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A Horse Of A Different Color

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 18-01-2017

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Within Human Resources it often seems that those in charge possess a strong compulsion to follow the lead of some other organization, what with the chase after so-called “best practices,” an all-consuming need to know what the “survey says,” and an inherent fear of doing something different from perceived universal norms.  They don’t like to stick their head out.

This reliance on others taking the first step is part of a herd mentality, the belief that somehow the organization is safer – on the right track – by doing what everyone else is doing.  If only we can figure that out.

Of course, as a defense mechanism, it is harder to criticize someone for following the crowd.  For doing the accepted thing.  Because if you think that everyone else is doing it, it must be the correct thing to do.  Whatever the “it” is.

Follow the Crowd

However, that tagging along approach doesn’t appear to be the operating procedure for Marketing, Sales, Manufacturing, IT and other functions within the organization.  Those specialty areas seem to be forever striving for that which sets them apart from their competitors.  Proponents of new techniques, new processes, new thinking are both encouraged and rewarded.  Following the crowd is actively frowned upon and could even be a career killer for someone advocating “Let’s do what everyone else is doing.”

How many times have you heard of organizations who support risk takers?  Who celebrate those who take a chance for the right reasons.  Aren’t they touted as organization models to be emulated?

So what is it about HR that seems to set that function moving in the opposite direction?  Because all too often HR comes across as wanting only to mimic their competitors and general workforce, seeming to be comfortable in the “average” niche.  That thinking is a head scratcher for me.

People who are risk-adverse feel comforted by the support of “survey says.”  They don’t want to stick their head out but would prefer to bring a gang of like-minded organizations along with them (survey averages) to the proposal meeting.

For them, the perceived common practice can be used as a crutch to support recommendations.  “If you don’t believe me, just look at what everyone else is doing.”

About this, though.  When you support the use of “best practices,” will you then be following what the high achievers are doing, or the more populous Joe Averages out there?

A New Mantra

I always advise my clients to do what is best for their organization, not for the other guy.  Sounds obvious, doesn’t it?  What your organization needs to do in any particular subject area may not be what everyone else is currently doing.  What you are experiencing can be unique circumstances, given your organization’s demographics, HR metrics, culture, industry, revenue or operating budget size, management biases, the strength of leadership, past experiences, financial soundness, etc.  So the “answer” you get from surveys and so-called “best practices” may not be reflective of what would work in your particular circumstances – at this particular point in time.

For example, if you find your average compa-ratio to be skirting 80%, and your market pricing study indicates base salaries are an average -10% to market, blindly advocating what everyone else is doing for midpoint adjustments and merit spend percentages may not be an appropriate strategy for you.

I will grant you though, that a takes a bit of intestinal fortitude to throw away the crutch and advocate a position singular to the needs of your organization.  Whether it is program design, expense recommendations, policy or procedural changes, or even administrative processes, sticking your neck out and standing alone in recommending improvements to your organization can be a thrilling as well as nerve-wracking experience.  And a risky one.

“What works for us” should be your mantra, not “What works for everyone else.”

The Other Side Of The Desk

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 10-01-2017

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happy-cat-by-trish-hammeI’ve often commented on those “well-intentioned amateurs,” those newly promoted managers who now hold the keys to the kingdom – the ability to spend the organization’s money.  Usually I’m lamenting their lack of training and their lack of knowledge of the organization’s reward programs.  These are folks typically promoted primarily because of their individual contributor qualities, not their leadership.

Following the promotion party no one seems to take the time to explain the how and why of the reward programs that these sparkly new managers are now charged with administering for their staff.  This presents the organization with a target rich environment for mistakes, inequitable actions and costly precedents. Not to mention the slow creep of an ever growing payroll divorced from an ROI.

And Another Thing

As bad as that scenario can be to an organization it is often compounded by a painful lack of understanding by managers regarding their employee’s perspective on those same reward programs.  Who is actually explaining to managers how to relate to their employees regarding pay issues?

In most cases the answer is, no one.

However, this additional problem is not confined to only the newly promoted, but also for those long serving managers who have lost sight of what it means to be on the other side of the desk.  They’ve been drinking the kool-aid that says they’re part of management and have to play the management “line.” Which usually sets up an attitude of us vs. them.

What are they thinking? Being part of management doesn’t (or shouldn’t) mean that they should ignore what their employees are thinking or feeling. Or what employees value.

I once consulted with a CHRO who seemed to view his own employees as the enemy, and proudly utilized various tactics to gain what he perceived as “wins” against them.

