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Judgment by Self Interest

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 14-07-2016

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Empty Boardroom, by reynermediaHere’s a tip that I learned early in my professional career, and has helped me weather many a storm of controversial compensation proposals.

Always check to see how the leadership team is personally affected by your recommendations.

Yes, we can all agree that internal equity, fair treatment and competitive practices should be the hallmarks of any reward program, but at the same time we should also be realistic as to what is achievable – acceptable to the powers that be.  If those at the top of the house in your organization feel that they themselves are not being positively impacted, or worse, then there’s a good chance that your recommendations will be going nowhere.

Or put another way, if they don’t win you will lose.

How the World Turns

I saw this reality play out just the other day, when assisting a client deliver their proposal to senior management for new grade assignments and a revised salary structure.  The designations for the senior leadership cadre placed incumbents low in their salary ranges, offering plenty of upward movement – and perhaps a bit of rationale for a “competitive salary adjustment.”

Our recommendations gained smiles and nodding heads from leadership – a well-received meeting.  There was no reason to explain how the senior team grades had been revised upward in an effort to better position incumbents, and thus garner approval of our proposals.  Because when the initial Draft #1 results were developed (reflecting the much-touted internal equity, fair treatment and competitive practices) the leadership incumbents did not fare as well, with higher compa-ratios and less opportunity for pay growth.

Should we have left things alone (the facts are the facts) and led with our chin in presenting our proposals?  Some purists would argue that we should have stuck with our principles, even if it would have been a risk.  But the client didn’t want to “throw the baby out with the bathwater” and risk the entire structure proposal being rejected or seriously challenged.  So they nudged some of their recommendations to favor the senior leaders – who as it turned out subsequently approved all of our recommendations.

Not In My Backyard (NIMBY)

Have you heard this term used before?  It’s when residents of a community are in favor of a new school, a shopping center, or any form of commercial enterprise, but not in my backyard.  What is conceptually a good idea turns sour when individuals don’t like how they are personally impacted.  “Anywhere but next to my house.”  Well, the same thing can happen at work when you try to get senior management to control the infection called “title inflation.”

Many a time I’ve tried to explain the inherent dangers of puffery and bogus titling to senior leaders, but all too frequently they would wave off my concerns with a “tut-tut” dismissal.  No worries, they’d say.  “It’s a no-cost benefit,” or “What’s in a title, anyway?”

And also because the impact of inflated titling didn’t affect them.

But as soon as someone is suggested as a Vice President title when they’re really something less, well then  the proverbial crap hits the fan.  “We can’t have that” is the common outraged and aggrieved response, and suddenly of all the arguments against title inflation that we used for the lower levels now make sense, albeit only at their own senior levels.

The fascinating counterpoint is that the dangers of title inflation will continue to be ignored at those lower levels.  Tut-tut.

But not in my backyard.  Self-interest can be a powerful tool, especially when wielded by decision-makers.

Is this right?  Is it fair?  Is it a double standard?  No, no and yes.  But in order to sell your compensation recommendations it would be to your advantage to know your audience.  You’ll need to acknowledge, and sometimes even play to the self-interest of those who are in a position to deny you.

As a professional it may bother you to take these steps, but sometimes managing compensation is a bit more complicated, and even contradictory, than the Compensation 101 textbooks would suggest.

Going Along For The Ride

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 11-07-2016

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Hand Mirror, by the Italian VoiceCan you think back to when you were first hired or promoted into your current compensation leadership role?  Do you recall what it was that your new boss said would be expected of you?  Was the message you heard something like this?

  • “We just need you to administer the current programs”
  • “Everything is working well.  Keep it that way”
  • “Don’t rock the boat; just keep things steady”
  • “We’re a traditional organization.  Don’t try to be a trend setter.”
  • “We pretty much know what we’re doing.   We just need you to follow along.”

Now that’s probably not exactly what you were told though, as chances are that no one would ever admit to uttering those words.  You must have been mistaken, they would say.  Instead, what they would prefer to recall saying to you, or at least what they think they meant, was something like this.

