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Enabling An Anti-Performance Culture

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 23-11-2015

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See no evil, by allyaubryWhen considering an organization’s merit increase process, a common complaint is, “we have too many employees rated too high.”  Which means the performance rating distribution curve is skewed.  Too many employees walk on water, while too few are not carrying their own weight.

What’s Normal?

A “normal” distribution curve of performance ratings, using a typical five point scale,  looks something like this:

  • Distinguished: Up to 10% of employees
  • Superior: 20% to 30%
  • Fully Successful: 60% or more
  • Needs Improvement: 10% to 15%
  • Unsatisfactory: Less than 5%

The descriptive language differs between companies and percentage guidelines vary as well, but you get the point.  Most performance ratings would normally be expected to cluster around the middle, with smaller percentages moving out to the extremes.

Is this how your company scores employee performance?  Don’t be surprised if it doesn’t.  The pervasive problem that fuels inflated ratings can be boiled down to a single question; “what employee wants to tell their mother that they’re average“?  We all think that we’re achievers.

And it’s worse at the top.

The Trickle Down Problem

The problem of skewed performance ratings usually starts with how a company’s management treats themselves.  Leadership sets an example in performance assessment that’s inevitably  replicated by the rest of the population, for good or ill.

Usually it’s for ill.

Management tends to consider their performance using a different measurement stick or justification than the rest of the organization.  Actual performance seems to be less a rating criteria than you would expect.  Sometimes it’s overlooked if not downright ignored.

Let’s take a look at some common management reasons for skewed performance ratings.  How many have you seen?

Entitlement:  When management feels that at least a portion of their annual bonus or merit increase is due them, “just because.”  It’s been 12 months and they feel entitled to receive their annual reward.

Feel good: When you want the employee to feel good about themselves and the company.  When you want to recognize effort instead of results, or when the company has had a tough year and the employee has “hung in there.”

Retention:  When the rationale is that the company  has identified a particular employee as a talent that needs to be retained.  This card is usually played when the reward process coincides with a reorganization.

Leaders need competitive pay: This is a fall-back position for the desperate, when performance arguments don’t work.  In order to retain leaders the company has to ensure that their pay is competitive.  This is not about performance at all, but keeping up with the marketplace.

Cannot use the rating scale: Here is a problem as old as the performance appraisal process itself.  Some managers have a difficult time rating an employee less than “average.”  Excuses are legion, but the result is that objective assessment takes a back seat as almost all employees are rated average or above.  And if marginable performers are bumped up into “average,” how do you think the truly average are rated?

Leadership is always rated higher than the regular folk:  This one is rarely voiced out loud – though repeatedly we see the results in the statistics.  If you’re a leader and not being readied for termination, then you must be pretty good.  Having poor performing leaders is a strong criticism of senior management, and we can’t have that!

What Can You Do?

Training sounds like a nice problem resolution strategy, but is often a throwaway thought – like “let’s push the EASY button and then go to lunch.”  In my experience behavioral change rarely results from sitting through a classroom session or by sending out a bunch of memos.

You need a bad guy.

You need to inject a healthy dose of discipline into the performance rating process.  Calibration sessions are useful, but you need someone in HR and at the top of the organization who demands a performance-related reason for each rating.

Someone has to say “stop!” when ratings no longer make sense; when they don’t correlate with how the business performed; when appraisals are poorly written, and when excuses trump objective assessments.

Lack of managerial discipline enables bad practices to continue, to even flourish and to spread throughout the organization.

That culture change you might be hoping for could morph into the very opposite of your goal; you could be developing an anti-performance culture.

The Muse On My Shoulder

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 10-11-2015

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Friday Cat Photo, by jim_mccullochPeriodically I’ve been approached by colleagues, clients and casual acquaintances, who ask about my compensation writing; why I do what I do, what’s the inspiration for my subject matter (my muse) and whether I have a “message” for the compensation and Human Resource practitioners out there.

And the best question of all is, “how do you get people to read what you write“?

So I thought I’d try to answer.

Why Do I Write?

