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What Do Employees Expect?

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 22-06-2010

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When it comes to paying employees for the work they perform, what do you think your workers expect?

__________________________

Does anyone in management ask themselves this question anymore?  Or is the collective attitude these days more typically 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.”

Where does that indifferent attitude come from?

When employees feel mistreated you will see the result through lowered morale, mental disengagement, reduced productivity and even separations.   Given the risks involved it’s discouraging that not enough of the people in charge actually consider the issue of pay from the employee’s perspective – the people doing the work.

Such an important question should generate a better response than guesswork and bias, shouldn’t it?

Any manager worth the title should anticipate employee issues, especially those with the power to make or break the business.  It’s all about knowing your employees, about being prepared.

Because isn’t payroll your largest single expense?  Depending on the industry it could represent 40% – 60% of total revenue.  Shouldn’t how you handle pay be carefully considered the same way you would the cost of raw materials, the acquisition of a new business, or the financing of more brick and mortar?  You should look at this expense from every possible angle, to better understand the underlying causes, and how you can make it work for you.  To better manage your reward dollars, without harming the business you need to understand those factors that impact employee pay.

Taking that hard look will mean trying to understand the employee perspective – 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 does help when you think of pay from the other side of the desk.  Employees provide a service and you pay them for it, right?  That shouldn’t be the end of the equation, because money doesn’t manage people – you do.

So, do you know what employees expect from managers, and from the company?  Their basic wants and needs have a direct connection to their performance, and their commitment to your organization.

What do employees expect?

While circumstances among individual companies and employee groups might vary somewhat, it is safe 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 high payer, and should avoid the label of “law baller,” but you should ensure that the pay opportunities you provide are consistent with market practice
  • Opportunity to earn more – employees should be aware that more money is available to them, through pay increases, variable compensation, even overtime as appropriate.
  • Regular pay reviews – don’t let employees hang in the wind; avoid the stereotype of employees worrying over how to ask the boss for a raise.  You don’t have to grant anything, but let employees know up front that you’ll be scheduling a review.  Anniversary or focal date is less important than that the employees know to expect a review.
  • Timely and accurate payroll – anything less than 100% performance is a problem, as perfection is guaranteed – especially by those lower paid employees who live paycheck to paycheck.  Payroll providers will tell you that you never hear from the 99%, but only from those with problems.  And the calls are always accusatory.  No one ever has a question about their pay; if something’s wrong, you messed up.
  • Fair treatment – employees don’t like “favored sons” or special treatment cases – especially if the perception is that they are not deserved.   Recipients will become known, so don’t think of putting any skeletons in the closet.

Do you understand these expectations?  Not so earth shaking, are they?  Do they make sense; do you consider them reasonable?  Are they the 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 in some cases lack of action (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 should be based 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 management treats employees as “we” vs. “them.”  Are they 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, these attitudes will become known.

So 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.

International Comparisons Can Get You Into Trouble

Posted by Chuck Csizmar | Posted in Articles, International Compensation | Posted on 16-05-2010

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In recent months several of my US-based clients faced challenges overseas regarding high employee separations coupled with difficulty in recruiting qualified staff.   These companies were at a loss to understand the cause of their problems, as each felt that they were already providing a more generous reward package for employees then was normal practice in the US.

A quick study revealed that the clients’ international employees were indeed receiving a great deal more than their American counterparts.  However, in many areas they were in fact being given no more than the minimum benefit provisions mandated by statutory requirement.  They were receiving only what the company was compelled to grant.  How do you attract, motivate and retain quality staff when the message of your actions is that you are only willing to offer what government regulations say you must?

One client bemoaned having to grant four weeks of vacation upon hire, because it was the law, only to find out later that common practice indicated five or more weeks were the norm.   To employees and candidates they offered no more than what they were required.  By ignoring competitive practice they were now paying the price by struggling to build and keep a quality staff.  They had earned a reputation in the local market as a “minimalist employer.”

When American companies first establish operations overseas Human Resources faces a number of challenges that they are unaccustomed to dealing with at home.  Every country is a separate and unique entity, with differences in HR policies, practices, and statutory requirements, each of which must be acknowledged and addressed in order to develop and maintain a successful operation.  On top of that are the vagaries of the competitive marketplace, where the same job is paid differently from Rome to Oslo to Buenos Aires – usually coupled with differing social charges and benefit coverage.

