A New Era In Aviation Compensation Analytics

Tony Kioussis (00:33):

Welcome to another Asset Insight Podcast covering the aircraft ownership life cycle. I am Tony Kioussis, President of Asset Insight, and your host. Citadel Consulting Services helps companies develop the processes and procedures to find, develop, and retain top talent. Part of this effort is making sure that each company’s compensation package is in line and that its corporate culture nurtures the entity’s teams. One of the company’s services is the AirComp Calculator, what it described as, “Business aviation’s only online compensation analysis system, able to provide precise compensation ranges for specific business aviation positions in seconds.”

Tony Kioussis (01:16):

Joining me today to discuss the AirComp Calculator is Dr. Christopher Broyhill, the company’s founder and CEO. Let me start off by asking about your background Chris, How did you get to become a compensation expert?

Dr. Chris Broyhill (01:30):

I was a fighter pilot in the air force and I find myself having made the transition from fighter pilot to a compensation geek. I retired from the air force in 2001. I’ve held a variety of leadership positions in business aviation. Most notably I was a Director of Aviation for a Fortune 100 company. And the issues of compensation has always been something that we seem to have struggled with. As a leader in an aviation organization I would make use of surveys, and I would often find myself at odds with the compensation people in our company, wondering how they got the numbers that they got.

Dr. Chris Broyhill (02:04):

So along the way while I was a director of aviation for that company, I attained a PhD from Embry-Riddle Aeronautical University. One of the reasons I went after the PhD is that a PhD is a research degree. I wanted the ability to provide data to our industry because it has seemed to me for the longest time that, in our industry we’ve got all this technical data out there but what I hear most of the times when I have discussions with people is it’s about their opinion, it’s not with the data.

Dr. Chris Broyhill (02:32):

So I got the PhD degree, and while I was going through the course of study, I had to take four doctoral level classes in statistics. I went into those classes basically kicking and screaming, and then came out on the far side going, “Huh. Wow, what an interesting information there, and how can I apply this and use it in a way that will benefit our industry?” So I sit on the Business Aviation Management Committee at the NBAA. I sit on the Management ToolS Subcommittee of that committee and the Management Tools committee is concerned with the management guide, but it’s also concerned with the NBAA comp survey.

Dr. Chris Broyhill (03:04):

So while I was there, back in 2017, somebody said, ” You’ve got this PhD degree, why don’t you conduct some scientific research on why people are leaving our industry,” and at that time, going to the airlines? And I said, “What? That seems like a reasonable course of action. Let me do that. Let me use my degree to conduct some scientific research because PhD is a research degree.” And as part of that, after I did the first study and presented my findings, I got to be known as the retention guy. The people have retention questions, they come and ask me and that migrated into or evolved, I should say, into a consulting practice where I advised flight departments on their retention practices, and what they were doing right, and doing wrong.

Dr. Chris Broyhill (03:42):

Part of retention is obviously compensation. So I had to come up with a scientific methodology to look at what people were paying and comparing them to scientifically generated survey data and making a judgment over whether the pay that organizations were rendering is too much, too little in the ballpark. So I found myself delving into these surveys that I had kind of looked askance at over the years and figuring out how they obtain their data, how they collected it, how they analyze it, how they presented it.

Dr. Chris Broyhill (04:12):

To date, I’ve done nearly 40 compensation analyses of flight operations throughout the US. I’ve done many, many Fortune 500 companies. I did an OEM. I did a major management company. I’ve done some high net-worth individuals. I’ve kind of seen the full gamut and my methodology has held true through all of those. So, that’s a long-winded version of how I got to where I am.

Tony Kioussis (04:33):

What is the role of compensation in the overall retention equation?

Dr. Chris Broyhill (04:37):

We define retention as a three legged stool. That’s my analogy with which I present it. One leg of the stool is quality of life. Can people predict their lives? Can they count on being home for important family events? Another leg of the stool is… I guess I would define it more precisely, now, as, “What’s the organizational culture of the operation? Is it a good culture or is it a toxic one?” And that’s a function of leadership. It’s also a function of the company itself and what that looks like. But the third leg of the stool is compensation.

Dr. Chris Broyhill (05:08):

HR professionals are very fond of saying, “Well, people will never leave for compensation.” And the answer to that is, “They don’t, but.” And what I mean by that is that there have been several different organizations that I have performed retention analysis of, where I’ve interviewed personnel there, and they say, “Well, we love the company. We love the leadership, but wow, our compensation is so low compared to what our peers are making. We feel like we’re not being valued as employees, or fairly valued.”

Dr. Chris Broyhill (05:35):

Sometimes compensation can be merely a numbers game, but oftentimes it can migrate over. Instead of being one leg of the stool, it can actually migrate to affect two legs of the stool in that it could affect employee’s view of what the company culture is. If the company’s got a great culture, it’s got a great quality of life, but they’re paying low, that low pay, in addition to being about the number itself can also get employees to look upon the company culture with a degree of resentment or bitterness. So at the very least it’s one leg of the stool. At the most, when it is very much on the low end, it can affect two legs of the stool.