This is an easy one.  It’s because I have something to say, and God has given me a modest ability to connect sentences into coherent thoughts and tell an engaging story.  But there’s more.  While I was stepping on all kinds on nasty stuff in the minefield I called a career, I had no one to rely on for practical advice.   No one sitting on my shoulder to whisper good thoughts.  Most of the self-help books, recordings and even conference speakers I experienced seemed to drone on over conceptual blue-sky ideas and (for me) unrealistic initiatives.  Stuff that I knew the boss would have nothing to do with.  Ideas that I wouldn’t be allowed to convert into actions, or even plans for action.

The reality of the workplace seemed very distant from the idealistic preaching of the self-helpers.

Call it a form of giving back, or of simply sharing the benefits of my experience, but I believe that there’s a lot to be learned from someone who has walked the path ahead of you.  The intent of my ramblings is to help the practitioner with down-to-earth common sense suggestions in straightforward language, with an added flair for understanding what the reader is facing in their own workplace.

Am I always right?  Probably not, considering the wide audience I’m talking to.  But the “right” wine isn’t right for everyone, is it?

And the writing is fun too.

What’s My Inspiration?

I start with mistakes.  I’ve made them, and hopefully have learned from the resulting bruises and headaches.  Over the years my bosses made mistakes; some learned a valuable lesson over time, while others repeated their judgment errors ad infinitum.  And then you have the experiences of my global consulting clients who have suggested constructive ideas to improve the daily lives of compensation practitioners.    All have served up a cornucopia of story lines.

Ideas come to me in the shower, while working outside, or even when driving the car.

Often it’s the use of flawed policies, procedures and every day practices that encourage me to say, “Wait a minuteMaybe there’s a better way.”

Why Do They Read?

This is the hardest of all, and perhaps I’m not the one to ask.  Why are you reading this right now? would be my counter question.  I’ve been told many times that (for some) my writing is enjoyable, informative, thought provoking and down-to-earth.

That’s not to say that everyone agrees with me, certainly not, but if what I have to says gets the reader thinking, that’s all to the good.

I prefer to think that I ramble on for the practitioner out there, not the theorist or conceptualist.  I have something to say to those with dirt under their fingernails, who live in the trenches, struggling to do the best they can.  I write to suggest timely advice, something you can start or stop doing right now.

People have said that my thoughts have made a difference, that it was good advice that they could implement  right away.  The best compliment of all.

So that’s my epitaph; I write to help.

——————

Caveat: No matter the length and breadth of my compensation experience I am neither all-seeing nor all-knowing.  I am but a product of my training and experiences, and those experiences likely differ to some extent from many of you out there.  Different industries, different companies, different bosses and different working environments, when blended together provide different perspectives to similar challenges.

Which is why I don’t present myself as the “answer man,” but rather as someone who has seen a lot, done a lot, and experienced a multitude of different scenarios.  So I “suggest” what you might find behind Door # 1 and Door # 2 when you have a decision to make, but rarely would I say that “this is the way it has to be.”  Because it doesn’t have to be, and it’s your decision to make, not mine.

I want to make sure that your eyes are open.

And maybe suggest a better way in the process.

So now you know.

A Pebble In Your Shoe

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 21-10-2015

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Stony Lonely Shoe, by Mark MichaellsFor as long as I’ve worked in Human Resources the common solution most often suggested by all ranks and segments of the population for a host of employee issues was to simply . . . pay more.

Yep, just push that EASY button of simplistic, no-thought, one-size-fits-all logic, and like a snake oil concoction sold by con artists the promise was that you’d start feeling better tomorrow.  Or as soon as those making the promises have gotten safely out of town.

Why is it that some people always think that the reason behind almost every employee issue is that the pay is wrong?  Simple and uncomplicated reasoning, I suppose.  Just the way we like to solve our problems.  Therefore the logical and easy-to-understand solution is to pay more.

Like a pebble caught in your shoe, all you have to do is flick your problem(s) away.

Life is More Than A + B = C

Sometimes though, you really need to look beyond the simplistic to find the REAL problem.  Placing band aids on symptoms will not be a cure-all for what ails you.  Instead, by masking the hurt you might be making things worse by focusing in the wrong direction.  Really harmful problems need time to fester before they erupt into crisis, so band aids often become misguided placebos to make one think that things are getting better.  Or will soon.

When managers complain about a sales incentive system, the answer could be the compensation.  It could also be territory size, unreasonable targets, poor product quality, administrative errors, inadequate training, etc.  It isn’t always about pay.