  • “We need a game changer, someone to shake things up around here”
  • “We have problems (insert specifics here) and we need you to fix them”
  • “Someone with your knowledge and experience is really needed here”
  • ” Tell us what we need to do. You’ll have complete leadership support”
  • “You have a great opportunity to make a difference here”

Mixed Messages

Now wait a minute.  These are two completely different messages, and would require two separate skill sets and personal motivation in a candidate.  The first message wants you to simply administer the current reward programs, to keep the ship afloat, moving in the right direction – and while you’re at it don’t let yourself step off the line that they’ve clearly marked out for you.  Change agents are not welcome.  The status quo is.

The second is quite the opposite message, demanding change, demanding leadership and demanding that you push the organization in the appropriate / proper (not “right”) direction.

As a newly minted compensation leader, which message do you want you hear?  Which one suits your “sweet spot” comfort level?  Which one would encourage you to stay with this organization past your first year?

And lest we forget, there is the very real possibility that you were in fact told one thing (the change agent) while circumstances would soon dictate another (the administrator).  This happened to me once, so I know the game is played.

It Depends on You

Chances are that if you consider yourself a change agent personality you won’t be happy with the routine administration, though technically you’d be very capable.  However, if the status quo is leadership’s only objective,  the search for competency in candidates would be easier, as even a modicum of technical ability would be suitable.  Some organizations might even promote a Financial Analyst or even a long serving Compensation drone.  They wouldn’t need more.

But the wrong person would drown in such a morass of “if it ain’t broke, don’t play with it” mentality.

The real state of play may be hard for you to figure out, until you’re already ankles deep in the slow speed or the fast speed.  And the title they give you won’t help, as title inflation can puff up the most mundane environments.   You could end up being the VP of (administrative) Compensation.

What’s in a title, anyway?  Is it a convenient reward for past efforts, like a label, or is it actually a description of what you’re supposed to be doing?  If you’re a Manager in your organization do you manage your responsibilities?  Or if you have a Director’s title, do you actually direct the affairs of your group?  But what if you do have a business card with one of those lofty designations, but on a day-to-day basis you’re really just keeping the ship afloat, administering, processing papers and making sure that no one’s feathers are ruffled?

Have a care to make sure that your career defines you and builds your title, not the other way around.

Unless you’re just going along for the ride.

You Can Lead a Horse to Water, But . . . .

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 19-06-2016

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You can lead a horse to water, by jjsalaDo you remember hearing this phrase, about how you can lead a horse to a water source, but you can’t actually make them drink from it?  The thinking is in the same vein as the adage about how teaching a person to fish goes a lot farther than simply handing them a fish.

In other words, you can only go so far in helping someone before they have to take ownership of the task themselves.  Otherwise you really haven’t helped them get past a single point in time, a single challenge.

You Make Your Own Guarantees

I’m a compensation consultant, and clients usually reach out to me when they have a compensation challenge that needs a solution.  And that challenge usually revolves around how best to spend the almighty dollar.  Here’s what I tell them:

“I can promise to show you how to save money (or in general fix your problem), but I cannot guarantee to personally save you a dime.  You have to do that yourself.”

What I’m saying is that, while I can study your situation, gather reams of data and present recommendations for you to consider based on my considerable experience, until you make the decision yourself to take action (change behavior, adopt new policies / procedures, adjust your perspective, etc.) improvement will not actually happen.  You have to be willing to change.  You have to be willing make the sort of tactical and strategic decisions that will solve your problems.  You have to be willing to step up and stand for the right kind of change.

Stepping Up

And that is where things start to break down, as some of those decisions can be hard to make.  Many managers and even senior leaders can be loathe to shake things up.

  • We pontificate about our pay-for-performance programs, but still want to give everyone a raise
  • We don’t want variable pay to really be “at risk,” as what we practice is actually a form of delayed compensation.  “Don’t worry, you’ll get something.”
  • Someone might get mad at these changes and decide to quit
  • We’ve never done that before (uncomfortable with stepping outside the comfort zone)
  • Not everyone is going to agree with this approach (we believe in consensus thinking)
  • How much is this going to cost me?  “Oh, I don’t want to spend that much.”
  • “Really?  That sounds difficult to implement.  Can’t we just tweak what we do now?”
  • “How long are these changes going to take to implement?  I don’t have that kind of time.”
  • Etc, etc, etc.

