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For Want Of A Nail

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 30-01-2014

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For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.

This proverb has come down in many variations over the centuries, yet the principle it embodies remains as true today as when first recorded.  If you ignore the small stuff long enough it will eventually become the big stuff; big problems, big expenses, big challenges to fix.  And big headaches.

Examples are legion; forgetting that simple oil change for your car; not taking the time to brush your teeth or take your daily medicine; delaying the install of free virus protection for your computer; or simply procrastinating as a way of life.  The little things can get lost in the midst of our active lives, but we ignore them at our peril.

Lack of action, lack of attention will bite you in the butt, eventually.

For compensation practitioners the “little things” are often not so much the “I can do it later” catch-all busy work we all seem to have too much of, but the fundamental building blocks that anchor the foundation of your rewards philosophy, your programs and ultimately your cost structure.  Screw up the details here and the consequences can be serious.

For example, if you ignore your salary structure (“oh, we looked at it a couple of years ago“) you run the risk of it becoming irrelevant.  And an irrelevant structure becomes a recipe for inequitable treatment, special deals and increased payroll costs. As does ignoring the blinking danger signals from your dashboard metrics.

And while managing job descriptions is usually relegated to the junior staff, inaccurate or out-of-date documentation can be the bane of your existence, from cost control to employee morale issues to court action.

Little things aren’t always unimportant things

How can a fundamental building block become a “little thing”?  It’s all in the attitude.  Folks like to focus on the exciting projects, the sexy initiatives and those experiences that can help build and polish their resume.  Routine tasks are often given short shrift while we look elsewhere for the interesting, the challenging, the more visible aspects of our jobs.  Or the jobs we’d like to do.

Ask yourself, who would want to work on a merger or acquisition project?  The hands go up.  Who wants to work on an international project?  The line of those  who are interested quickly forms.  But if you would ask, who wants to work on maintaining the existing reward system?  That is, worrying about documentation, about record-keeping, about the fundamentals. 

Not so much interest there.  Boring!

But somebody has to do it.  Because if you don’t, the wheels will come off the car, sooner or later.  And then senior management will be asking, “who’s responsible“?

Perhaps the answer is to mix it up, to have a bit of the humdrum blended in there with the exciting stuff.  So maybe you’re working on job descriptions and job evaluations part of the week, and then an HR Transformation initiative later on.  You can be market pricing surveys on Monday and Wednesday, but on Tuesday and Thursday you’re re-designing the management incentive scheme.

Ahhh, but I know what you’re going to say.  Who among us has the option of picking and choosing our projects, so that we’d be able to unilaterally design our work schedule, to blend the routine with the exciting?  That never worked for me when I was in Corporate America.

But isn’t there something to be said about doing the job, any job, well?  Doing so says a great deal about you as a professional, and as a person.

Don’t lose sight of what you might consider the “little things,” the basics and routines that need to be completed “just because”  in your work.  Think of it like changing your oil.

You and your car will be better for it.

Who Are You Talking To?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 23-01-2014

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January is a busy month with compensation communication, but just how effective is yours?  Perhaps all you’re doing is talking to yourself.

____________________

I read a movie review the other day and noticed that, in the first few paragraphs there were two words that I didn’t immediately understand.  The words “bifurcated” and “atavistic” were used, presumably to help readers better understand what the reviewer thought of the movie.

Well, those two words are not part of my everyday vocabulary, and upon reflection I might be able to explain “bifurcated,” though aren’t sure what that has to do with the subject movie.  As to “atavistic,” I think that I’ve heard the word before, but really don’t know what it means.

Now I consider that my intelligence level is a bit above average, so I have to wonder – who the heck was the reviewer talking to with their review?  I certainly didn’t “get it” as far as whatever points they were trying to make.  And NO, I didn’t drop everything to look up those two words.  What I did do was stop reading the review.

Who are they talking to?

This is especially important when considering your compensation communications.  If you want someone to hear what you have to say, to understand your message or point of view, to learn from reading your words, you have to talk to them at a level they are comfortable with.  Not you.  This is not about you.  Or at least it shouldn’t be.