So perhaps it’s that management attitude thing again, but in my view employees are part of the organization’s “family,” and should be treated as such.  You don’t gain “wins” against your family, even if they are represented by a union. You and the organization only lose when you think and act against your own employees.

What Is Your Job?

As a manager you’re not just part of Management, but of Leadership as well (admittedly a distinction not often made).  And effective leadership requires an understanding of both sides of an issue; that there is more than one side of a coin, and that other opinions have merit.  Lacking that balanced view labels you as narrow minded, self-centered and arrogant.  Whoa!  That’s not who you are, is it?

You need to get out of your office or cubicle and learn what it means to be an employee impacted by your organization’s reward programs. You need to talk with your employees, to get a sense of where they’re coming from.  Don’t assume that they think like you.

But please don’t start by going around asking, “Are you satisfied with your pay?”  Most employees realize that there’s no gain in saying yes, no matter the truth of it.  They know that if they say they’re unhappy, maybe something will come of it.  But if they say they’re satisfied, end of story.

This perspective from the other side of the desk is not rocket science.  Employees tend to have four critical wants when it come to your reward programs:

  • Competitive pay:  You underpay employees at your risk.  At best only Joe Average will appreciate you.
  • Recognition and reward for their performance: Pay for performance, based on individual achievement, still remains the primary engine to encourage lasting personal effort.
  • An opportunity to gain more (pay and / or higher level):  No one likes being in a dead end job.  Picture Joe Average playing solitaire on his computer, waiting for the clock to strike 5:00.
  • Fair treatment: Equity of pay, of opportunities and future growth should be based on performance, not special treatment of so-called special cases.  It’s not only the sales force willing to chase that carrot.

Do your reward programs offer your employees each of the above?  Do you know that they do, or do you assume that they do?  Big difference.

Whatever is going on in the heads of your employees, you better find out.

Walk a mile in someone else’s shoe and see if your feet hurt.

Asleep At The Switch

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 29-12-2016

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asleep-by-cell105It can be argued that nothing much of significance occurs in the business world between Christmas and the New Year holiday.  The bosses are (mostly) on vacation, those clients and vendors still open for business seem future-focused to the start of the new year, the phone isn’t ringing all that much and many offices have only a skeleton staff.  The pressure is off, folks are relaxed from phase 1 of holiday cheer and many are already looking forward to phase 2.  Next week is soon enough to re-focus.

If you do have to make an appearance at work, it’s a good time to share Christmas experiences with colleagues, to clean up your desk and files, take long lunches and in general idly pass the time until after the First.  It’s like your time is on automatic pilot.

Which is exactly why you should be careful with your actions, as hopefully your conscious is whispering in your ear. Because it’s all too easy to take your eye off the ball during the holiday season.  In the HR / Compensation world there are many moving parts right now.  Lots of balls up in the air.  If you’re not careful, next week when the flow of business returns to normal, you might find yourself sitting behind that proverbial eight ball of “woe is me,” playing catch-up and as a result setting bad precedents.

What Can Go Wrong?

Right now the annual incentive assessment and payment process is underway.  Are the review forms being properly completed and submitted on time?  Are you reading them?

Likely the annual merit review process (performance assessments) is also underway.  Are those forms being prepared in a timely and appropriate manner?

Is the merit increase matrix the same one you used last year, and even the year before? Has anyone checked as to its continuing usefulness?  Is that a rubber stamp I see on your desk?

The new annual incentive plan commences in a few days.  Has the design been reviewed?  Are managers being instructed as to the timing and construction of appropriate goals / objectives?

The new salary ranges have been approved, right?

If you have stock options and / or Long Term Incentives (LTIs), the new program initiative is upon you.

Has all of this been communicated to employees?

Pick one of the above.  If you ignore it, if you let things slide along on automatic pilot you lose the opportunity to correct errors, to make improvements.  You are condemning yourself to repeat whatever is wrong with the status quo. That’s not supposed to be your role, is it?

The more you leave things alone as you relax through the holidays the more likely it is that you will take shortcuts and lose the opportunity to make effective change – because your time has run out.

Shortcuts

During the course of my career I have seen this scenario played out time and time again.  Taking your eye off the ball while the clock is ticking leaves you few opportunities to perform your job effectively during this hectic season of Compensation program finalization and initialization.

  • Assessment forms aren’t even read, but merely checked off as having been submitted.
  • Someone digs out the announcement memos from last year and changes the date.  Done!
  • Annual objectives for the closing year are assumed correct, even as written at the last moment (now).
  • New objectives can be promised for eventual submittal.  “Soon,” they’ll say.
  • Your overall assessment process becomes a paperwork mill, and little more.