Now the above are just examples – excuses really – that suggest it would really be a better approach for some to simply stay the course.  I’m sure that each reader can quote a few similar examples from their own organization.  The point is that the sort of change that really impacts the organization, that can actually solve many of the compensation challenges you face, are often hard to make.  That’s why you haven’t undertaken them before.  There are going to be winners and losers, and too often management worries more about the losers (Joe average performers) than in taking care of the winners (your star performers).

As a consultant I not only make recommendations but also try to show the client what is likely behind door #1, door #2 and door #3 of their options.  What is going to happen.  But I can’t make the decision for them.  Nor should I.

Always remember that many managers put being liked at or near the top of their personal agenda, and often times the kind of changes an organization requires is not going to win popularity contests.  Hence the tendency in some quarters toward inaction or half-hearted lip service.

So while I can lead a client to the water source, sometimes they just sit there with a blank look.

I hope that isn’t you.

What’s In It For Me?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 03-06-2016

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Handout, by DianeWorthA number of years ago I sat in the office of my Chief Operating Officer, part of a project team presenting a recommendation for a number of adjustments to the company’s management incentive plan. Our key “improvement” was that we wanted to expand the eligibility.

After quietly listening to our proposal the COO leaned back in his chair, tented his palms in thought, paused for a bit, then asked us, “What’s in it for me?”

At our collective blank look he slowly shook his head then tossed our report back to us.  “Tell me what the company is going to gain in return for this increase in fixed expense.”

In our defense we tried to justify our recommendations with broad comments like “The surveys say,” or that “It’s the right thing to do,” but when he started to frown and grow agitated we knew the game was up.  The meeting was over, as was our proposal.

Lesson Learned

I gained a few bumps on the noggin that day, but learned a powerful lesson at the same time.  You have to understand the financial impact of your recommendations, as well as how they would help the organization and thus justify that financial impact.  You have to create, as best you can, a win-win scenario for the company as well as for employees.  Otherwise, you’ll be labeled with recommending increased costs and trying to balance that negative with a vague, yet hopeful maybe.

The Finance folks won’t go for it. They’ll never agree that hard costs (real payments) can be balanced (equaled) by projected savings or estimated revenue gain.  They don’t like dealing with what they call “soft” money.

Btw, it also helps to be aware in advance the various management biases that you’ll likely face during conversation with individual senior managers.  They have them; we all do.

In other words, you have to broaden your thinking to consider business angles and perspectives as would an operations executive.  Sticking to only a narrow HR-centric view of the organization can blind you from seeing the big picture, every time.

What To Do

In preparing your proposal presentation for senior management, or even for your own manager for that matter, keep in mind a few bedrock selling principles.

  • Know what your new / increased costs are likely going to be (impact on the business).
  • Be able to show (specific illustrations) how your recommendations will solve a real problem (“We need to do this because . . . .”).
  • If your proposal balances costs against gains (revenue, savings, productivity, etc.) be realistic that such gain figures are usually optimistic estimates.
  • Be able to show (specific illustrations) what would happen (the dark side) if your recommendations are not approved – or if the status quo is allowed to continue.
  • If there are potential glitches (or risks) to implementing your recommendations, point them out as possibilities before someone else does.
  • Avoid as much as possible the “soft sell” that I had tried with my COO.  It can work, in some organizations, but can also be easily dismissed by a more critical senior management.

For a better success rate I suggest that you stick to a simple formula; 1)  Demonstrate the problem (insert specifics here), 2) quantify the impact of that problem, 3) recommend a solution, 4) quantify the cost of that solution, and 5) show (insert more specifics here) how your solution solves the problem.

Don’t simply tell management that all will be well if they approve your plans, but show them, repeatedly with facts and figures that yes, indeed, tomorrow can be a better day.

Show them what’s in it for them; what’s in it to the betterment of the business.

The Wannabe Business Partner

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 31-05-2016

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Friends, by S BakerOver the years the Human Resources Department has transitioned itself through any number of “latest thinking” management concepts and corresponding “buzz phrases” – from “matrix management” to “broadbanding” to “onboarding” and “headwinds” and whatever this week brings.  Each new approach started as the brainchild of management consultants seeking to encourage so-called creative thinking and the latest strategies to improve the human factor.