When turnover statistics worsen, the organization’s supposed low pay becomes the “kicking boy” for why employees have left.  However studies have consistently shown that to be a false logic, which if left unchallenged could direct attention away from the real problem.

Many of my clients have assumed that their problem was pay; that they should be improving pay in some fashion.  But that isn’t always the case.  In fact, more often than not the problem isn’t pay.  However, using pay as an easy target of complaint is simple to explain, offers the chance of “more for me” and often succeeds in getting employees and even senior management to mindlessly nod their heads.  Because perhaps they don’t want to dig a little bit deeper.  Perhaps they just want the immediate problem to go away – and they think that more pay would do just that.  No fuss, no muss.

Wrong.

The Ease of Chasing a Distraction

Many times pointing the finger at pay is serving up a distraction for those whose primary interest is in dealing with a quick fix.  It’s similar to a dictator who risks war with a neighboring country simply to hide the fact that their own economy is near collapse.  Illusionists call it a sleight of hand.  Those using this practice will have you looking at everything and everywhere but where the real culprit is – or should be.

So when your foot hurts, don’t rush to throw out your shoes.  Think about it.  Maybe it’s only a pebble that could easily be removed.  But maybe the problem isn’t what you think it is.  Maybe it isn’t what you want it to be.  Maybe the problem is more ingrained within the organization, more complex and doesn’t offer a quick fix solution.

To make things right maybe you’ll have to conduct some research, spend a little time considering possible ramifications, unintended consequences and roll-on effects.   So talk to affected employees, gather a wider perspective from those closest to the sore points, delve into the weeds, get behind the symptoms and understand the root causes.

Because offering more incentive dollars to the sales force when quotas are unreasonable isn’t going to get you anywhere.

So don’t simply kick the can of problems down the road, because that can will roll to a stop and you’ll be facing the same challenges again and again. Problems will not go away by themselves.  Instead, if left ignored they tend to worsen.  And if your quick-fix solution addresses only a symptom and not the real problem, then you’re wasting time and money while what really ails you will fester and grow ever more difficult to resolve.

You may think that your problem is like a pesky little pebble in your shoe.  Have a care that you could be seriously wrong.

I Have The Number!

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 06-10-2015

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Curved Perspective, by Joel KramerPicture the scene: Someone is hurrying down the hallway at work.  Maybe it’s someone you know, a client of yours, or one of your managers.  They’re waving a piece of paper that’s gripped in their hand.  “I have the number,” you hear them shout excitedly.  “I know what we should be paying.”  And off they go toward the executive suites to tell senior management “the answer.”

A bit dramatic, you say?  Perhaps.  But that’s the scene that plays in my head whenever someone I’m dealing with is more concerned about having a market priced number to show, more so than understanding the validity of that number.  Especially if that number fulfills a preconceived or desired expectation.

I’ve seen it happen again and again.  It’s as if Moses came down from the Mount with the tablets, only this time he held eleven commandments, not ten.  That 11th directive from on high is the market figure you’ve been looking for.  The answer to your quest to discover “how much?”

Only, is it?

Market Pricing is Not an Exact Science

Repeat this after me.  Market pricing is not an exact science.  No matter what the vendors claim about their proprietary software, their point evaluation systems or their convoluted survey source documents.  No matter how much you paid for that survey.  Subjectivity still rules.

The question you want answered is, what is everyone else paying for the position I’m interested in?  Unfortunately, your survey sources almost never tell you that. It’s not going to be that straight-forward.  There are too many variables at play.  Which is why relying on an attitude of “anyone can do this” often results in an arithmetic number, but rarely one that you can rely on.

Which is why you need compensation practitioners to sift the wheat from the chaff and to interpret the Rosetta Stone of survey data.

You have to listen to the qualifiers that every survey source presents.