There’s a lot of information out there, a problem for our times, some would say.  So if you want to get your message across, you need to be able to reach your target audience with as simple a message as you can.  So they all can understand, so they can repeat it to others, so that they’ll remember it tomorrow.

Is your text written at the New York Times 8th grade level?  If not, why not?  Don’t try to impress your audience.  It doesn’t work.

Losing your audience

A similar experience happens when listening to a speaker at a compensation conference, a webinar or even at your local professional  association meeting.  The speaker uses a word or phrase that is foreign to you.  “What did they say?”  Your mind stops listening as it struggles to identify the strange word and what it means – and then to put it in context.  Maybe you’ll figure it out.  Maybe you won’t.  Meanwhile though, the speaker has kept on talking – but you haven’t been listening while your mind was paused.  Now you have a struggle to catch up.  Maybe you can.  Maybe you can’t.

And then it happens again.  Another mind pause while you mentally translate, “what was that again?”  And so it goes, and you never quite fully understand the speaker’s message. 

That’s not communication.  That’s a speaker talking to a mirror.  You’re incidental.

The writer’s club

That’s what I call it, to describe the majority of contributors to professional journals.  I’m on the article review committee for one of those magazines, and I often wonder who these authors are writing to.  If they were trying to educate or explain practical tactics that would assist practitioners with their immediate problems, then I’m afraid that many an article wouldn’t pass muster.

That’s because many articles (check it out) are written by academics and consultants, not practitioners who have dirt under their fingernails from working in the trenches.  As a result practical advice (what can I do now?) is usually in short supply. What we all too often get instead is conceptual “stuff” from the view at 30,000 feet, broad inspirational white papers that you just know your senior leadership won’t even consider.

This isn’t always the case, of course, but how many of those articles are you able to wade through before your eyes glaze over?   Not just read the words, but learn from?  Heavy stuff.  Heavy lifting.

When someone is communicating, is actually reaching you with their message, you listen, you absorb, you learn.  It’s the same for me.

So talk to me, not to the mirror.

Why Do They Do That?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 14-01-2014

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Bureaucrat, by Delmarva.DealingsHave you ever visited the Post Office, or the Department of Motor Vehicles (DMV), or had the opportunity of spending quality phone time with a government employee?  Of course you have, and it can be a frustrating experience.  You need help, or advice, perhaps a creative solution to your problem – maybe simply someone to point you in the right direction. 

Argghhh!

More often than not what you’ll get instead is a quote from a policy or a regulation that doesn’t help you at all.  And this is usually accompanied by an air of indifference for your circumstances.   Should you dare ask them, why? they stumble, seem a bit startled at the question, and then finally repeat what they said before – usually word for word.

When I was an expat living in England I was able to cruise all over the country for a full year on my international drivers license.  This was driving on the wrong side of the road – and with a manual transmission.  The experience gave me and those with me a few close calls.  But no one questioned the risks I took or shared with other drivers; just get off the plane and drive off was the common practice.

However, after that initial twelve months expired the bureaucrats wanted me to get a British license, which meant a period of driving with Learners tag prominently displayed on the car (L) and taking a written as well as a driving test.  When I asked the clerk why I was required to act like I was 16 years old again the fellow’s eyes glazed over as he parroted the regulations.  When I said, “but that makes no sense,”his only response was repetition.

Though he was very pleasant about it.

Bureaucrats are everywhere

Cute story, isn’t it?  But the humor might wear a bit thin if you find the same experience where you work.  Consider those managers who treat their employees in a similar manner, including that air of indifference.  How do they react when approached by an employee thinking outside of the box; or when a request falls outside the norm?  Too often I’ve seen managers play the bureaucrat card and quote the rules.  That’s against company policy,” or “we never do it that way,” or even “that’s the way it is.” 

In other words, they don’t seem to know the reasoning behind their own response, so they parrot a rule or a policy or even a common practice – all without stopping to think whether what they’re saying makes sense or is helpful to those who have come to them for assistance.  It’s like a parent saying, “because I said so.”

Why do they do that?