Choosing to operate under the guidance of U.S employment law and US-based corporate practices is a failed strategy.  Maintaining such a US focus (usually for ease of administration) will bring you grief; grief from your employees, from those you hope to hire, and most of all from local governments whose laws you have ignored or bypassed.

Think how you would feel if elements of your own reward package, policies or procedures were based on European or Asian common practice.   Wouldn’t go over well, would it?

If you decide that your business strategy requires you to maintain a staff presence in a particular country, then I would advise you to treat that operation the way you would its US counterpart; provide competitive terms and conditions that will attract and retain the right caliber of employee in that country – and ignore how their packages might compare with US or other country counterparts.  If you are not willing to make that commitment, from an HR perspective you would be better off not to engage employees in that country.

Let Me Tell You A Story . . . .

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 16-05-2010

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When you’re trying to grab the attention of Senior Management, remember this; they like a good story, especially one with pictures.

If you’re addressing your company’s single largest expense, its employee pay programs, the pictures become charts & graphs that illustrate the points being made.

Pictures capture attention and build memories much better than text or even the spoken word.  Show a picture and the image is locked in, while reliance only on text is a risk.  The drone of dry prose can grow boring and is liable to lose the attention of all but your strongest supporters.

Attention grabbers that work: 1) speedometer style formats that graphically indicate the current situation against the target; 2) the green light, yellow light, red light approach, again to colorfully paint a picture that stays in the mind; and 3) pie charts, tables, even regressed lines that tell a story.

People remember images because they capture the imagination.  They have a harder time recalling (and taking to heart) what you said or what you wrote.  So concentrate on your supportive imagery.

Make the story a short one.  I once worked for a CEO who thought any proposal could be reduced to a single piece of paper, with plenty of white.  “If you need more than that,” he would say, “it’s not such a grand idea.”

You need a plan

However, before you settle on the visual format best suited to sell your case you should focus on the data points necessary to make that case.  Remember the old adage that a dream without a plan is only a fantasy?  If you don’t take action steps to convert ideas to reality, what you’ll be left with is smoke & mirrors – with no results to show for your efforts.

For those of you who have ever been on a diet, you treat it like a project plan, right?  Experts advise that participants write down everything they eat, have goals to strive for and milestones to gauge progress.  It helps to have a plan and to keep score – to know where you stand and where you’re headed.

To accomplish this you should create quantifiable metrics that will collectively illustrate the well-being of your compensation program(s) – and then establish baselines (current state) and targets for each performance indicator.  This key step will help you understand whether your costs are being contained and whether the ROI on employee rewards is at the level your company requires.

Commonly used HR metrics:

  • Average salary / wage
  • Compa-ratios (comparison of pay to a range midpoint)
  • Count of employees per segment (hourly, non-exempt, professional, management)
  • Average performance ratings
  • Average annual pay rise for each performance rating
  • Count and average promotional and “equity” increases
  • Voluntary turnover (employees who decided to leave)
  • Average employee age and length of service

We could go on and on, but you get the point.  Refine these and any other quantifiable factors by further segmentation – per salary grade, employee group, male / female, etc.  Make sure each metric is measurable, because accuracy counts.  A compelling argument demands precision.

To make these metrics work for you, to avoid a series of make-work arithmetic exercises that do nothing more than capture minutiae, be certain to measure what is important to your business – not simply what data you can capture.  Make sure the importance of the metric is clear to management (or can be made so).  Management needs to grasp the importance of success, to understand why the metric is important and what achievement would mean.

Once you have the right metrics established (collectively called the “dashboard”) and a baseline in place, you will readily see where the problems lie.  Then set specific targets going forward to improve these weak areas, creating periodic milestones to mark your progress.

What to look for

Every organization has different pressure points.  However, if your metrics data indicates any of the following situations, management should be informed.