  • How many companies have matched the subject job? Is the job match 100%, is it close or are we talking about comparing similar competencies?
  • Is the reported figure a good example of what your competitors are doing?  Or the universal everybody?
  • Is the survey source(s) reliable, do they have a good reputation, or is the data self-reported off the internet for a few bucks per job?
  • Is the data all-industries or segmented to your industry or SIC code
  • Does the figure you’ve been given reflect national data, regional or is it localized?
  • Your business has $100M in revenue.  Does the survey show you data from similar sized organizations?
  • Is the data based on incumbent information, or on a series of formulae and algorithms that only projects a likely figure?  If job A pays X and job B pays Y, then job C (your job) likely pays Z.
  • When you told senior management the source of your “answer,” would they nod their head in agreement, or would they frown and ask, “who?”
  • Finally, do you have the answers to the questions I’ve just posed?

So when you consider all the variables involved we’re likely looking at the analysis of a marketplace that requires a bit of interpretation.  Are you up for that?  Or are you ready to grab any figure and start running?

Are You Willing to Fall on Your Sword?

How confidant are you with the market figure you’ve been given?  What if senior management starts asking even a few of the above questions?  Ask yourself, has the survey source(s) suggested any qualifiers to the data that could impact how the information is used?  Have I factored those qualifiers into my “answer?”

Because once you start waving that paper about you’ve become Moses to your leadership group.  They’ll be looking at you to show confidence in what you’ve just presented.  You’ll have to stand with that answer.

So have a care.  Sometimes a little extra analysis is necessary.  Sometimes the initial figure needs to be double checked.  Sometimes you need to qualify the data to better read how market subjectivity may suggest more of a range of figures than a precise $73,212.

And sometimes you don’t really have an answer at all, but only someone’s guesstimate.

Is that good enough for you?

I Have a Pet Peeve

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 13-09-2015

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Fractalius Kitty Kitty, by peasapI’ve worked in Compensation my entire career.   Spent most of it in Corporate America and now for a bunch of years as a global consultant.  I love what I do, but at the same time can acknowledge that it’s not all fun and roses.  There are dark times.  Not every day ends with a smile.

You see, like most of you out there (ok, probably everybody) I have a pet peeve – a behavior or attitude that happens at work and irritates me, big time.  Well, to be honest, I have more than one peeve.  I have several.  I suppose that the longer you work in this field the more you find yourself shaking your head at those “muggles” that you have to deal with.

How about you?  Be honest.  As a compensation practitioner what bothers you most about those you’re supposed to be helping?  What are you exposed to that just drives you nuts?

Go ahead, you can vent.  We’re all friends here.  Likely we all have stories to tell.

For the sake of space I’ve kept my irritations to a small list.  How many times have you experienced one or more of these scenarios?

  • How hard can it be?  Managers with the attitude that you can just grab any compensation survey, flip to the page that matches the job . . . and there you are.  Anyone can do it.
  • We don’t need a job description:  Likely because they didn’t write one, and don’t want to now.  “Use the title in your analysis,” is a common refrain, or “doesn’t everyone know what that job does?”
  • Just give them more:  Some folks have a simple answer for every problem, except that there isn’t a money tree planted behind the building.  But hey, don’t sweat the details.
  • How do I fill out this form?  From those who can’t be bothered with performance appraisal forms.  They know the answer (score / rating) already, but just need help in back filling this %$#@!& form.  We’re all paper pushers in HR.
  • Can’t you just convert the currency?  A basic no-no in international compensation, but I still hear it asked, over and over again.
  • Give everyone 2%:  With small merit budgets it’s too inconvenient to go through the motions of a performance review cycle.  Just push the EASY button and let’s go to lunch.  Little thought is given as to how the high performers or even Joe Average will respond.  As if all the consequences are good.
  • That’s not what the market is paying:  Your data is wrong.  They’ll tell you that they know a guy who makes more, or they Googled higher rates on the internet, or they’ll just cop an attitude of “that just can’t be.  Prove me wrong.”
  • I need more money:  Whatever is available isn’t enough.  The reasons can be as myriad as snowflakes, and are not always business-related, but somehow the “system” just isn’t responsive to their needs.  So you should fix it.
  • You’re not being flexibleThis is my personal favorite, where any answer but the one they want to hear is not the right one, which proves how rigid you are in your thinking.

No amount of training, self-help courses or even hand holding explanations seem to stem the tide of repeated aggravations from colleagues, clients and even strangers on the street who don’t have a clue.  Though they say and act as if they do.