Let’s face it, it is easy to say, “That’s the policy” without taking the time to understand the reasoning that goes behind the policy.  Kind of a knee-jerk response.  It’s safe, you can’t get blamed, and the questioner goes away.  But is that the right answer for the circumstances?  And is that what you want, for your employee to simply go away?

What do employees think when treated in such a fashion?  In polite terms they’ll write the manager off as a waste of time.  Won’t go there again.”  And so goes morale, engagement, collaboration, team effort, productivity and every other positive aspect of employee relations.  Poof!  Just like that.  Blow them off and they do the same to you.

So don’t do that.  Don’t make decisions – just because.  Don’t parrot what you can’t explain.  Have a reason for what you tell employees.  They don’t have to agree with you.  But you owe them the courtesy and respect of considering their point of view and to respond in a thoughtful manner.  They deserve a proper answer, not something taken off the shelf.

Btw, I never did bother getting my British driving license.

Christmas Is Over, Isn’t It?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 09-01-2014

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Gifts by stevendepoloIt’s that time again.  The end of the business year, when managers everywhere turn their thoughts to – bonuses!  The calculators are out and every eligible soul from Marketing to Manufacturing to Sales, IT, HR and the Executive Suite tries to figure out how fat that check will be.  For many, it’s the gift receiving season.

And thus the same bad script repeats itself for the annual management incentive process, year upon year upon year:  objectives created at the last minute, embellished accomplishments artfully recorded, problems and shortcomings diminished or forgotten and assessment forms looked at with bureaucratic disdain – as in, how do I fill out this thing to pump up my results?

More than the mechanics are at fault

Oh yes, the process is flawed, yet the foxes are in charge of the chicken coup – and they offer little hope for reform.  Why?  For those in charge the process works, and self-interest pays its own rewards.  Picture a belated Santa Claus with a large bag of goodies.

Cynical?  You bet.  For many of us in the trenches true pay for performance is an elusive concept best remembered from Compensation 101 textbooks, suitable only for life as it should be, not as it is.  Sad to say, but senior management is often the worst offender.  I’ve seen senior executives manipulate or adjust financial results to ensure that their own incentive awards wouldn’t be reduced.  Senior staff deserves competitive incentives, don’t they?  How can you not reward your senior leadership for their efforts?  And so once again entitlement trumps performance.

Studies suggest that the I-deserve-it mentality has weakened through this recession and slow recovery.  However I’m convinced that it’s still alive and well wherever rewards are viewed as payment due for time served and effort, not results.

But we go on hoping, one company and one client at a time, trying to persuade leadership that it’s primarily good performance that should provide rewards; that tenure isn’t a compensable factor, that incentive payments should be earned, not simply an automatic gift of delayed compensation.  Lower level employees are expected to earn their rewards; shouldn’t the same case be made for management?

End of year expectation

Have you ever told an executive that their annual incentive might be reduced because of either corporate or individual performance didn’t meet expectations?  They would look aghast at the possibility.  I’ve taken calls from spouses asking when the money would be available (post Christmas sales) – who then grew upset when told of the review process and that the Board of Directors has to approve.  The common attitude was, times up! – where’s the money?

Will the situation be any different for the bonus cycle in 2014?  I hope so, but bucking the trend of human nature is far from a sure bet.

To change those dynamics, as well as the effectiveness of your incentive plans you need to stand up and speak up.  The process is starting now, so it’s not too late to have an impact, to instill a management pay-for-performance philosophy in your company – even if it’s only one step at a time.  

·         Performance appraisal shouldn’t be an activity list (I was very busy), but a focused statement of achievement against quantifiable and measureable objectives.

·         Let the assessment tell you the rating, not the other way around (“how do I fill out this form to give a 4 rating”?).

·         Confirm that the language on the assessment form corresponds to the performance rating.  Oh yes, you have to check.

·         Assessment forms should be required before an incentive payment is made – negating an old procrastination trick (“oh, just process the check.  I’ll get the form to you . . . tomorrow or the next day”).