  • Average performance ratings that exceed how the business was rated
  • A workforce where key segments are approaching retirement age
  • Promotion and “equity” increase activity that overwhelms the merit budget
  • Low compa-ratios that indicate you are not paying your salary ranges
  • Any figure that is an unpleasant surprise

When you’re telling a story to management, make it compelling – with facts and pictures that feed off critical metrics analysis that form the pulse of your business.  Then bring home the sale by showing how to solve the challenges being faced – with practical strategies designed to end your story on a happy and successful note.

When Competitive Pay Isn’t Enough

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 07-05-2010

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You’ve seen your company’s want ads and heard the pitch from your recruiters; you offer competitive wages to qualified candidates.  That’s got to be a strong hook for attracting talent, right?

Big deal.

Pay structures are updated based on market trends, so the opportunities offered employees support your retention and motivation strategies, right?

Not enough.

Most employees presume their company is already meeting (or aspiring to meet) the goal of competitive pay.  Companies routinely advertise the practice (“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?

I’m afraid not.

What doesn’t happen when you offer competitive pay is that your recruitment problems do not magically disappear, your employees won’t be satisfied and your compensation programs have achieved little more than being average – and isn’t that a “C” grade in school?  Is that where you want to be?  As far as aspirations go, it’s only middle-of-the-road.

If your company does pay “the going rate”, that means that approx. 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.  Is that what your company aspires to achieve?

No one leaves your company for less money – so all you’ll hear from your employees is about how so-and-so is making more somewhere else.  And as employees only hear what supports their own notions –they 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 being the premier paying company in your market / industry – and can you afford that cost?

Lest we forget, it’s important to differentiate between having a salary structure (grades, salary ranges and midpoints) that provides 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 proud of the fact that their salary ranges were continually adjusted to mirror market rates, but was later embarrassed to discover that actual pay practices fell well below their midpoints.

For their part, employees relate to what they are being paid, not the midpoint of a salary range or other such declared “opportunity”.  To them the company’s “competitiveness” is more illusion than fact; especially if they’re experienced and have been with you for awhile.  Thus the company needs to keep its focus on actual pay vs. opportunity pay.

Why don’t employers pay the “going rate”?  Typically it is not a strategy, but a series of practices that evolved over time.

  • Some candidates will accept a lower rate than should normally be paid for their knowledge and experience, 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 don’t want to pay similarly qualified new people more than existing employees, so the new hires are offered below market pay.
  • Pay-for-performance 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 (and thus marketability) faster than a company’s annual merit system can recognize.  This is compounded when you have to hire a qualified worker and discover that the market requires you to pay more than what you’re paying your more experienced employees.

So, what’s the answer?  Management won’t agree to become the premier payer in your area, so you should consider instilling flexibility into your pay practices.  Consider targeting key jobs (highly skilled, difficult to replace, etc.) and make sure those jobholders are well paid for the market.

Other positions 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 / 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 so – big deal.

The Seven Step Compensation Diet: Step # 7 – Stay the Course

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 01-05-2010

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In our last post we introduced you to step # 6 of the Seven Step Compensation Diet – the need to create quantifiable program metrics.  Such tools are used to help understand (measure) whether costs are being contained, where the problems areas lie and whether the ROI on employee rewards is at the level you want them.

At this point in your compensation diet you’re well on your way to establishing successful cost reduction / effective spend program(s), but your struggle isn’t over yet.  All can still be lost, as most dieters will attest, if you fail to stay the course.

Step # 7:  Stay the Course

Consistency of effort is the key to long term success, whether you are trying to lose a few pounds, save money for your company’s bottom line or build a more effective and efficient organization.

Your success will not be achieved via a quick-fix cure, but through the steady application (repeat, steady) of the constructive re-design steps we’ve been discussing.  You must keep firm control of both the gas pedal (keep moving, keep moving) and the steering wheel (minimize distractions).

By carefully applying each of these steps a side benefit will develop – that of a stronger trust relationship with your employees – demonstrating that management is intent on fair and equal treatment for all its workers.  That trust will take time to grow, and it needs to be nurtured through visible and repetitive actions that continue your message.  Like a steady drumbeat, the continued application of uniform policies and procedures will pay dividends that grow with time.