So what do you do with your pet peeves?  You grin and bear it, keep pushing that boulder up the hill and fix a polite smile on your face.  It’s the price of being a compensation professional.

Thanks for listening.

A Tale of Two Markets

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 02-09-2015

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Bureaucrat, by Delmarva.DealingsAs every Compensation practitioner knows, sometimes there is no straight answer to a question being posed.  However, the boss asking that question still looks to you for not only what the tea leaves say (surveys), but what should they do about it.  The answers you have though, they often aren’t black or white, but instead show lots of grey.

But management doesn’t like grey.  They don’t want you to sit on the fence.  They want you to make a call.

What do you do?

Consider This Example

A survey shows that there are 350 nonprofit organizations in FL, and the base market rate for the XYZ position you’re analyzing is $150k.  However, that same survey indicates that there are 36 FL organizations that are same size as yours, and that market is paying  $125k.

When you consider the variations of data, you see that . . . .

  • Florida is a large state.  Where are these 350 organizations located, compared to your site?
    • Does the survey tell you this?
  • These organizations will vary in size (operating budget, employees, number of sites, etc.) a great deal, from much smaller than you to much larger
    • Does the survey segment data according to size?
  • How many of these 350 organizations are in the same “type” of nonprofit business?
    • Does the survey segment data according to type?
  • If the data is segmented, which segment is more important to you?  Can you ignore others?
  • Do you really care about variations, or does the answer with the most robust data win?

Management is waiting.  How do you answer their question about the market rate for XYZ?

Depending on the circumstances your answer might be $150k, or under other circumstance you might say that the answer is $125k.  Both can be considered correct, dependent upon how you read your data sources.  But for the incumbent employee, their market is the $150k.  That’s their view of how they should be valued.  That’s their view of what they can get with someone else.

The Wannabe Survey Analyst

How your organization defines its view of the competitive market is important, but most folks outside of Compensation will let that distinction slip right by them.  Grab a survey, flip the pages until you get to the subject job and point your finger at the top-of-the-page figure.  There.  Done.  How hard was that?

I’ve seen it done.  Likely so have you.

The trouble with this approach though, is that’s it’s all too easy to miss the mark.  If you’re a $50M nonprofit food distribution organization in Central Florida, how important is it to know, and include what a $150M nonprofit disability organization is paying in the Miami area?

The trick for the wannabe analyst is that often the available survey data doesn’t make enough distinctions in the figures being reported.   There may not be enough data (statistically valid) for $50M nonprofit organizations in the Central Florida area.  Never mind food distribution.

So data on that narrow slice of “same organization” criteria you’re looking for is simply not available.

That data on the top of the survey page may not represent your organization at all.  Or you could get lucky.

Broaden Your View

Look at your “market” from two perspectives; 1) what are other organizations – just like you – paying for a subject position, and 2) what are others paying in an organization sized like yours.

You can even add a third component; what about your geographic area?  What you have then is a composite of data points that require interpretation and explanation.  So perhaps your response is buried in the midst of the survey page, not at the highlighted top.

Just to make things a bit more complicated, another consideration for you is the difference between the employment market value of a jobholder (what pay can they achieve out there) and what organizations just like you and sized like you are paying.

This is the “it depends” element of compensation that drives non-practitioners crazy.

I can see their point.

Passing Through the Beaded Curtain

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 16-08-2015

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L1005944, by Brooklyn Museum CafeFor those who have spent the majority of their career in the Compensation arena your upward pathway likely started at the bottom of the ladder, writing job descriptions, completing survey questionnaires and evaluating jobs.

Eventually you worked your way up the food chain into survey analysis, market pricing, structure design, incentives and program development. You mastered the various formulae, charts and graphs, could make Excel dance on a dime and you could debate complex technicalities that would befuddle your HR generalist colleagues. You became a master technician for the “hard” side of Compensation.

You carried a calculator everywhere.

The Hard Side

The “hard” side?  This designation represents the body of knowledge and experience surrounding the traditional view of compensation practitioners – from the outside looking in.  Such are those who manage the technical analysis of impersonal data bites – that black & white world that only deals with neutral and impersonal facts.

Subjectivity is not allowed here.  We are usually placed in a small cubicle and left to our own devices – with our computer and survey sources.    No one stops by to chat.

