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Focus, Focus, Focus

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 10-08-2016

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Any seasoned compensation practitioner will tell you that having business objectives for an employee’s short term incentive plan (the annual STI) is a critically important design element.  Focus, by AnkakayLacking that you will face the prospect of misguided busy work being claimed as having provided a valuable contribution.

These same professionals will likely also expound on the value of developing SMART objectives.

  • Specific:  Avoid the vague and generic
  • Measurable:  You have to be able to measure the performance
  • Attainable:  Objectives should be reasonably attainable with a concerted effort
  • Realistic:  Meaningful goals that support the needs of the enterprise
  • Timely:   Avoid a never-ending effort with a time line that fits the performance period

And then we have to consider the number of objectives.  Here the usual advice is to concentrate one’s effort on less, not more.  Having 10 or more objectives reads more like an activity roster than a focused series of targeted goals integrated with management and business plans.  The rule of thumb (actually more of a guideline) is to identify no more than eight, and no fewer than four objectives.

Somewhere in that discussion you would also find recommendations concerning the size of the targeted reward – the potential, the opportunity.  No one changes their behavior and focuses their efforts for an entire year with the promise of only a pittance.

Ok.  Now that you have (hopefully) the right objectives to chase, and you’re motivated to do so, the question becomes, where best should you  spend your time and effort?

What To Focus On

The natural tendency for most employees is to focus their efforts on what they’re interested in (what they like to do),  what is the easiest to accomplish, and those objectives that would give them the biggest return for their efforts.   Identifying the easy stuff is, well easy, but what would provide the biggest bang requires more organizational planning and design.  Because the organization should have designed a win-win scenario into their plans; if the organization wins, the employee wins.  But the organization has to win.

To get the employee to chase specific goals meaningful to the organization the carrot (reward) dangled in front of them needs to be large enough to gain and keep their attention.   So the organization needs to lead the employee to focus their efforts on what is most important to the organization.

The natural tendency is to first attack the challenge that provides the highest reward and least resistance.  They may even decide to ignore other objectives – no matter the value to the company – if the reward for the easy objectives makes up the difference.

So employees can be encouraged to change behavior and focus attention on those objectives with the greater reward opportunities, the biggest bang.  You do that by proportionately weighing the more important objectives much greater than the “nice to have” objectives.

Consider this: When you provide an employee with multiple objectives, anything with a weighting factor less than 10% of total reward opportunity becomes a wasted effort.  They’ll either ignore it (no results), or will feel the goal can be achieved with little effort (would likely have been achieved anyway).  Reward monies in this case will not motivate, will not impact the employee’s behavior.

I have witnessed Sales employees ignore small payout objectives in favor of focusing on the bigger ticket reward goals.  So make sure you put your money and weighting behind these goals.

Without weightings each objective, whether large or small, critical or incidental, will be valued and paid out at the same rate.  Which is NOT how your organization actually values these objectives.  But if you design the incentive plan that way, that’s the behavior and that’s the performance that you’ll get.

Fish or Cut Bait

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 02-08-2016

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Dad Fishing, by Richard GiffordOr in poker terms, “Are you in or are you out?”  Make a call.  Because sitting on the fence dithering as life goes by will get you little more than a sore bum.

Picture this:  What do you do when a senior executive  looks you in the eye and asks you a direct question about your thoughts on a controversial topic that you’re responsible for, or involved in?  When they want to know where you stand.  In that scenario you’ll find yourself unable to play the glib politician who hems and haws,  spouts unrelated talking points or even attempts to misdirect the conversation.  You ‘re caught on the spot with no wiggle room.

You pause, but find that they’re still waiting – still looking you in the eye, expecting.

Well, what’s it going to be?  Do you tell them what they want to hear, or tell them what you really think?  Stick your neck out or pull it back into your shell?  You’ve only got a moment to weigh your options.

The Role You Play

It’s at this point that you find yourself defining and confirming your role in that organization, or at least as how senior management looks at you.  Are you to be seen on the front lines leading (managing , directing, etc.)  Compensation, or are you behind the firing lines administering the Compensation function (maintaining the status quo, performing repetitive routines, providing admin support, etc.)?  Are you sticking your head up, or keeping it down?

Chances are that you’ve reached the level of your present role because someone felt that they could trust you with responsibility, to either lead or administer.  You know your job, or at least the technical aspects of it.  You have the title of someone in charge, someone who is expected to understand the complexities of your profession and how those intricacies relate to your business operations.  Thus, how do you handle yourself when the chips are down becomes your “rep,” how you are known – for good or ill.

Remember too, that first impressions are hard to shake.

Decision-makers project a self-confidence to stand up for themselves, to provide their best professional advise based on their knowledge of the subject matter and their personal experience.  On the other hand, fence sitters often display a fear of making a mistake, or worse, of getting someone angry with them.  Like any good (?) politician the cautious administrator would rather first read the polls (know what the questioner wants to hear) before speaking out.  That’s called being flexible with your opinion.