Is this how things are where you work?  Eleven months of preparation abandoned at the last minute to accommodate checklists and hurry-up?  Is that how you started the year, last January, with this expectation for how things would play out?

Maybe it’s too late already for you.  Maybe you’ll find this reminder note too late to take effective action.  Or perhaps you’re already playing administrative catch-up.  Maybe you are one of those on vacation this week yourself and I’m wasting my time, whistling in the wind.

Don’t be asleep at the switch this holiday season.  Waking up will present difficult challenges come the New Year.

The Great Christmas Giveaway

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 21-12-2016

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gifts-by-stevendepoloEveryone and their brother-in-law will be soon heading out of the office for a well-deserved Holiday break.  Those who remain can look forward to a (usually) relaxed week between Christmas and the New Year.  Time enough away from chirping phones and multiple meetings to ponder where your Compensation function is heading, and do you want to go there?

Approaching the end of the year attention has already begun it’s inevitable tilt toward, “what are we going to do next year”?  Compensation managers and practitioners will have their hands full for the next few months, balancing the need to effectively close out this year, while at the same time preparing for the next.

Which is a fertile environment for practitioners to mutter, “I’m so busy.  If our compensation programs aren’t broken and in pieces, let’s leave them alone. We have other fish to fry.” Unfortunately that attitude, while perhaps understandable during a busy time of year, is effectively saying, “let’s stay the course.  Let’s continue into next year with what we’ve been doing this year.  Who’s complaining”?

The Complaint

But instead, perhaps there should be a shout of alarm (picture me raising my hand from the back of the room).  A basic premise of having effective reward programs (they perform the way they were intended, delivering desired results to employers and employees) is that you need to periodically check.  You need to kick the tires.  Even though your car is running fine today, and tomorrow and even the next day, eventually problems will develop and it will stop running effectively.  That’s why you schedule a checkup.

So how do we know that the incentive plans continue to run effectively, aren’t wasting money, aren’t creating inequities and aren’t fostering employee discontent?

Points to Ponder

While you’re sipping some Christmas cheer and munching on too many Holiday cookies please take a moment to reflect on what might be considered weaknesses in how you approach transition reward (end of year / start of year) practices.

  • Incentive Review Paperwork: You have forms meant to assess performance for your annual management incentive plan (or others).  Does anyone read them?  Is the language consistent with the rating?
  • Last Minute Objectives: Annual objectives should have been settled by the end of the first quarter.  If managers are still writing them now, in order to coincide with activities that took place, you have a problem.  You are spending reward monies on self-fulfilling goals.
  • Let’s Give Away More Incentives: Have a look-see at who is eligible for your incentive programs.  Because there’s pressure these days to lower the eligibility further into the organization,  increasing the ranks of those being given the “opportunity.”
  • Let’s Have More of the Same: You’re busy; I get it.  But that doesn’t mean you shouldn’t review the design parameters of your annual incentive plan(s).  To make sure the plan still supports business objectives.  Otherwise you’ll simply repeat whatever didn’t work this year.
  • Win-Win Scenario:  Make sure you spend enough time ensuring that your new incentive plan(s) will have significant payouts only if the company is successful as well.  It’s nice to worry about the mechanics of ensuring competitive and equitable incentives for the employees, but if the company isn’t winning as well, you’re throwing money away.  After all, the plan is (should be) intended to incent employees to deliver a successful year for the company.  There should be no guaranteed payments.
  • Leave the Games for the Kids: The payroll costs for an incentive plan are typically very large. As best you can make sure that performance = reward remains your guiding principle.  Avoid the gamesmanship of vague objectives, sloppily written assessments and even manipulation of results to ensure payments.

If something is amiss with your incentive design and administration your employees will know.  They might be silent when ineffective practices benefits them, but will howl like the Ghost of Christmas Past if they feel they’re not being fairly treated.

While this may be the season of giving, please make sure that both your company and your employees receive the gift of equitable reward for performance rendered.  That should be a gift that pleases everyone.

Merry Christmas and Happy New Year!

A Practitioner’s Recipe For Success

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 20-12-2016

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Whenever I come across self-help materials intended to assist Compensation practitioners with their professional growth I often notice an overly large emphasis on the technical side.  Also, when reading internet blogs meant for the same audience there again seems a constant litany of how-to guidance on, again, technical issues.

That’s all well and good, but . . . .