·         For the 2014 cycle, start by having objectives established early in the year, not in an after-the-fact rush at the end

Granted, you’ll need more than a steely look and a waving flashlight to stop a speeding freight train, so you should educate management about their ineffective and wasteful practices before the cycle starts.  Because afterward is usually too late; discipline as a learning tool is best used to prevent problems, not when Santa is already reaching into his bag of checks.

Maybe this can be your New Year’s resolution?

Merit Pay’s Fatal Flaw

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 30-12-2013

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It’s likely that your pay-for-performance program has a fatal flaw built into it; an inadvertent side effect of the design that, if ignored by management will almost certainly guarantee failure.

 But no one wants to talk about it.

Instead, what you’ll hear is a steady drumbeat of, “Oh yes, we have a pay for performance program.  All our employees are rewarded on the basis of their performance.”  But what if those merit increases won’t be enough to move an employee from low in their salary range up to the midpoint, the “going rate?”  What if merit increases alone won’t assure competitive pay?

The problem

Over time increases to the external marketplace will outstretch the company’s ability to keep pace through rewarding performance.  Annual performance awards can’t keep up with increasing market values and often new hires will be paid more than current, experienced employees.

The company usually describes their midpoint as associated with the market “going rate.”  Thus any employee who has performed their job responsibilities for a set period of time without performance penalty will reasonably expect that their pay rate should at least equal that market rate.

That sounds like a fair and reasonable expectation.

When that doesn’t happen though, when individual pay remains below midpoint / market, the employee’s disappointment over perceived unfair treatment can fester into lower morale and disengagement, which in turn often leads to separation.  If the employee is a high performer, the company has just suffered a significant loss.

Doesn’t happen here, you say?  Then test yourself.  Ask Human Resources how their pay-for-performance system works over time, over several years.  Ask them how they’re going to move a new employee’s pay from the minimum or low end to the midpoint value.

I wonder what they would say.

Look at the numbers

Let’s look at an example: say you’re hired at the bottom of the salary range, at $80.  The midpoint is $100 and the maximum is $120 (typical salary range).  Your compa-ratio is 80%.  After three years with the market / midpoint rising at approx. 2.5% per year, the $100 has become $107.70.  Meanwhile, let’s say you’re performing well, receiving 4% annual increases.  After three years your pay is now $90, and your new compa-ratio is 83.6%.

If you believe that three years of satisfactory (or better) performance has brought you to a point where you are thoroughly familiar with the job, and therefore should be paid the “going rate,” guess what?  You’re stuck at 83.6%, while the moving “market” remains at 100%.

And if you’re fortunate enough to receive a promotion?  Chances are your present 83.6% compa-ratio will likely have you starting the new job similarly low in your new salary range.  So the self-defeating process starts once again.

But what if you’re not promoted?  How many more years will it take to get you to competitive pay?  Are you willing to wait that long?  Or will you become another statistic in the company’s turnover rate?

The causes that make the effect

This doesn’t need to happen, but all too often does.

  •  When a company is caught up in an “everyone deserves a raise” mentality, there isn’t enough money left over to properly reward the higher performers.
  • Many companies don’t provide significant reward differentials between performance levels.  Is 1% or 2% enough between your stars and “Joe Average”?   Are you motivating through pay, or simply administering?
  • When managers fail to consider employee contributions vs. the evolving competitive market.  When decision-makers ignore external realities and instead focus solely on internal balance (equity). 
  • Merit budgets are not designed to address the issue of “market creep.”  It’s as if the company presumes that the external marketplace isn’t moving at all.

With the above as backdrop an organization’s internal pay practices can easily become disconnected from an employee’s market value.

Not many companies recognize this inherent flaw in their pay-for-performance program.  Individual managers may notice the danger, but most organizations tend to turn an official blind eye.  Granted, most don’t have the extra money that would be required to jumpstart employees to match their growing marketability.  They don’t have enough resources to be fair to everyone; it just costs too much.

Instead, they prefer to take one year at a time, all the while telling employees that the merit system works.

That’s where the cynical viewpoint of some employees is created, suggesting that quitting and getting rehired is a sure way to get the money you deserve.  It’s a risk, but I’ve seen that tactic work.