Lately though a persistent theme has settled in that HR should become a “Business Partner” of the organization, to enhance the value-added contribution of its programs and be taken seriously by senior management.

So what exactly is an HR business partner?  Several criteria have been used as descriptors:

  • Diagnose business needs
  • Develop management’s capability to address HR issues
  • Provide advice and a particular point of view
  • A focus on driving the business forward

Do these describe your HR function?  Is HR considered a business partner?

Your Father’s Personnel Department

Today most would chuckle at memories of the “old” Personnel department, whose primary responsibilities were recruiting, record keeping, arranging blood drives and safety shoe programs and running the annual picnic / Christmas party.  The Head of Personnel was rarely considered a “player” at management meetings.  Some believed that the department was only a necessary evil.

Personnel was the department focused on the interests of the employees.  Its management was staffed by employee relations generalists, was sensitized by the needs of employees and left the running of the business to operations management.  Personnel dealt with people.

Today, companies expect less transactional administration and more strategic thinking.  Being labeled a “people person” is now considered a negative, a source of humor among recruiters.

Tell-tale signs that HR is a true business partner:

  • Direct report to the President / CEO and listed as a member of the Senior Team
  • Able to speak with credibility and respect at the management table
  • Able to advance the value of HR to those holding negative biases
  • Consulted by senior management on human factor issues
  • Initiate major decision-making affecting employees

As a newly designated business partner-wannabe, Human Resources in many companies has transitioned away from the traditional role of representing the employees.  It has focused instead on utilizing the human capital to assist management in achieving objectives and driving business success.  However, the more successful HR has become as a business partner the greater the danger that employees will lose trust and confidence in HR, exactly because the focus has moved away from employees.

As HR has developed a new stratagem, some might say a new identity, what part of itself has been lost while chasing to transform itself?

Danger Signs

Have a care that you don’t lose the heart and soul of HR – its caring connection about employees.  Don’t start looking at employees as merely numbers on a spreadsheet or boxes on an organization chart.  There are other departments who already do that very well.

Is the HR function served or harmed by leaders “counting the chairs” on their way up the hierarchy?  These are typically fast-trackers who are not HR-trained, but temporary visitors to the department for a “broadening” of their management experience.  Why is that acceptable for HR, but wouldn’t be tolerated in IT, Finance, Marketing, Engineering or Manufacturing?  Is the head of any other function something less than a seasoned expert in that profession?

These other functions are already considered business partners.  Only HR faces remains the newbie, on probation at best, at worst one step away from getting the coffee.

Even while sitting at the Senior Management table negative biases from the old days often remain:

  • Remember the blood drives and Christmas party? It’s hard to be taken seriously after so many years focusing on administration.  Does HR manage important issues today?
  • If the head of HR has only been appointed to gain experience toward their ultimate loftier goal, how serious can we take a temporary worker who is only passing through?
  • HR is still perceived of as the gatekeeper of corporate policies. Being an advocate of policy doesn’t win friends.

From the employee’s perspective it’s important to consider HR as the advocate of fair and equitable treatment, compliance with employee-oriented regulations, and their representative among senior management.

What if senior management doesn’t feel that way?  What if they want HR to become a partner focused primarily on the bottom line – to the exclusion of the human factor?

Have a care that we get what we want – Business Partner – and then our employees choke on it as we lose our way.

Relax at Your Peril

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 19-05-2016

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ber-antem, by Dimaz FakhruddinyYou’ve seen the company’s search ads and heard the pitch from your recruiters; you offer competitive wages.  You figure that that’s got to be a strong hook for attracting talent.

No.

Your pay structures are regularly updated based on competitive market trends, so the reward opportunities you offer employees are aligned with your retention and motivation strategies.

Smoke and mirrors.

Companies routinely advertise “we offer competitive wages” and candidates in return expect this of potential employers.  But what happens when your goal of offering competitive pay is finally achieved?  Are employees grateful?  Can companies rest in their efforts to attract, motivate and retain?

Not so much.

The Missing Pieces

What doesn’t happen when you offer competitive pay is that your recruitment problems don’t magically disappear, your employees won’t be satisfied and your compensation programs have achieved little more than being average.  Isn’t that a “C” grade in school?  Is that how you want to position your compensation strategy?