At Christmas we don’t receive any cards.

Then it happens; one day you’re asked to walk through the beaded curtain into a new world, toward a new career in something called Compensation Management. This is exciting, because on the other side is increased pay, a loftier title and finally recognition as a “player” within the HR community.

The Soft Side

You’re assigned internal clients who aren’t interested in your formulae, charts & graphs or technical babble. They want you to solve problems, provide solutions, talk with them about how Compensation can help them achieve their business objectives.   You’re expected to become an advisor, enmeshed in “what do we do now?” scenarios.

This is the “softer” side of Compensation, where rules become guidelines, policies become politics and the proper answer to most everything is “it depends.”

Not everyone makes it safely through that beaded curtain.  That’s because, besides the cool new business card the job also requires a mindset change, into a place where your comfortable analytical tools aren’t as much in demand and instead you need something called “relationship competencies” to succeed. I’ve seen many people falter at the curtain; some don’t want to pass through – and others have stumbled through, only to eventually burn out and fail.

Why do some fail to succeed once through the curtain?

  • Non-Exempt mindset: Some aren’t comfortable becoming part of management, continuing to identify themselves with their former colleagues and finding it difficult being labeled “management” and required to support the company view.
  • Comfortable with technical analysis: Figures don’t lie, they just are.  Can’t argue with that.  Can’t be blamed for that. There’s a comfort in dealing with the neutral, just reporting the facts.  Some prefer to stay in this “safety zone.”
  • Uncomfortable with multiple answers for the same question: A common problem where differing circumstances can result in differing answers.  Like the ground shifting beneath your feet, the certainty of sameness is replaced by “it depends.” Life isn’t all black and white anymore.
  • Preference to let policies and procedures make the decisions:  Some folks don’t like to stick their neck out, to face being challenged and having to defend their recommendations.

Back when you were an analyst you weren’t expected to develop tactical strategies and recommendations; you read the surveys, tabulated the spreadsheets and reported your findings.  That’s it.  Then you went home.  Sound harsh?  Not at all, as proper analysis remains a critical component for the making of informed business decisions.  But if that’s all you do . . . ?

To be an effective practitioner of compensation management is to straddle both sides of the Compensation function;  you must understand the technical aspects of where the numbers come from and what they mean, but you must also adapt and thrive within a new environment where your role becomes an influencer of management decisions.  To be successful you need to breathe the crisp air of business realities and when dealing with internal clients be able to shake up those technical rules you learned so many years ago; don’t let them rule you.

Or you could sit back and let established policies and procedures do the talking, though that’s probably not the intent of your increased salary and important new title.

But sorry, you still won’t get Christmas cards. They go to the HR generalists.

Pushing the Right Button

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 09-08-2015

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OLYMPUS DIGITAL CAMERANot every employee is capable of selling products or services to potential customers.   The selling process requires an employee to possess a particular set of interactive and persuasion skills, as well as having a compatible personality profile (garrulous, self-confident, unafraid of rejection, etc.).   While some employees enjoy the challenge, most want no part of it and only a minority are neutral about the idea.  For those tasked with a selling job it’s typically a reflection of an individual personality that would generate success or struggle.

For compensation practitioners having the right person involved in the selling process can be more important than the compensation program itself, because dangling potential rewards in the face of the wrong person can be a waste of money and a lost business opportunity.

It’s All About Motivation

Success in the selling process depends upon the right motivating elements aimed at the right employee personality.  To do this correctly within a sales compensation program requires the design to take that into account, to focus financial rewards toward whatever engages, whatever motivates the employee to perform in the manner the organization wishes.

Costly mistakes can be made when an organization assumes that all employees will react in the same fashion to the same stimulus.

Have you considered what motivates your sales employees?  Chances are that not everyone would have the same answer.

  • Money:  Everybody’s first response is that all you have to do is offer the opportunity for a cash bonus and the employees are off and running.  But in chasing the almighty dollar employees could also drive your company in the wrong direction – even off a cliff – because they may take the path of least resistance (difficulty) and greatest financial reward.  If those activities fail to align with what the company needs to assure business success, money is not only wasted but used to reward behavior that could be detrimental to the company.

Do you really want to reward the sale of a money-losing or low margin product?