What can you do?

Develop a Ring Fence: identify your key employees and make sure that they are both competitively paid as well as appropriately paid for their value to the organization.  Build a protective “fence” around these employees, similar to “franchise players” in professional sports.  These are the ones you can’t afford to lose – so keep track of their compensation packages.

Then every year review your entire staff.  Who is paid properly and who is not.  Having this knowledge is half the battle, halfway toward a solution.  Because from this point individual corrective tactics can be devised.

Caution: you may have to decrease or even forgo some increases for “Joe Average” employees.  Can you do that?

—————-

The merit pay process usually works well for one full cycle, but for the long term the mechanics don’t provide the compensation level that the employee is worth.   Management touts their merit reward programs as a one-time event, but over time employees will see the fly in the soup, that unless one gets promoted on a regular basis the “system” actually works against you.

But no one wants to talk about it.

I Don’t Get It

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 15-12-2013

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Falling Down Cat, by Celine. QI really don’t.  Can someone explain why some companies are interested in what other companies are planning to do next year with their salary range midpoints?  I presume that’s what’s happening, because there are surveys out there compiling and reporting such data.  But who really cares?  Aside from anecdotal information I’ve never understood the importance of this reporting.

To be fair, perhaps my experiences are the exception, as I’ve never used such information in program analysis, or even reported it.  But somebody must be using it. 

Somebody.

I can only guess that I’ve missed something; maybe I should have taken another WorldatWork class, because the issue has never arisen from any organization I’ve worked with, either as an employee or as a consultant.  Which leads me to ask, do some companies actually propose raising their midpoints on the basis of a survey listing what other companies are doing?  Is that metric as important as what’s being paid for jobs, or what the average merit spend might be next year?  How does someone else’s projected salary structure movement relate to my company’s particular situation?

Can you envision  recommending  to senior management that midpoints be raised by X% – because that’s the projected midpoint increase of other companies? 

The focal point of my survey analysis has always been to determine the competitiveness of current  midpoints and actual pay practices.  In planning for next year I can see adjusting those midpoints to either remain competitive (our midpoints are already there),  to improve our standing (our midpoints lag the market), or freeze them (midpoints already pegged above market rates), no matter what a survey said was common practice.  Am I wrong here?  I’ve always thought that my company’s salary structure should move in relation to our own competitiveness, regardless of what anyone else is doing.  Otherwise we could be making the wrong adjustments – either too much or too little.

And what about the expense involved?  Contrary to what some pundits have assured me from time to time, midpoint growth can create costs.  There’s no free ride.

·     When an employee’s base pay drops below salary range minimum on January 1st, do you cover that amount – or wait until the next review?  Whenever that might be.  The fair decision would be to raise the employee to minimum and then (or later) grant a merit increase on top of that.  Extra cost though, right?

·     Higher midpoints push experienced employees further back from the internal “going rate” – creating pressure to restore the balance.  Have you ever explained to a long service employee why they weren’t being paid at least the midpoint?

And when exactly are these midpoint estimates made?   How predictive are they?  In reality they’re guesstimates, and many times the questionnaire is completed in haste, just to get the form submitted.  After all, most companies won’t confirm their new structure commitment until late November, while the survey questionnaires are completed in mid-summer. 

How good is your crystal ball in August?

Btw, a company’s salary structures (grades and salary ranges) are usually segmented along the lines of hourly, non-exempt, exempt professional, and management employees.  To gain a clear picture of your total competitive marketplace you should consider that each segment is moving at a different rate.  For example, it’s likely that management pay is growing at a different percentage than for hourly employees.   Suggesting that only a single figure would reflect your entire population would distort the reality of your multiple competitive markets.

Now I suppose there may be companies out there that have changes to their reward programs contractually tied to “market movement” or even midpoint growth, but in this day that number is likely a very small minority.

So, can someone  tell me why analyzing someone else’s guesstimated midpoint movement  is important?  I’d really like to know.