As far as aspirations go, it’s only middle-of-the-road.

If your company does pay “the going rate,” that still means that roughly 50% of the companies out there are paying more than you.  That’s what average gets you, with half doing more and half doing less. You won’t see that fact pointed out in recruiting campaigns.

No one quits for less money – so what you’ll hear through the grapevine is how so-and-so left and is now making more somewhere else.  And as it’s human nature to hear only what supports your own notion  –  your employees won’t pay attention to the broader rewards package, just the points that confirm their opinion that your company isn’t paying enough.

The only way to avoid this scenario is to become the premier payer in your market or industry – and can you afford that cost?

It’s also important to differentiate between having grades, salary ranges and midpoints that provide competitive rate “opportunity” and actually paying employees at those rates.  Some describe this as whether the company is “walking the talk.”  I recall a client quite boastful that their salary ranges were continually adjusted to mirror market rates, but was later embarrassed to discover that their actual pay practices fell well below midpoints.  The company said one thing by their pay structure, but did another by the way they implemented that structure.

For their own part, employees relate to the pay they receive, not the midpoint of a salary range or other such declared “opportunity.”  For them the company’s competitiveness can be more illusion than fact; especially if they’re experienced and long service.

Bad Practices Can Evolve

Typically it’s not an organization’s strategy to avoid paying at competitive levels, but more likely a series of practices that have evolved over time.

  • Some candidates will accept a below value hire rate and managers tend to view this as a cost savings. Though it is more like putting a skeleton into the closet and hoping it doesn’t jump out at you down the road.  One day these employees will change their minds.
  • Once you’ve started down the slippery slope of paying some employees below market rates the practice is soon compounded by internal equity. Managers will resist paying similarly qualified new people more than existing employees.
  • Reward systems have a hard time keeping up with the increased marketability of employees. A minimally qualified employee hired at the minimum rate will gain knowledge and experience (thus marketability) faster than the company’s annual merit system can recognize.

What’s the answer?  Management won’t agree to be the premier payer in your area, so consider instilling more flexibility into your pay practices.  Consider targeting key jobs (highly skilled, difficult to replace, mission critical, etc.) and make sure those jobholders are well paid.

And don’t forget to pay attention to your customer-facing employees.  For many a customer those folks are your company.

Other positions you have deemed less skilled and more easily replaceable could continue with your “competitive opportunity” strategy.  This approach is akin to ring-fencing key talent, protecting them against poaching while recognizing and rewarding those with the most potential impact on your business.

Bottom line?  Be careful when you claim how your company provides competitive wages.  You may not be correct, but if you are – big deal.

Get Over Yourself

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 19-05-2016

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Confidence, by petesimonOver the span of my career I’ve interacted with any number of Compensation practitioners, but also with a host of wannabes, career transients and dabblers, along with more than my share of HR generalists thinking that “Anyone can do this.”  But the hardest profile I’ve had to rub shoulders with is the self-proclaimed expert who thinks that they know all and see all.

They have the right answers.  Even if they’re not a Compensation pro.

You’ve seen this type of individual before; they’re the “answer man” for every challenge that an organization can throw at them.  They always seem to know what needs to be done, and how it should be done, and their supreme confidence in themselves allows no reluctance in letting you know how proficient they are.  To put icing on the cake they typically compound their arrogance by insisting that their approach, answer, stratagem is the right way. The only way. And that other suggestions or perspectives are simply . . . wrong.

These people can be technically effective at what they do, but they often think too much of themselves and want to make sure that everyone else knows how effective they are as well.  Which irritates, doesn’t it?   These are the types you see at professional conferences, blog sites and association gatherings, arguing over issues like the Cost of Living vs. the Cost of Labor, lamenting over the death of the performance appraisal process and debating the right steps to solve the latest hot topic compensation issue.  They also are convinced that the solutions they used in the past are definitely the right course to take with today’s problems.

They’re not the personality type I’d like to have a drink with.

But I can forgive all of that (ok, most of that), if only they would show a bit of humility. If only they would get over themselves.