It seems to me that becoming a master technician in the compensation “science” is not by itself going to be an effective strategy for success in the corporate world.  In fact, sometimes that technical prowess can prove a bit of a hindrance, as it could limit upward opportunities.

True story: During my career the President of a nationally known retail chain interviewed me for the top Compensation job.  He later said to his CHRO, “Hire this guy. He has a personality.”

My checklist of Useful Competencies

If you rely solely on your technical capabilities, while remaining in your cubicle all day, and if you’re saddled with the personality of a troll, you’re going to have an uphill struggle toward success.  You’re going to need more to work with, so print this checklist and tape it to your office wall – where you can see it every day.  It could save your career.  You must:

  • Be flexible: Be willing to listen and keep an open mind.  Become known as a problem solver. Do not quote policy except as a last result.  Have a reason for your actions that can be easily explained.
  • Understand the business and how Compensation impacts it:  You’re not on an island cut off from the rest of the business.  Learn how what you do interacts with and has an effect on the business. What you do should relate to and support organizational objectives.  If not, know why not.
  • Have a personality:  Basic stuff, but have a ready smile, greet people, shake hands and in general show a warm side to those you interact with. Become an engaging person.  Oh, and try to be sincere about it.
  • Don’t be a Geek / Nerd: Don’t spend all your time spouting technical language and showing off charts & graphs.  As if all those figures are self-explanatory and you’re merely the spokesperson.  That data should be the backdrop to your explanations, not the focus.  Don’t be an analyst when you need to be a leader.
  • Be able to work a room: Leave the introvert at home and develop the skill of being comfortable holding multiple conversations in a room of strangers, colleagues or even senior leadership. That will build your image in a positive way.  If you’re an introvert, work on it.
  • Be persuasive:  You will not get too far by dictum, so work on your reasoning and communication skills.  You need to  be able to influence others, to gain agreement on the strength of your rational arguments.  “My way or the highway” does not generate a warm response.
  • Become the one who gets lots of Christmas cards: That’s your goal for next year, to be someone that colleagues think of when preparing their lists.  That is usually a good sign, because they like and / or respect you.  PS – I’m not counting stamped signature cards from consultants and vendors.
  • Play (a bit of) politics:  I don’t like this one, but it’s true.  Politics exists in every organization, so you need to be able to play the game at least a little.  Don’t think that you can “stay above the fray,” as you’re a professional or some such rot.  The powers that be will eat you alive. But as best you can try to remain neutral and project yourself as someone that all sides can trust.
  • Yes, be technically proficient:  Of course you still have to know what you’re talking about (the science of Compensation), but the higher up you climb the food chain the less reliance you’ll need on your personal technical capabilities.  You will become valued and judged for what else you bring to the plate.

Nowhere on this list will you find the ability to rattle off the overtime exemption criteria for the FLSA, or the salient rating descriptions in your point factor evaluation scheme.  And nobody is going to swoon when you describe linear regression, correlation coefficients or the difference between the Cost of Living and the Cost of Labor.  Your audience, your clients, your senior management will expect more.

But if they like you, if you have an engaging personality and can work well with others, well then, you’re half way there.

Do Not Limit Yourself

Unless you want to.  Unless you are someone who prefers the technical work, to the exclusion of the managerial side of the craft.

Those employees are out there.  I have met them.  They are happy with what they do.

But if your repertoire of competencies leans too heavily toward excel spreadsheets and data analysis your ability to “pass through the curtain” from the hard side of Compensation (technical) to the soft side (managerial) will be limited.  Because Master Technicians tend to remain just that, both by competency and by interest.

Likely you have seen your own examples of individual contributors (technicians) who have been promoted beyond their capabilities – or their interests.  Those employees are rarely successful.

So pick and choose.  If you want to go through the beaded curtain be certain to bring more along with you than a calculator and a spreadsheet.

Warm up that smile!

Are You Kidding Yourself?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 12-12-2016

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rose-colored-glasses-by-florence-luongAs a manager within your organization you’re expected to provide leadership and direction for those employees who report to you.  Likely that requirement is a key accountability in your job description, and fulfilling that mandate means that you’ll have to make decisions that impact your employees – for good or ill.

Bummer.  Not everyone is comfortable with that responsibility being part of a Manager’s role.

From the perspective of senior management a key leadership expectation surrounds the handling of the employee performance review – and those future pay actions (rewards) that are based upon that assessment.  The boss has placed the ball squarely in your court to render those decisions.