 

You Get What You Reward

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 30-11-2013

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Carrot and Stick, by mr_k_rmA company’s sales incentive plan is like the Pied Piper from the childhood fable; it plays a tune and the sales force follows behind.  Wherever the Pied Piper leads, the sales force will go – whether it be down the straight and narrow toward a bright tomorrow, or into the rough, down the hillside, through the brambles and over the cliff.  Because the melody being played is about money, and when that tune catches the ear those chasing behind will follow it anywhere.

I was once brought in by a client whose sales incentive plan rewarded the sale of products that generated a loss on each sale.  And it wasn’t part of a loss-leader tactic, either.  The sales reps were rewarded – even though their actions were detrimental to the company.   Bad behavior was rewarded, and therefore it was repeated – over and over again.

Which begs the question, why would a tactical plan for incenting sales employees encourage actions that don’t support the company’s own self-interest?  Isn’t anyone watching the store?

What behavior do your own plans reward? 

Do you know?

It’s up to those who design the sales incentive plans to carefully pick the right pathway.  Because as long as the money is flowing the sales rep isn’t going to raise a red flag and ask, “are you sure you want us to do this?”  That’s not going to happen, as most incentive plans are not self-correcting.  The lemmings will race over the cliff as long as a dollar bill is waved in front of them.

Have you looked at the details of your own plans lately?  Do they outline a plan of action that rewards the right kind of measurements (sales volume, revenue, margin, market share, etc.) that support the company’s objectives?   That drives an employee behavior that helps to deliver business success?  Do you expect a Return on Investment (ROI) for the incentive money you’ve targeted for payment?

Get your checklist ready

While there might be more variations in sales incentive schemes than snowflakes in the winter sky, certain fundamental design elements do apply as prerequisites for success.

  • First and foremost the company has to succeed.  Only sales targets whose achievement advances the company’s bottom line should be used to incent employees.  Are you paying for busy work?
  • Spell out what you want the sales force to achieve.   Can employees tell you what their specific targets are?
  • Provide enough reward to change behavior.  Like any incentive, if you want to encourage a certain behavior you need to place a carrot out in front.   Not enough reward usually equates to not enough effort.
  •  The greater the selling effort, the greater should be the reward.  If your reps are simply taking orders (product sells itself), are you paying for what would have happened anyway?
  • Make sure you can measure  performance against quantifiable milestones.  Are payments made on the basis of measurable results or discretionary judgment?

Yes, there are other important criteria for sales plan success, but unless you start with a clear map that details where you want your sales force to focus their efforts, you run the risk of missing the mark – which can be an expensive mistake.  You will need a team effort, not the disconnected activities of individually focused entrepreneurs.

The success (and continued use) of a sales incentive plan should be measured by the success of the business, not by how busy employees are, or even how much revenue is generated.  Unless activities can be measured and achieved, and support the company’s business plan, you’re better off with a straight base salary plan (horrors!).  Because providing incentive rewards that don’t advantage the company is often paying for busy work.

So ask yourself, does your sales incentive plan encourage the right sort of behavior, activities that will drive business success?  Are you paying for the results you need?  Are you getting your money’s worth?

It might be time to check.

Are You Still Playing Follow The Leader?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 21-10-2013

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Picture the scene;  you’ve just completed a presentation to senior management, complete with analysis and recommendations for next year’s compensation program.  Now you stand ready for the question and answer session.  Now is the time to defend your proposals.

With a carefully blank expression on his face your COO poses a single question . . . why does it cost so much?

Justification Or Excuse?

But you’re prepared.   You’ve anticipated the question.   You know that properly answering this “why” question is your once-a-year opportunity to make your mark, show off your CCP designation and help direct the reward programs for your organization.

So chances are you won’t respond with, “because that’s what everyone else is doing.”  Uttering that lame comment would suck the air right out of the room – and likely your career with it.   So you won’t say that.  However,  just between us, would that actually be the truth of it?  Are your recommendations based on the unique status of your own organization’s external competitiveness, internal equity, overriding Compensation strategy and financial affordability, or have you simply parroted what the Compensation surveys report that everyone else is supposedly doing?   Have you pushed the EASY button and followed the all-powerful lure of “common practice?”