Tony Kioussis (06:12):

What is unique about your approach to compensation?

Dr. Chris Broyhill (06:16):

One of the things that I kind of stumbled upon was that I was doing the same thing with my methodology, that HR people who are in the compensation field do. So at the end of the day, what I’m generating is market ranges. So how do I get there? I only use data that comes from accredited compensation surveys, where the data is scientifically collected and scientifically analyzed. That’s the starting point, and I use multiple surveys.

Dr. Chris Broyhill (06:40):

First thing I do is I age the data. The survey data is never current when it is finally released. It’s at least six months old, and oftentimes can get up to a year, a year and a quarter old before it’s replaced by updated data. So I have to age the data into the present. The way I age the data is I use internal survey trends, but I also use data from the US Bureau of Labor Statistics. So I take the survey data, I age it using internal survey trends and then data from the US Bureau of Labor Statistics. Then I regionalize the data, again, using internal survey corrections for area, and I regionalize it also using data from the Bureau of Labor Statistics.

Dr. Chris Broyhill (07:15):

So for any set of conditions, and by conditions I mean, What position I’m analyzing? What class of jet I’m analyzing? What geographic area I’m analyzing? I get anywhere from four to eight different numbers for that same set of conditions using the different approaches with the data. The low number is the low end of the market range. The high number is the high end of the market range. And I do that for multiple percentiles and across multiple types of compensation. As far as I know, I’m the only person out there in the industry who’s analyzing compensation in that way.

Tony Kioussis (07:47):

Okay. Let’s talk about what the AirComp Calculator specifically does and how a company would use this service.

Dr. Chris Broyhill (07:55):

The calculator is designed to make the job of the aviation manager easier. My customer base consists of aviation managers, whether they operate one airplane or they operate several, it’s to make their jobs easier. Every year, aviation managers have to do performance reviews and they also have to build budgets. When they’re doing both of these tasks, they need to know what their compensation structure looks like, and they need to compare their current compensation levels with what they think the industry is commanding.

Dr. Chris Broyhill (08:23):

So that’s what I developed this thing to do. Rather than have aviation managers have to get out the salaries. I’ve had several aviation managers, when I provide live demos to them, they go, “Holy cow. You provide in seconds what it takes me a long time to do when I’m doing these tasks over here. You’re going to make my life so much easier with this.” And that’s my goal. It’s to make the life of the aviation manager easier.

Dr. Chris Broyhill (08:43):

So what the AirComp Calculator specifically does is, it allows people to enter current base salary and current total cash compensation. Total cash compensation means base salary, plus a yearly cash bonus. They can select what their current 401k matching percentage is. They can select what their current benefits load is. Then they select what position they want to analyze.

Dr. Chris Broyhill (09:04):

The calculator will analyze 14 positions from Captain to Senior Captain, to Director of Aviation, both flying a non-flying, Director of Maintenance, Maintenance Supervisor, Maintenance Technician, Flight Scheduler/Office Manager, Scheduler, Flight Attendant, Senior Flight Attendant, and there are a few others in there as well. It analyzes across five different jet classes, and by jet classes, I mean, that’s based on a combination of maximum takeoff weight, as well as where the jets fall in the charter world, in terms of the charter categories that they fall into.

Dr. Chris Broyhill (09:39):

I even recently broke out premium, took the helicopter compensation for just the Captain position, because that’s the only one where there was enough statistically significant data. I’ve got light jets, I’ve got medium and super mid-size jets. I’ve got large jets, I’ve got heavy ultra long range jets. And then a special class of heavy ultra long-range jets, which I define as premium jets. Those are the ones that are the newest, latest, and greatest, and they command a higher compensation level for some of the positions involved.

Dr. Chris Broyhill (10:07):

So I’ve got five jet classes and then I’ve got 21 different geographic areas. And because the BLS data is unique to municipality, the geographic areas are centered around municipalities as well. For example, it doesn’t say Northeast, it’ll say Boston, it’ll say New York city for the New York city Metro area. It doesn’t say West, it’ll say Seattle or San Francisco Bay area or Los Angeles or San Diego. So it’s very locally based.

Dr. Chris Broyhill (10:32):

And with all the conditions, person presses, Calculate, and the calculator generates market ranges of compensation versus the base salary level. And all products that it generates, it looks at the average, 50th percentile, 75th percentile and 90th percentile. It looks at base salary. It looks at total cash compensation, including 401k match, if the person’s input a 401k match. And then it looks at total compensation as a function of benefits load. It generates on-screen output, and it also generates a PDF report with high-res graphics that can be cut and pasted into a PowerPoint presentation, or even just printed out and presented to principals or supervisors, or even…

Dr. Chris Broyhill (11:16):

One of the arguments I make for the calculator is, you’ve got pilots that are coming to you and saying, “Well, we’re hearing that these guys across the field are making this, but we’re only making this.” You can print out a report and provide it to them and say, “Hey, this is what the current market range is for your position, and here’s what we’re paying.” So it provides on-screen and PDF products to allow aviation managers to view the data and present the data to others.