Well, are you a tough manager with high expectations, or do you have a “rep” as an easy rater – as someone easy to please, someone who hesitates to make up or down decisions about their employees?  Do you feel that all employees deserve an annual raise?  Are you reluctant to discriminate of the basis of job performance?

Perhaps you have a tendency to consider decisions based on emotional factors (employee needs and wants), versus on the basis of business-related practicalities (performance assessment, company affordability, most deserving, budgets, etc.)?

Well, you probably say, the truth is that it’s a matter of balance; that managers need to weigh both factors (employer and employee) in trying to do the right thing.

True enough in concept, but such a balanced approach suggests use of a carrot and a stick – as well as a bit of a giveaway.

Signs of a “Softie”

Easy-to-please managers believe in giving as many employees as possible as much reward as the company will allow, with the expectation that recipients will:

  • Be grateful and work harder out of personal thanks
  • Be satisfied and not quit
  • Recognize the manager as someone looking out for them

These managers are kidding themselves, wearing rose colored glasses, thinking that emotional pay decisions are going to deliver results that help them (the manager), and maybe even the organization (there’s that unfortunate priority again).

Why Emotional Decisions?

Managers have a choice, and what unfortunately comes naturally for too many untrained folks is the tendency to protect themselves.  Many still think of themselves as supervisors or even individual contributors, not members of the organization’s leadership cadre.  In basic terms they still project the so-called “employee side,” versus the “company line” (that’s how they see it).

  • They want to be liked: They want to be a friend as well as a boss.  They still remember sitting on the other side of the desk.  So they empathize.
  • They avoid career-impacting decisions:  They’d prefer that someone else play judge and jury with an employee’s career.  Or let the performance figures speak for themselves (“numbers don’t lie“).
  • They don’t support the company’s pay program:  These are the ones who tell employees, “I wanted to do more, but HR wouldn’t let me.”  They fail to defend reward policies, preferring to be seen as being on the employee’s side.
  • They’re afraid someone would quit:  Because that might be a reflection on them as a manager.
  • It’s really about them:  Having employees unhappy for any reason usually means more work for the managers themselves.  It could mean extra attention to subordinate work (vs. their own), recruiting and training replacements, doing the work themselves to fill in, etc.

These managers are not helping the organization; they’re not even managing.  What they’re doing is administering the pay programs as if they didn’t have a decision-making role to play as part of the leadership team.  It’s managing from a distance – being the disengaged leader.  Let someone else make the decision.

For sure it’s not easy for some new managers to “flip the switch” and start thinking like one of the leaders of the organization.  But when they took on the mantle of “Manager” they stepped up to additional responsibilities.  They’re no longer “one of the boys,” but now the boss of those “boys.”

Those who wear rose-colored glasses to make reward decisions are in truth ineffective managers, who over time will harm the organization through their inability to make the effective, objective decisions that impact the employees who work for them.

Managers?  They’re kidding themselves.

Rising Up From Failure

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 01-12-2016

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amelia-cat-by-brownpauIt’s happened to me, more than once, and likely has happened to you as well.  Rejection.  Failure.  The boss or even senior management didn’t go for your idea.  Maybe they weren’t even nice about it.  You might have thought that your recommendations were good ideas, but they didn’t gain you the approval you had hoped for (too expensive, too controversial, too complicated. etc.).  But hey, you can fix things and get back in there to pitch your proposal again.

But what if the rejection was more complete, a one word NO and the meeting ended.  What if you were shown the exit before really getting into the details.  You zigged and they zagged.  You missed the boat and the boss wasn’t afraid to tell you so, and even by how far you had missed the mark.  Ouch.

Now what do you do?  Before you head for the aspirin, or other pain relievers, let’s take a look you might approach the before, and then the potential after of any presentation.

The Before

To get ready to pitch an idea to your boss, or to senior management for that matter, it’s best not to “wing it” when getting your presentation ready, but instead to thoroughly prepare yourself.  You might set up a checklist to help you remember some do’s and don’ts.

  • Remember the formula for any proposal:  State the problem, then the impact and ongoing cost.  Pause then to let the gravity of the circumstances sink in.  Then offer a solution (your proposal), followed by how the problem would be solved, along with projected costs.  Finally, paint a picture of the success to be achieved because your proposal has been approved.
    • These are the basics, taken from any good compensation manual.  Now also consider the rest.
  • Don’t try to overwhelm with facts and figures:  You’re a professional and already have their trust, that you know what you’re doing.  So focus on the key program changes and only use summary statements and figures.  You don’t have to “prove” your case with reams of data.
  • Get ready for “gotcha” questions:  They will come, so prepare by asking yourself – what do you think they will ask?  Are there possible glitches that should be addressed early on?  Survey your staff for devil’s advocate thinking.
  • Double check your figures and your text:  Sounds minor, but don’t let yourself stumble over embarrassing math errors or typos.  And yes, someone will notice.  Highlighting even a minor error could prove a costly distraction in the middle of your presentation.