Management Come-Uppance

Presenting a personality of arrogant expertise in the face of any and all challenges can sometimes blind you to the particular realities of the situation being faced.  To the point where you start to force fit so-called solutions in order to match the problem.  These folks forget that when you’re dealing with people, not simply with figures, formulae and spreadsheets, what is the correct solution becomes less of a cookie cutter “let’s do this again” methodology and more how to handle a unique manifestation of specific challenges grown out of the organization, the culture, the demographics and even the management biases within their business.

So that what worked somewhere else yesterday may not work here, today.

Long term, the problems faced by these self-proclaimed experts are that;

  • They alienate lesser mortals (staff and colleagues) with their arrogance, self righteousness, stubbornness  and know-it-all demeanor.  Which is not a good recipe for building an effective team effort.
  • They tend to lecture senior management on what is the (only) right course of action.  Which can be a career limiting move.
  • They are not good losers, believing that a decision going against them is a major mistake.  They can then become passive resisters.

Take a Lesson

No one likes to be lectured, to always be told that their ideas fall short of the proper way to do things.  If that behavior describes how you approach working with others, stop it!

When you were young and first started school your mother likely told you, “Try to get along with the other kids,” or words to that effect.  In other words, don’t stand apart but become part of the group.   In later years, by the time you gained a leadership role that admonition can be converted into “Learn the environment and listen to the employees – only then should you speak.”

Show a little humility by listening to others, by planning for unintended consequences and by anticipating “gotcha” questions and the doubt of inevitable nay sayers.  Try to understand that others, even subordinates can have effective ideas and possible solutions that are worth considering.  And that senior management may have a more complete view of an issue than simply the compensation perspective.

But most important – get over yourself.

Considering the Minimum Wage

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 24-04-2016

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Periodically I’ve been asked to comment on the controversial subject of raising the U.S. Federal Minimum Wage.  I say controversial because it seems as though lately the subject has taken on the sensitivities normally associated with politics and religion.  Everyone has a strong opinion, and few folks out there are willing to listen to viewpoints that differ from their own.

That being said, as a compensation practitioner of long standing I do have a few opinions that I’ll share with you.

Picture This

Close your eyes and picture for a moment the type of employee that your mind conjures up when you think, minimum wage employee.  In my view there are two possible images:

  • Bobbie, the High School Kid: Not that long ago Bobbie’s image stood by itself, the high school age youngster holding down his first job. His motivation was money for gas and Saturday night dates.  The job was part time and the work didn’t require skills or even more than a day of training.  Anyone could do it.

Now Bobbie doesn’t really care about the business, about customer service, or even whether he consistently made it to work on time.  Company loyalty was a foreign concept, not even thought about, as he probably planned to stay on this particular job for only a short period of time.  He had better things to do, and just needed a few bucks to do it.  Turnover rates for the Bobbies of the world is very high.

And he doesn’t need a “living wage.”

  • Robert, the Head of Household: This image is what may be considered the new face of the minimum wage issue, or at least as the media portrays it. We’re looking at a much older worker who needs a full time job and has a family to support.  What remains though, is the same low or minimum skilled individual, who for some reason cannot obtain employment more complex or valuable than that of an entry level position that offers the lowest wage out there.

How it is that Robert is working at the same job next to Bobbie is never explained; bad luck, high school dropout, having a questionable background that discourages other employers – we don’t know.  Perhaps it’s a part time second job to help out at home. But Robert is doing the same work as Bobbie.  Paying different rates could be considered discriminatory.

The Minimum Wage Job

So what jobs warrant a mandated minimum wage these days, providing only the lowest of the low pay levels?  Chances are the answer is that low or no skills are required.  What employees don’t know can be quickly learned through short term training.  These are the proverbial “anyone can do this” jobs.

But you say, what about construction workers?  Not the electricians, plumbers or carpenters, but the ditch diggers (is that even a category these days?) and generic laborers.  Or what about low skill jobs that are highly physical, very messy or even dangerous?  Here the competitive marketplace pushes pay rates up to attract workers.  Anyone can do it, perhaps, but those who want to are limited – so supply and demand push up the pay rates.

The Survey Says . . . .

For most jobs employers are not able to attract employees when they pay below market rates.  While that may be obvious for skilled positions that’s also why the ditch diggers, garbage handlers and other less desirable jobs are often paid more than what the government mandates.