  • Mission:  Especially prevalent with not-for-profit organizations, many employees have a “fire in the belly” belief in what the organization espouses, be it products, services or awareness.  This internal value system often provides motivation enough to ensure concerted efforts.  In such a scenario money is deemed less important as a motivator.  Employees are already motivated by the worthiness of the organization’s mission.

Helping others or helping a cause can be reward enough for some employees.

  • Brand identification:  If you identify with the organization’s offerings and have a belief in what you are selling you’re already halfway to becoming an effective sales representative.  For these employees the ingrained belief in what they sell is already present; they just need a  bit of training.

Employees are proud to be associated with a particular product or service.  They’re always wearing the logo shirt and are the organization’s biggest fans.

  • Self-motivation:  Here the employee possesses an internal reserve of self worth that helps make excellence its own reward.  It’s a state where success in one’s endeavors is self-fulfilling.  The reward system for these employees is often a nice addition, but isn’t necessarily the prime motivating factor.

A certain level of performance would be forthcoming, no matter what financial rewards are offered.

  • Challenge:  The mindset here is the joy of climbing the hill, especially if there’s a pot of gold at the peak.  Similar to self-motivation, some personality profiles relish a good challenge, and if you provide a reward for goal attainment, so much the better.

For such employees, the game is always afoot.  They enjoy breaking down barriers, solving problems and grabbing for the brass ring.

  • Competition:  The fierce desire to be better than others; where winning is critically important.  Note: such employees might not be effective team players.

Sometimes this motivational factor is less about achieving company goals than simply doing better than other employees.  Like a loose cannon these players may have their own definition of winning, which may not be synonymous with yours.

The takeaway point here is to understand what motivates your employees and then to place your rewards in front of them in a fashion that leads and directs their behavior.

Because if you design your incentive program with the wrong assumptions about what engages your workforce, you’ll risk missing your targets, misspending your financial assets and perhaps not even achieving the required level of success – regardless of the money paid out in rewards.

Understanding The Employee Point of View

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 13-07-2015

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Friends, by S BakerWhen it comes to paying employees for the work they perform, what do you think they expect?

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Or does your management care enough to ask this question?  Perhaps the collective attitude today is more often either, 1) “they’re lucky to have a job,” 2) “where are they going to go“? or 3) my personal favorite, “I pay, you work.”

When employees feel mistreated or taken advantage of in the performance = reward equation you’ll see the result through lowered morale, mental disengagement, reduced productivity and even separations.   Given the business risks involved it’s discouraging that not enough of those in charge are able to view the issue of pay from the perspective of those doing the work .

What’s the problem?

Any manager worth the title should be expected to anticipate employee issues, especially those that have the power to harm the business.  It’s about knowing your employees, about being prepared.

Payroll is likely your largest single expense, representing 40% – 60% of revenue.  Shouldn’t how you handle pay be as carefully considered as the way you would view the cost of raw materials, the acquisition of a new business, or the financing of more brick and mortar?  You should analyze this expense from every possible angle, to better understand the underlying causes and learn how you can improve.  To manage reward dollars without harming the business you need to understand those factors that impact employee pay, as well as the attitude of those being paid.

Taking that hard look will mean trying to understand the human factor behind the cost of labor.  It will mean understanding how company pay decisions are perceived by those on the receiving end.

It can help when you think of pay from the other side of the desk.  Employees provide a service and you pay them for it.  But that shouldn’t be the end of the equation, as money doesn’t manage people – you do.

What do employees expect?

Do you know what employees expect from managers, and from the company?  Their basic wants and needs have a direct connection to their performance, as well as their commitment to your organization.  While individual circumstances might vary somewhat, it’s reasonable to say that employee expectations fall into several broad categories:

  • Competitive pay:  No surprise here, because that’s probably what you want too.  You don’t need to be a premium payer, but should avoid the label of “low baller” as you ensure that pay opportunities are consistent with market practice.
  • Opportunity to earn more: Employees should know that opportunities are available to them through pay increases, variable compensation, promotions and perhaps even overtime.
  • Regular pay reviews: Don’t let employees hang in the wind; avoid the comical stereotype of employees concerned over how to ask the boss for a raise.  You don’t have to grant anything, but let employees know that you have scheduled reviews of pay and performance.
  • Fair treatment: Employees have a distaste for “favored sons” or special treatment cases – especially if the perception is that such treatment isn’t deserved.   Recipients will become known, so don’t start putting skeletons in the closet.