Now you’re ready.  But being ready only assures a smooth presentation.  Something can still go wrong.  Don’t be blinded by a personal bias toward your work that may not be shared by those responsible for making the ultimate decision.

If everyone smiles and you get a green light, you needn’t read any further.  But if you play the percentages it’s likely that something will slide off the tracks, from a minor mishap to a major derailment.  If so, what do you after the meeting?

The After

Your reaction to a “failed” presentation depends a great deal on the specific aspects of what went wrong, who said what to whom, and whether your proposal needs a band aid or major surgery.  But consider a few basic responses that should serve you sell.

  • Making adjustments:  Listen to what they said, nod your head and commit to reviewing your materials and the resubmitting in a fashion that addresses their concerns.  Get back into the fight!
  • A different perspective:  Think hard about why you didn’t win the day.  Maybe they have a perspective that you hadn’t considered.  Maybe they raised concerns that you hadn’t addressed.  Learn from the experience.
  • Half a loaf is better than nothing: There’s nothing wrong, and a lot of good that can follow compromise.  Even if the powers that be won’t approve everything you asked for, take what you can get.  Getting halfway to a goal positions you better than remaining at the starting gate.  Next time you’ll move even closer.
  • A defeat is seldom unconditional:  Even if your proposal was rejected, you raised important issues and created a dialogue with the decision-makers.  That’s a good thing.  You also got them thinking, and likely created an environment where raising the same issues again (in a revised format) will likely receive a better reception.

So don’t give up when your precious ideas and recommendations get slapped down.  Instead get up, brush yourself off, adjust your thinking as necessary and prepare to fight another day.

Why Have a Pay Structure?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 21-11-2016

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Once an organization reaches a certain size in employee population it’s been typical practice for the Human Resources department to replace an ad hoc compensation / reward process with a more structured program.  And part of that program development, a key element in fact, is the establishment of a base salary (pay) structure.  Here you will have an ascending hierarchy of grade designations (your position is a grade “x,” mine is a grade “y”, etc), coupled with ranges that indicate a minimum to maximum value (salary) for each grade.

While distinctions in design can vary amongst organizations the central point of having a uniform structure is very much commonplace in both for-profit and non-profit organizations.

You probably see the “but” coming, don’t you?

Startups and Small Businesses

Just the other day one of my clients, a young and fast growing high tech company, explained to me that they didn’t use grades or salary ranges.  They didn’t have a pay structure.  They felt that they didn’t have the time to develop a standardized reward program. “We’re moving too fast,” the CHRO told me, and “We don’t have the time, people or money to focus on an HR project.”

That’s a common response for start-ups and small businesses.  The feeling is that there aren’t yet enough employees to start building an HR infrastructure.  Everyone knows everyone else’s first name and the company Christmas Party could be held at a restaurant.  Also, business leaders are too engaged in more important endeavors: getting the business off the ground, developing products and services and setting up mechanisms to sell their offerings.

Therefore these first generation employees are usually paid on the basis of:

  • Whatever the individual employee could negotiate
  • Whatever the company felt it would take to get chosen candidates to join, or
  • Setting of fixed rates for everyone in a particular job

Little thought is given to pay relationships (equity) or even the short term (?) impact on payroll expense.  The focus is lock set on creating a business, of getting the ball rolling.  Even job titles become an afterthought, with resultant title inflation slowly infecting the organization, and no one has a job description.

I get that.  That’s the reality of getting a business off the ground.  HR takes a back seat.

But it can’t last.

Paying The Piper

Eventually these poor compensation practices will start to cause real pain within the organization, similar to how too much sugar inevitably causes tooth cavities in children.  Payroll gets out of hand (too high), inequity amidst the staff starts to cause employee relations issues and managers begin to see valued employees becoming disgruntled and heading for the exit.

By the time management starts to realize they have a problem, not only have the problems grown serious and disruptive, but those pay practices that no one cared about earlier have now become ingrained into the small company’s culture. Now it’s not going to be so easy to change course.  Now management risks angering some employees even as they try to steer the ship away from the reefs.  Some of those employees could be valued contributors.