Beneath the COO’s simple question your senior leadership is really asking whether your proposals set a course to  simply follow the pack, or do they lead toward solutions crafted for your organization’s own needs?  Follow the crowd or strike out your own path?

Are your recommendations for the company’s compensation programs a compilation of “everyone else is doing it” rationale, or are those proposals based on what you feel is necessary for your own organization – regardless of the “average?”

Are Decisions Being Made For You?

Is your view of presenting competitive programs a reaction to the behavior of others, or because certain tactics also make sense for you as well?

  • Raising Salary Ranges: Surveys will report the projected average increase in salary range midpoints for next year.  But how does that figure relate to the competitiveness of your own situation?  Do your ranges need a similar adjustment?  What would you recommend if you didn’t have a survey whispering in your ear?
  • The Average Spend: When survey sources report a projected average spend for next year, is that your recommendation as well?  And when responding to the why question, what else do you have to offer as justification?  Does the survey figure make sense for you?  Can you afford it?
  • Pay Decisions: Are the survey sources reliable indicators (multiple?) that you can point to as the prime reason for making individual or group pay decisions, or are external sources only one aspect of your analysis, one element of your reward program strategy?

Before you make that next reward presentation ask yourself whether your decisions and your recommendations are adding value to the organization.   Or was your analysis complete once the survey data suggested a common trend?  Gave you the answer, so-to-speak.

The easy way is to point at others, to argue the common sense of common action.  However that strategy bespeaks more of a Compensation Administrator than one who is charged with overseeing the proper design, competitiveness and effectiveness of the company’s reward programs.

To be fair, sometimes what everyone else is doing is the right action for you.   Then again, the reported “average” may be no more than an arithmetic exercise that is less a strong trend than rather a convenient manipulation of data points.  Who’s to say?

So be careful before you sign on to tactics decided upon by other companies.  That nameless average of common practice is not responsible for your organization’s compensation programs.  You are.  And you’d better have a better reason for your proposals than that’s what the survey said.

Mistakes Can Help, Really

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 09-10-2013

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Can you recall an instance at work where you made a mistake, an error in judgment, a bad decision?  An “oh cripes!” moment that you would have liked to have had back again?  Perhaps it was a rash decision, a lapse in sound thinking, or simply poor planning that caused you to take a wrong step.  And if you were unlucky, that error was noticed far and wide.

You remember how you felt then, don’t you?  You were likely embarrassed, surprised or even angry.  Certainly you felt awkward that you had messed up and that people had noticed.  To cap it off, in that memory of yours the wrong people had taken notice.

Bet you won’t do that again!

Perhaps not, but that doesn’t mean you shouldn’t stick out your neck again.  Turtles don’t make for good leaders. And neither do ostriches.

Because when we make a mistake and learn from it, when we use a negative experience to help us prepare for the next opportunity, we grow as professionals – as individuals and as leaders.  A painful lesson will be more deeply embedded in our consciousness because of the fact that we did screw up, made a bad decision or used poor judgment.  It’s human nature for us to remember our foibles, and because of that to hopefully not repeat those circumstances where we had burned our fingers.

If we were risk adverse and played it safe throughout our career, if we avoided decisions, kept our head down, didn’t stretch ourselves, we would likely never fly high.  We would also never be noticed by our senior leaders and our career might not get us where we wanted to go.

No pain, no gain?

If your strategy is to use your mistakes as a learning experience, what lessons would you take away if you never stubbed your toe?  Chances are your ego would swell with self-importance, and what had been healthy self-confidence would morph into supreme over-confidence.  You would start reading your own press releases, and that pathway leads to a steep cliff.  It’s only a matter of distance.

I remember my father always telling me, “at least try.”  That’s good advice for managers too.

So take a calculated risk.  I’m not talking about a roll of the dice, but a decision or an action plan based on your knowledge and experience.  Use your professional judgment and put a stake in the ground.  Stand up for something and you’ll learn from the experience.  If you stumble, pick yourself up and get back into the fray.  Just don’t make the same mistake twice.