Minimum wage jobs represent the floor of the labor market, where the only reason certain jobs are paid what they are is because the government (federal or state) mandates a certain pay level that supersedes competitive practice.  Without being artificially propped up these jobs would have their pay levels gravitate to what it would take to attract the right caliber of employee.

The Employer Viewpoint

Most compensation experts will tell you that a proper pay level(and you can certainly debate the exact amount) is the least amount necessary to attract, motivate a retain the right caliber of employee.  Because anything more, according to Herzberg’s Motivation Theory, will not increase your return on investment (performance, productivity, etc.).  And anything less won’t allow you to have a competent staff who is willing to remain with you.

If it was your money, and your jobs required little or no skills to perform, and the profit margin of your small business was razor thin, what would you do?  Likely you’d keep your staff as small as possible, use technology wherever you can to replace employees but pay your staff the prevailing (competitive) wage – unless you’re artificially required to pay more than the marketplace would otherwise suggest.

McDonalds has already introduced internal ordering kiosks that replace employees.

When you’re facing the loss of your business because your pay levels have become a social issue, you either fold up your tent or you cut; you cut staff, you cut hours, or even products and services, but you do whatever it takes to stay afloat. And chances are the prospect of only staying afloat was not why you went into business in the first place.

Meanwhile, all Bobbie still cares about is getting enough gas money for Saturday night, a new video game and a couple of burgers.  A raised minimum wage will not affect either his motivation, his customer service or his willingness to stay with you.  He wins, you lose.

On the other hand Robert is out on the picket line demanding a “living wage” to support a family that Bobbie doesn’t have – all for doing the same job.  But of course Bobbie will gladly accept whatever handout the government requires.  It’s all good news for him.

Should you pay the same rates to Bobbie and Robert for performing the same, low or no skilled job?  That really is the social issue on the table, isn’t it?  Perhaps it’s not a compensation issue at all.

And finally, where does the $15 rate come from?  Economic or competitive survey analysis?  Compensation professionals?  Or perhaps only from politicians and social activists.

The Value of the Value Proposition

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 08-04-2016

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Use of the term “Value Proposition” seems to have gone out of date in Human Resource circles, or at least I don’t hear it mentioned anymore.  Have you?  Granted, catchy buzz phrases come and go with the seasons, or so it seems, but I had thought that the value proposition as a strategic compensation focus had roots.  Perhaps the term has been replaced by a new phrase (same idea; new words).  It can be hard to keep track.

I hope though, that compensation practitioners are not losing sight of the concept, because in my humble opinion this thinking should be the 11th commandment.

For those new to Compensation the original term (in HR speak) can be described as follows:

A value proposition is a promise of value to be delivered and acknowledged and a belief from the employee that value will be delivered and experienced.  A value proposition can apply to an entire organization, or parts thereof, or employee perception, service or programs.

What the dictionary is saying is that if an employee values something, then a  promise by their employer to provide that something is considered a worthwhile strategy.

The Value of “Something”

The trick is, what is that “something?”  Because one size does not fit all.

We all want money.  Cash is king and all of that.  But pay by itself can be more of a psychological dissatisfier than most realize (remember Herzberg’s Motivation Theory?).  Because having what we consider the right amount of pay results in a neutral feeling , while anything less than the right amount is a perceived negative.  And having more?  Does that feeling even exist?  So there is little upside for the employer to paying more if the goal is employee satisfaction.

However employees in their diversity want more than just money.  They can appreciate and “value” more than the cash. It could be medical and / or other benefit coverage, low insurance premiums or deductibles, vacation time, free parking, discounted cafeteria food, liberal sick time, tuition reimbursement, even free coffee in the break room.  The list is endless.

Anything that the employee considers a reward (that which is provided or made accessible to employees) as part of the working environment is a something that will be valued.

Employers take note: what employees value they can be motivated to attain or retain (not lose).

Using The Value Proposition

This is where the “cafeteria style” benefit plans originated; the view that, if the organization focuses on delivering that which the employees consider as having personal value the return benefits (improved morale, retention, engagement, productivity, etc.) will outweigh the cost of providing that value.  And perhaps the cost doesn’t have to be any greater than what was paid out before, just better focused.