Time and again I’ve been asked by clients to help them develop their first compensation structures, to assist them as they struggle to work through numerous employee-related challenges and deal with a bloated payroll.  Aside from the mechanics involved in setting up a new pay structure (market pricing, job evaluation, salary range width, midpoint differentials and assigning jobs to grades) overcoming past practices and precedents, dealing with the employees themselves, becomes a real challenge.  A painful challenge.

For example:

  • Disconnecting inappropriate job titles is sometimes easier said than done.  Employee egos and self-identification have been blown out of proportion, but to make someone take a step back is difficult.
  • Dealing with outliers who either pop out the top of a salary range, or fail to meet the minimum level.  When faced with a competitive pay structure to replace the ad hoc and laissez faire suddenly some employees are found to be overpaid, while others are underpaid.
  • Facing the cost implications of the above.  Raising someone to the minimum value of a pay range is an easy decision, but what if there are many employees so affected?  And if an employee has been with you for awhile, raising them to the minimum can still be perceived as a slap in the face.
  • Setting grade assignments that reconcile a job evaluation system, competitive market pricing results and internal equity.  Think of a juggling act where everyone is a potential critic.

So do yourself a favor.  Pay attention to germinating pay issues even as the business passes through its stage 1 and stage 2 development.  Then, when it’s time to standardize and structure your reward programs you will find the road ahead all the smoother for your efforts.

What Is A Reward?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 16-11-2016

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Confidence, by petesimonWhen you think of the cumulative payroll expense being distributed to your employees, do you consider that amount of money a cost to the business, or as an investment in business success?  I’ve heard both terms used, usually along the lines of a glass being either half full or half empty.  It’s all about how you look at the same figure.  Do you value the employee contribution, to the tune of “X” number of dollars, or do you consider that amount too much of a necessary evil that constantly needs to be monitored, minimized and even cut?

This isn’t a trick question.  Because it’s a legitimate response to say you value your employees, while at the same time you want to minimize their cost to the company.  It’s all about being effective and efficient.  You want to spend what you need to spend for the right caliber of employees.  Not more and not less.  So you’ll need a balanced program of employee rewards that provides the right motivation for your employees (attract, motivate, retain), while not wasting money by overspending for the same level of performance.

The Right Reward

What programs or policies do you count as being a reward for your employees?  Payment for performance, yes, but also aspects of your work environment (what one experiences when they work for you) that makes employment more enjoyable for your employees.  Cash of course, but how about a subsidized cafeteria?  What about tuition reimbursement, an on-site clinic, a credit union, or perhaps product / service discounts?  Ask yourself, what other programs, policies or initiatives are either provided or available to employees in your organization that help make the working environment a more pleasant place to be for all those hours every week?  Or, what can you do?

Because the almighty dollar will only get you so far.  The pool is limited, of course, and to managers it’s a basic, though simplistic and automatic response to employee needs.  Many managers will stop right here though, because after giving out cash the rest of the value proposition (what employees value)  can be hard work to identify, implement and administer.

Think about it.  How many other somethings offered by your organization bring a smile to your employees?   To have them talking positive about your organizations to family and friends?  Find out what those goodies are, because those are valued and become considered as a reward for working there.

They don’t have to be large programs, or expensive offerings; just what is meaningful to the employees.  But it takes putting your thinking cap on.

Cash Is King, But . . . .

Every organization is different, with myriad characteristics, infrastructures, cultures and degrees of financial strength, so it’s hard to point at something and say, “do this.”  But if you presume that cash is not always going to be available, try something else as well.  Try lots of somethings.

  • Benefits: Not just the core programs that almost every organization provides, but perhaps there are other initiatives whose availability would be appreciated, whether funded by the company, by the employee or via a proportional split.  My wife still remembers the job where I was able to buy her roses at work, or take care of the dry cleaning from my office.  Both were fully employee-paid, but were convenient and appreciated.
  • Work-Life: Do you expect your employees to maintain a “live to work” or a “work to live” mindset about their job? It matters.  Look at your PTO policies, remote access for employees, job sharing, or simply the ability to periodically work from home.  Do you have the latest hardware and software technology?  How about health and wellness programs, or initiatives that get you involved in your community?
  • Performance & Recognition: You hire an employee to do their job, but do you also provide performance feedback along the way? Encouragement?  Improvement assistance?  Counseling?  Do you show appreciation and behavioral reinforcement to foster more desirable efforts?  Do you highlights achievers for the contributions they make?  Celebrate employees doing their jobs.
  • Development & Career Progression: Do you treat employees like an electrical appliance – plug them in work them until they fail? Or do you provide challenges as well as opportunities, learning experiences that enhance capabilities, perhaps coaching / mentoring / training experiences? Are you really investing in your employees?