While most companies talk about the advantages of risk taking, many don’t walk the talk.  Instead, some organizations simply get rid of those who had the misfortune to make a mistake.  In such an environment there’s always someone out there waiting for you to fail (passive resistors, nay-sayers, the overly critical, etc.), or to take advantage when you stumble (enter the political animal).  All of which sends a powerful message that risks are only entertained when in fact they aren’t risks at all.

On the other hand, creativity and innovation will be fostered in an environment that nurtures decision-making, that encourages measured risks as a method of stretching oneself.  Instead of killing the risk-taker when they stumble such organizations seek to stretch the capabilities of their employees by encouraging them to do more than they thought themselves capable. 

After all, it’s only a risk if there’s a chance of failure.  Managers who are not afraid of making decisions, of standing up for themselves, of taking a chance for the good of the organization – they should be valued, not criticized or otherwise penalized.

In an atmosphere free of threats and political quicksand the leader can emerge and thrive – to the betterment of the organization. 

Do You Keep Skeletons In The Closet?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 29-09-2013

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To what extent is your compensation program transparent to employees, or on the other hand, how much is kept a big secret?

Early in my career I worked for a very successful, decades-old manufacturing company who maintained the practice of posting their salary structures on the walls next to the punch clock machines.  Every grade and salary range up to management positions was available for public viewing.

I was young and unseasoned at the time, hadn’t been around much yet, so didn’t think much of the practice at the time – either way.  It was just the way things were at that company.

Those were the days

Flash forward to today.  In your organization, if an employee asks about the salary range of a job other than their own, do you tell them?  If an employee asks the grade designation of a job not their own, do you provide it?  Or do you say that it’s none of their business?  That such information is on a need-to-know basis?

As my professional career progressed from those early days it often seemed that the disclosure practices of my employers slipped backward into the era of “we – they” management philosophies.  An era I had thought long gone.  In one company the employee wouldn’t even be told the minimum and maximum of their own salary range.  Another employer would readily tell an employee their own salary range, but not the range of a job one grade higher. 

Now of course it’s entirely possible that my own career progression of employers is a unique combination of companies not typically replicated by many of you out there.  Perhaps most of you still post your salary ranges on the break room wall, or the pay grades are simply included within the periodic employer newsletters.

But I’m betting that’s not the case.

So why is that? Why not disclose the key elements of your job evaluation and base salary structure?  What’s the harm in letting employees know where they stand, and what their career progression could look like?  What’s the harm?  What’s the big secret?

Whenever I asked that question, in all innocence and with a guileless question mark on my face, the usual answer was, “that’s the policy.  Always been that way.”  Dumb answer.  Pushing my query further never did get me a decent explanation, which left me with the obvious conclusion that management felt they would be better off if such information was hidden from their employees.

Perhaps it was some form of management discretion that they felt would be challenged by letting too many people know what was going on.  But the tactic never did make sense to me, as folks are even more curious about that which they’re told they can’t see.

Hiding the crown jewels

If a company is going to restrict information about their pay programs, it’s common to guard two key elements:

  • Salary range – Communicating the minimum and maximum, or even just the midpoint.  Letting you know how much you’re paid in relation to how the company has valued your job.
  • Grade – The designation of a position within the hierarchy.  If you know your grade, chances are you can figure (or guess) the grade of others – including perhaps your boss.

Then again, if the grading structure can be manipulated by management discretion (whimsy), or job evaluations slanted one way or another, perhaps there are a few skeletons in the closet after all. Perhaps there are indeed little secrets that are best kept out of sight.

If not, then why not post the salary structure on the office wall?  All the grades, all the salary ranges, and all the jobs covered by the compensation program.  For those who like to keep their confidentiality, you can cut off the disclosure at the executive level. 

But that would be heresy in many quarters, wouldn’t it?  Because if those jobs have been fairly and objectively evaluated and priced against both internal and external factors, what’s the reason for the locked drawer attitude?  If there’s nothing to hide, if you can defend or at least explain your decisions, then why not hang your laundry out in the sun?

What’s the big secret?

I think we know.