I still remember the organization where my laundry was picked up and delivered to my office door.  And where I could buy a dozen high quality long stem roses for my wife.  The charge for these services was 100% paid by the employee, but the memory of having (and later losing) those conveniences lingers to this day.  Especially with my wife!

Even considering the above merits it remains a common practice in some organizations to focus on delivering pay and pay alone; to treat employees as having one dimensional thinking and desires.  Here are managers who think that by keeping their finger on the EASY button (just pay them more) all good things will come to the organization – without breaking a sweat.

Instead, all too often they find themselves burdened by unsustainable payroll growth, while still lacking the improved morale, retention, engagement, productivity, etc. that they had assumed would follow the pay cycle.  They find little or no ROI for their simplistic knee jerk tactic of thinking that one answer (the easy one) solves all challenges.

Because they really aren’t interested in providing all that the employees consider value. That road leads to more work (complexities, time consuming, myriad answers) than if they simply pressed a payroll button.

So perhaps, at least in some quarters, the Value Proposition hasn’t disappeared after all, but is just ignored.

But not with your organization, right?

Bob’s Your Uncle

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 08-04-2016

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Orange Arrow, by Stuart MilesI once lived in England for five years as an expatriate, and during that time my team took great pleasure in confusing me with English words that held little meaning for an American.  Often times I could repeat the words back to them but still didn’t understand what the term meant.

As the Brits often told me, we speak the same language, but we don’t.

One example that stuck with me is “Bob’s Your Uncle.”  Within the UK it’s a common phrase that means “and there you go,” but like so many colloquialisms finding the root cause was a challenge.  It took me almost two years to find someone who could explain where the term originated.

Easy Peasey

Two hundred or so years ago there was a high ranking Member of Parliament (Robert, Lord Salisbury) who held great sway (political influence) across the British Empire.  This was a powerful man who also believed in nepotism, and so it was not unusual for even his distant relations to find themselves in favored government positions.

Such office holders with familial connections held positions of power, influence and easy living.  Over time the phrase was born, that everything would be fine (easy peasey) as long as “Bob’s your uncle.”

And That Applies How?

Which got me to thinking about a message I had received a few weeks ago from a recent graduate who wanted to make a career in HR and specifically compensation.  The inexperienced questioner asked a very basic question; a question often asked by those just starting their careers.  “How can I achieve success in my chosen profession?”   He wondered whether there was a blueprint, a map, or a guide of sorts to keep him on the straight and narrow.

Of course there are no rules, no instruction manuals or pointed arrows guaranteed to show the way to career success.  The experiences of those who went before you are varied and distinct in so many ways, usually a compilation of diverse career choices, working for particular supervisors who influenced for good or ill, differing type and operating style of employers, and of course the series of unanticipated head knocks (lessons learned from mistakes made) that one gains over the length of a career.

What happened to me may not happen to you, I thought.

So I condensed my experiences, preferences, personal work philosophy  and gut instincts into a set of generic principles that could (or should) provide a solid platform of suggestions for anyone interested in career success, whatever the chosen profession.

Below is the essence of what I sent to that recent graduate, reflecting my thoughts for how a compensation practitioner can be a success.  It’s not a complete list, the specific applications can sway in the wind along with the reality of personal circumstances, and the concepts broad enough for individual interpretation.

  • Understand your company:  You need to know at least the basics of the business operations where you work.  What are your products / services and what advantages do they offer a customer?   Don’t remain stuck in your office / cubicle, but get out there and learn about the business.
  • Understand the facts:  What is the business environment your organization operates in, and how competitive is your reward program?  What story do the metrics of your organization tell you?   What issues do you face with payroll, turnover, morale, engagement, etc?  Sadly, all too many practitioners start and stop here.
  • Understand your management: Who are these people and what are their management biases?  Learn the perspective that they bring to making HR and compensation decisions. Know them and get them to know you.
  • Understand your goals: If you don’t know the pathway you’re on, then any road will do. So learn what defines success at your organization and strive to support efforts in that direction.  Make sure you have goals that are integrated with the larger picture.
  • Mix, stir and bake at 350 degrees until done!  Take all of the knowledge gained from the above, combine it with your own skill sets and experience, then work diligently at making a difference,  every day.

And there you are!  Follow these suggestions in your chosen career and everything will be fine.

Bob’s your uncle.