If perchance your role is still gelling within the organization, or senior management isn’t quite sure yet what they have in you, that is the time to make your mark.  Or to quietly withdraw from the field.

On The Other Side Of The Coin

But lest we advocate for too much candid free speech, let’s give a sad call out to those in management who push themselves too far with their self-confidence.  Here you would find the arrogant so and so who loves to make declarative sentences to their staff, as if to say, “I have the answer.  The rest of you are idiots.”

Declarative sentences made to peers and subordinates leave the listener with the option of either complete agreement or being placed on the defensive – as they clearly are in the wrong.  Thus it is rare for such “answer man” comments to be made to senior management – the boss – as such arrogance would likely cut short their career.

Such self-promoters will avoid modifying their statements with “In my opinion,” “I think,” I’ve read (or heard about)” or in any way admit to the possibility of other viewpoints.  This is the way it is.

Do not be this person.  You will not be liked, or respected.  You may be listened to, simply because of where you sit within an organization chart, but that only places a false smile on the face of those subjected to your over-the-top self-confidence.

The Need to Reward Employees

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 25-07-2016

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Money, by borman818Now you may be asking yourself, why is he talking about this?  Isn’t it obvious, like 2 + 2 equals 4?  Doesn’t everyone reward employees for their efforts?

Sad to say though, that there really are organizations that don’t view the employer – employee relationship in quite the same way as most of us.  Their thinking is, “We pay them a salary for doing their job.  Why should we pay more?”

Taking a page out of a Compensation 101 textbook let me list the reasons that such a negative attitude about your workforce can become a problem, both short and long term.

  • You need to pay competitive wages: While this point is seldom argued your comparative marketplace is a moving target.  What looks like competitive today soon won’t be, so unless you have a process for updating your competitiveness it will start to slip.  And that slippage will pick up speed over time.
  • Business costs rise over time; so do employee expenses: The price of most items is higher today that it was a year ago, and in some cases the rise is dramatic.  If your employee costs (pay levels) are fixed / frozen your employees will have an increasingly difficult time making ends meet.
  • Rewarded behavior is repeated: It’s an old saying but worth repeating until everyone “gets it.” If you reward desired behavior (good performance) you’ll likely get more of it.  Conversely, the lack of reward tends to encourage average behavior, or worse.
  • Do you want a high performance culture?: If you fail to provide employees with equitable and competitive pay that’s linked to their job performance, what you’ll get instead is a lot of Joe Average performance.  Because an employee’s self motivation is not sustainable.  That personal battery of enthusiasm will drain down and shut off.
  • Employee expectations: Employees expect to be paid a reasonable amount for their work, but they also expect to be both acknowledged and rewarded for making a continuous effort on the company’s behalf. No one will work well for very long with their pay frozen or the likelihood of more money being a “maybe” or a “we’ll see.”
  • An elemental cost of doing business: This may be hard for some to understand, but if you’re going to operate a business there are certain costs that need to be incurred. Otherwise don’t bother.  And one of those costs is to properly pay and reward the people who are working for you.  They keep the business going, and you should never forget that.
  • Honoring your commitment: Do you proudly tell everyone that you’re a “pay-for-performance” company?  Do you believe that employees drive business success?  Well then, you had better walk the talk.  Because employee trust is at stake, and the failure to honor your promises will ensure business mediocrity, if not a slow descent into failure.
  • You should fear the alternative: If you decide to march to the beat of a different drummer, to say “nahhh” to the above, then consider what your future likely holds in store for you. Because when employees start to say, “why bother?” you’re in trouble.

>  Dissatisfaction with management: This is both negative and infectious. Disgruntled people are not quiet people.

>  Reduced morale: Sad faces and blank looks are not signs of an engaged workforce.  And the talk around the break room will lean toward other “opportunities.”

>  Reduced productivity: When employees take their foot off the gas pedal.  What you get from them starts to drop off from a desired 110% effort to somewhere south of 100%.

>  Higher degree of disengagement: When your employees start to say as well as think, “I don’t care” – that attitude will spread.  What it builds is a low performing culture.  Think of your business as a car driving around town with the brakes on.

>  The wrong turnover: The wrong sort are the better performers, who always have an option in the marketplace. Someone else will tell them, “We love you.  We’ll take care of you.  Come work for us.”

If you believe that employees are important to the success of your organization, then not having a proper pay-for-performance program in place to recognize and reward job performance on a regular basis is a mistake of the highest caliber.

Then again, perhaps some believe that employees are an easily replaceable commodity, that their pay is a cost worth trying to reduce, rather than an investment.  That they are not people, but simply cells within a spreadsheet, or blocks on an organization chart.

Just remember, that what you sow is what you’ll reap.

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.