assign similar compensation levels to personnel with similar levels of responsibility, regardless of functional area. Companies that favor an outward focus look more at market levels of compensation for jobs in the individual functional areas and then try to apply them to the pay structures they have designed.
While this is a reasonable methodology whose worth has been repeatedly proven, it can play havoc with compensation levels for members of corporate flight departments, particularly pilots. The problem lies in the concept of individual pay bands that accompany the jobs at each level in the structure. And here, we have the cause of the compensation limitations mentioned above, those that aviation managers face across the entire country.&nbsp;
Let’s say we’re talking compensation—base salary—for a captain flying a premium long-range aircraft, like a Global 7500 or a Gulfstream 650ER, for a flight department in the Midwest. According to 2023 data, a captain flying a jet like that should be making a base salary of about $260,000, but her peers, who may be doing accounting or information technology chores, may be making only about $180,000. So, our captain is at the absolute ceiling of her pay band. She can’t even be awarded a merit increase of 3 percent or so because that would exceed the prescribed upper limit for that band.
Her boss does some research, maybe even using the AirComp Calculator, and finds that he needs to target the 75th percentile for her compensation to keep her from taking a position with the airlines or with a company on the other side of the airport. He wants to increase her base salary to $290,000, but he can’t, because her employee grade limits her compensation to $260,000.
The aviation manager has two options. He can try to get approval for an exception to the pay structure, which is rarely granted in most corporations, or he can try to get the captain promoted to the next higher pay level, perhaps to senior captain. But, to get this option approved, he’ll have to get authorization to change the staffing structure of his department, which allocates a certain number of personnel at each grade in the organization. In many cases, the aviation manager can do neither. The employee might eventually depart for a position with the airlines or with another department, in which case the company would end up paying $200,000 for recruiting and training her replacement when a $30,000 pay raise would have saved it that cost.
In conversations with corporate aviation managers at the AIN Corporate Aviation Leadership Summit in July, their frustration with rigid pay structures came through loud and clear. Many of them were trying to compensate their pilots at levels that would deter transition to the airlines and were prevented from doing so by their compensation department’s determination to abide by the pay structure in place. Several of them had lost personnel as a result.
I’ve had personal experience with that outcome. Years ago, when I was running a flight department for a large energy company, I wanted to increase my safety captain’s compensation by $10,000 to pay him for his additional responsibilities and expertise. The company’s compensation department denied my request. “This guy is in grade E7!” the compensation representative said. “How can we justify paying him $190,000 when his peers in the same grade are making far less?” Shortly thereafter, the safety captain took a position with another company, and I had to pay to recruit and train someone to replace him. The company lost about $150,000 on that bit of shortsightedness.
An aviation manager at CALS recalled a pilot who showed him a job offer from another company where he would be paid $30,000 more for flying the same jet at the same airport for approximately the same schedule. “I went to HR to try to get him an increase,” said the aviation manager, “and they told me he was at the top of his pay band and an increase wasn’t possible. I then showed them the offer letter the pilot had forwarded to me. The HR person said, ‘Oh, that’s OK then! We can pay him the additional $30,000 because that comes out of the retention budget. It’s different money.’
“I was astounded,” the aviation manager continued. “This guy had to have one foot out the door to get a raise. What kind of message does that send?”
Corporations’ rigid adherence to pay bands does benefit some people, though. High-net-worth individuals, whether they have their own flight departments or work though management companies, can lure personnel away to operate their aircraft merely by throwing more money at them, and they have no concerns about pay bands or corporate policies. They’re willing to pay what is necessary to get the flight organization they want, and it is actors like these, as much as the airlines, that lure personnel away to destinations beyond those attainable in the corporate world.
Are such destinations risky for pilots? Certainly. Can high-net-worth individuals change their minds arbitrarily and get out of the flying business? Absolutely. But some employees in corporate aviation have become so fatigued with the rigidity of corporate policy and the unwillingness of compensation personnel to understand the current market that they’re willing to take the risk. Some corporations are realizing this. Others are not. To their own peril.

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