Dr. Chris Broyhill (11:42):

Several of the pitch calls that I’ve made for the calculator, I’ve also had the aviation managers bring members of their compensation team onboard to listen to the call, and the question me about my methodology and I’ve yet to one compensation manager refute the methodology, or say, “I don’t want to do that.”

Tony Kioussis (11:58):

How does one pay for the calculator, and what does it cost?

Dr. Chris Broyhill (12:02):

Doesn’t cost very much. Keep in mind that when I would be hired to do compensation studies, I would do five positions for 2,500 bucks. Right now you can buy 24 queries of the data for $1,000. You can get 60 looks at the data for 2,100 bucks and 120 looks at the data for $3,500. It can be paid for by credit card or ACH transfer or paper check. I’ve done all three.

Tony Kioussis (12:26):

What do you see relative to compensation trends in the wake of COVID-19, and what might strong business leaders want to do?

Dr. Chris Broyhill (12:34):

Well, this has been a topic of ongoing conversation, and it’s funny because recently I’ve seen a study from Boeing, and I’ve seen a study from CAA. So I think right now people are under the impression that wages in our sector are going to get compressed, or they’re going to contract a little bit. That’s not what the data is showing. The data’s not showing this in two ways. When I got the 2020 data, which probably did not reflect what COVID-19 had really caused because most of it was collected earlier in the year. It showed in year over year increases in every position from the same data in 2019.

Dr. Chris Broyhill (13:07):

But very interestingly, the statistic I used from the Bureau of Labor Statistics, the aging statistic is the growth of private industry wages. And by private industry wages, I’m talking about wages in non-governmental jobs, not wages in jobs that are not publicly traded. When the BLS defines private industry, it means jobs that don’t have to do with the military or the government.

Dr. Chris Broyhill (13:29):

So in Q1 of this year, that wage growth was about 0.8%. in Q2, when COVID really hit, it was 0.4%, so it was still growing just at a slower rate. Q3, which is the statistic I was on the edge of my seat for, 0.5% wage growth. So wages are still growing. What that means is, if there are aviation managers or company CEOs that want to take advantage of the current and very temporary hiatus, and the pilot shortage or pilot demand, it’d be wise if they didn’t take that approach. Because the current shortage we’re undergoing is a very temporary one. And as I mentioned earlier about the… I didn’t complete my thought, but the Boeing studies, the CAA study, both echo that.

Dr. Chris Broyhill (14:14):

Pilot demand, and with it, the demands for other personnel in our industry or are going to continue. And as soon as the world starts getting back to normal and people start traveling again, which they will, there’s a heck of a lot of pent-up travel demand out there, and the airlines are going to start drawing people again. Then we’re going to be back to where we were, and my prediction is, and there are many others who feel the same, the level of pilot shortage we will experience on the backside of this is going to be worse than the level of pilot shortage we saw on the front side.

Dr. Chris Broyhill (14:43):

What all that means to you and me is, strong business leaders, smart business leaders will continue to pay their people competitively. They won’t contract their wage structure. They won’t take advantage of the temporary glut of available people to fill positions, and they will continue to pay competitively. If they do that, once the shortage returns, and it will, with a vengeance, and probably quicker than we think, their people are going to appreciate that loyalty and their people will not flee. But if they try to take advantage of it, they’re going to see a mass exodus, as soon as the demand develops on the far side. And it will, it’s just a question of time.

Tony Kioussis (15:19):

What else should people know about your company’s capabilities with respect to the business in general, aviation industry sector?

Dr. Chris Broyhill (15:26):

It’s interesting. I’ve recently quoted two cultural analyses of organizations, and I won’t go into much more depth, but I do cultural analyses of organizations. I get in, I do a statistical study of an organization. I do a study by interviews, and I find out what the culture really is, not what people think the culture is, but what the culture really is. And the research I’ve done, particularly the research I published in my latest book, which is, Business Aviation Leadership: From the Traits to the Trenches. It’s available on Amazon, as well as my website there, which is www.chrisbroyhillbooks.com. That’s my literary website.

Dr. Chris Broyhill (15:58):

My consulting website is citadelconsultingservices.com. But I do cultural analysis, I do leadership studies and I do one-off compensation studies as well. Sometimes people want a deeper dive in the data from a compensation perspective. They like the product that AirComp provides, but they want specific recommendations unique to their organization and unique to what they do and I provide that as well.

Tony Kioussis (16:21):

This has been another Asset Insight podcast covering the aircraft ownership life cycle. Please visit our ever-growing podcasts library at assetinsightpodcast.com, and select from any number of topics discussed with business aviation industry experts. This is Tony Kioussis and as always, thank you for listening.