Do you understand these expectations?  Do you consider them reasonable?  Are they the sort of expectations that you have yourself, for how you want to be treated?

How you and other managers react to someone’s expectations, by either actions taken or by lack of attention (ignoring) will set the tone for your employees; you dismiss their concerns at your peril.  You don’t have to do anything, of course.  But your eyes should be open and your decisions based at least partly on knowledge of what your employees are thinking – and expecting.

Otherwise you’re making decisions in the dark, and how many gems of wisdom come from that process?

Think about whether your management treats employees as “we” vs. “them.”  Are employees viewed as boxes on an organization chart or as real people?  Are they considered an important asset to the business, or a cost item to be managed (dealt with)?  Whatever the answer, your attitudes will become known and discussed among the staff.

Take the time to understand where your employees are coming from.  That bit of research will provide dividends down the road – no matter how you choose to pay your people.

It’s About More Than Numbers

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 02-07-2015

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Calculations, by marco_1186I’ve never been particularly good at mathematics, and yet have made for myself a successful career in Compensation.  Now, why is that?  One would think that we’re all numbers people, focused on statistics, surveys and regression formulae.  People just expect compensation practitioners to be a whiz at figures.  On the other hand, such so-called math experts often fail to rise to the top of the profession.   That’s a quandary to ponder over.

Why do some compensation people succeed (climb the specialist ladder) and others don’t?  Likely there are several reasons, but I think persona has a lot to do with it.

Changing view of compensation

Effectiveness in Compensation isn’t (or shouldn’t be) all about the numbers, but about the people affected by the numbers.  A successful practitioner should understand their company’s business and the pulse of the employees, who are not just figures on a spreadsheet.   If you consider the human factor as little more than boxes on an organization chart, then your ability to solve problems will be limited by your ignorance of the employee relations impact that naturally follows your recommendations.

Do you remember seeing an HR fellow with a pocket protector and a bunch of pens in the shirt pocket, walking the hallway while laden down with survey reports?  That was the traditional view of “the comp guy.”  This was the master technician who lived with the charts, graphs and regression formulae, but who failed to understand the people impact of their work.  Everything was about the numbers.

Best practices are different these days.  Compensation staff are no longer confined to a cubicle or an out-of-the-way office, but increasingly are stepping out among the employees, developing their knowledge of how the business operates, all the while increasing their ability to partner with internal business clients.

Sensitized practitioners know that compensating employees should be about the rewards as well as the process, about how rewarding employees can influence behavior, for good or ill.  Therefore the success of the solutions provider is in being able to creatively assist managers with achieving their objectives, while at the same time adhering to consistent policies / procedures.  It is not about quoting policy with a shrug of the shoulders.  It’s about being engaged in the process.

What’s the color of your hat?

Something else to think about; what role does the Compensation function play in your organization?

  • Policeman vs. Gatekeeper:  The role is not to say yes or no, but to encourage an open process of ideas and practices that operate within established policies and procedures.  Nobody likes the fellow who can offer little more in the way of help than quoting from the company policy manual.
  • Numbers vs. People:  Are your thought processes people-oriented, or is the understanding that employees are affected by these policies and procedures lost on you?  A business-only focus that ignores the human factor in driving success is inevitably tripped up by lower morale and disengaged employees.
  • Policy vs. Flexibility:  Are you one to quote policy as a supposed answer to every manager’s question, or are you open to creative possibilities?  When you tell a manager that the decision remains with them, that you’re only offering advice, you’ll be able to actually see their body dynamics relax.   At that point you can reach them, because their defensive barriers will be down and their minds open.
  • Analysis paralysis vs. solutions-provider:  Being able to make timely decisions vs. being caught up with a constancy of analysis that never seems to move to a decision point.  Do you have a reputation as a decision-maker or an analyzer?

When you consider the compensation people you deal with in your organization, are they the good guys or the bad guys – the white hats or the black?  Which are you?

You don’t have to be a numbers whiz to be successful.  You just have to know what the numbers mean, and how to use that knowledge to help your clients.