The value of rewards is in the eye of the beholder.  If I have an opportunity to gain something that I value, then attaining that “something” because of where I work is a reward.  Whatever it is, it may not work for other employees, but if I value it, then it works like the proverbial carrot on a stick to provide me with motivation, with appreciation of my employer and ultimately more and better effort on my part.

You may have your own somethings where you work, and they could coincide or differ with my own.  Such is the strength behind the Value Proposition – which has morphed into a cafeteria-style menu of rewards and opportunities, cash and non-cash.

Have a care though, because going down the value proposition road requires more work on your part than simply doling out more cash.  But the rewards to you and your organization will be worth it.

Guaranteed.

Rewards For The Right Reasons

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 16-11-2016

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Boba Fett Reward, by pasukaru76If you have an employee working for you, why would you give them an increase to their base pay?  I’m presuming though, that there’s a review program (annual?) in effect so that employees don’t have to come to you, hat in hand to ask for a raise.

When reflecting on their merit review / pay increase programs, here are the reasons I typically hear for granting individual rewards.

  • Good job performance: In recognition of delivering good or better job performance during the review period.
  • Tenure: Employees who have been around for a long time deserve “something” to recognize and reward their continuing loyalty.
  • Peanut Butter Spread: Popular in low merit spend years (lot of those lately), the thinking is that making distinctions is not “worth the effort,” so “Let’s give everyone the same raise.”
  • Everybody wins: Part of the popularity effort by many managers is the belief that all employees should get something.   They try to avoid being judge and jury about the linkage between performance and rewards.
  • They need the money:  The soft-hearted approach, when managers make emotional vs. business decisions.  An employee’s personal circumstances become a pay decision consideration.  And if one doesn’t need the money?  Chances are some of their portion might be shifted elsewhere.
  • I don’t want them to quit:  Another aspect of the manager popularity effort and a cousin of the “Everybody wins” tactic, is where a manager ignores or downplays job performance and reward distinctions to ensure an employee doesn’t get angry and then decide to leave the organization.  Because a decision to look elsewhere might negatively impact the manager.  Self interest conquers all.

You’ll notice that I put “good job performance” at the top of my list.  Is it at the top of yours?  Sad to say I often see that requirement placed further down the list in many organizations.  While everyone would agree that performance is important, we’re talking about money here, about discriminating among employees.  So the counterargument from pay-for-performance critics is that there are other things to consider.

Basic Rule of Thumb

But what if those reward dollars were coming out of your own pocket?  What if you acted as it you owned the business, and that the merit spend monies came from you, not from off a money tree or from some other constantly renewable source?  Then the decision becomes, either give monies to “deserving” employees, or keep it for yourself.

If that was the case, might the decision making process become more objective, might focus more attention on the ROI gained for the reward monies being spent, and might you expect managers to do a better job at actually managing their employees?

A basic rule of thumb in human factors management is that job performance that has been recognized and rewarded is going to be repeated.  Conversely, employees will find little encouragement to continue unsatisfactory behaviors and performance if they realize that pay increases are not automatic, and that an accounting of some sort will actually take place.

Sit on your butt and get nothing.

Critics and Naysayers

With that vein of thinking I would suggest that pay increases granted in advance of performance is also a bad idea.  I’ve heard some pundits, in their criticism the performance appraisal process say, “Let’s ignore the past (performance) and instead reward employees for future effort.”  Doesn’t that sound like a bribe?  And if the employee doesn’t perform well enough to warrant the monies already given, would there be a pay claw back later on?  I don’t think so.

Some other pundits (p4p criticism #2) suggest that dangling pay increases in front of an employee – as a form of motivation – is a wasted effort.  Their belief is that employees will perform well anyway, as some form of internal self-worth will propel them to work hard.

  • When high achievers and Joe Average receive the same / similar increase, whose performance do you think is encouraged and will be repeated?
  • How many of your employees “perform well?  100%?  Probably not.  So already this theory ignores a segment of your population.
  • Well-intentioned and self-motivated employees will eventually run out of steam (think of a battery) unless recharged by recognition and reward.
  • Your organizations risks encouraging a “Why bother?” mentality, which when coupled with a higher percentage of Joe Average in your workforce, is a recipe for serious difficulties.

So have a care that your reward monies go to the right employees, and for the right reasons.  Less than that is wasted money.