Your employees should also see that their senior management team is “walking the talk”, adjusting their own behavior to match that of newly trained lower level managers.  Leadership is critical to ensure organizational success, as a shared effort among all employees will invigorate and motivate group activity into doing the right thing.  Conversely, playing with internal politics, favoring special interests and / or displaying executive arrogance (us vs. them) will doom your dietary efforts as employees will lose faith with a message that’s only talk.

It is also worth noting that not everyone will agree that the steps you’re taking are the right choices.  Those who disagree will likely employ one of several tactics in an effort to render your initiatives ineffectual; you should anticipate such reactions and plan your counter-measures.

  • The Naysayers – those who whisper dark thoughts in the hallways and cubicles, shaking their heads with the knowledge that “of course it won’t work”
  • Passive Resistance – offering little in the way of upfront objections, these folks will not actively assist the process but will do what they can behind the scenes to delay, discourage and otherwise weaken your efforts
  • This too will pass – especially prevalent with those who have been around for a while; these folks will sit back, offer neither help nor active discouragement, but will simply wait you out.  They figure that the existing culture will overwhelm your initiatives, especially if support is minimized

Forewarned is forearmed.  Enlist senior management for visible support from above, frequently communicate your positive messages to employees, reward performance over personality, be fair and consistent in your decision-making – and keep at it.

To close out the dietary analogy remember that most weight loss efforts do not work in the long term, mainly because the dieter is unable to achieve long-lasting behavior change.  We all want that quick fix diet pill!  Similarly, if your company is unable to change its practices it will suffer the same discouraging result (cost increases, inequitable treatment and worsening employee relations) as ruinous business practices creep back into play.  You might even be worse off than before.

Or not.  Make your choice.  Get out there and shake things up.  You can do it.  We’ve just shown you how.

The Seven Step Compensation Diet: Step # 4 – Position Control

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 04-04-2010

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In our last post we introduced you to Step # 3 of the Seven Step Compensation Diet – the need to establish written operating instructions for your Managers.  These policy and procedural guidelines will clarify the company’s strategy, educate those making reward decisions and help minimize aberrant behavior and damaging precedents.  Now let’s really get our arms around things.

Step # 4: Establish Position Control

When developing the business model for your company or department the number and type of positions required for successful operations was likely laid down somewhere.  “We will need three of these, five of those, a manager there, etc.”  This Table of Organization (TO) is similar to a floor plan for your business, carefully describing the human factor blueprint necessary for efficient and profitable operations.  The plan creates first critical, and then necessary positions.  You won’t find “nice to have” jobs here.

The trick though, is to stick with your plan.

And of course the problem is that most companies don’t.  For those less careful a slow job creep inevitably slinks in, whereby other titles (or additional headcount) become added that are not on the original TO.

The Chinese have a phrase, “death by a thousand cuts”, which is an apt description of how a company’s fixed costs can grow – one little action at a time.  After awhile you’ll look around and wonder how your cost structure became so bloated.   While there are many culprits, a particularly insidious practice that adds no ROI – only increased costs – is the use of inflated job titles.

Have a care to avoid this nasty virus, a subtle backdoor practice that needlessly increases only costs – not value.  These are typically additive positions with incremental titles like Senior, Lead, Assistant, etc., where the job description barely changes at all.  Or they may take the form of important-sounding titles that really mean something else. My personal favorite is the First Impressions Manager, who is really the Receptionist.

If management feels that they need to offer an employee a more expansive title, remember that job holders will soon claim that such titling deserves greater reward (higher grade, higher salary range, increased base salary).  Again, more cost with no ROI.

The process of Position Control is like an old-fashioned girdle for organizations.  It forces you into shape, to control the number and function of jobs within your organization.  Here’s what you do:

  • Understand what jobs your business requires (as compared to wants), and the number of positions (employees) per job
  • Allow only those approved jobs and that amount of headcount to be filled
  • Establish strict procedures for recommending and approving changes to the job list

Some companies tag each position (headcount) with a unique code, to better track where employees are being placed.  For example, you may currently employ five senior engineers, but perhaps your organization only requires four.  “You are where you are,” the Brits would say, but once you know the problem you can plan remedies.

The Position Control process can help you re-establish and then maintain the organizational requirements you need for operational success.  This process will help educate managers on the difference between required and superfluous jobs.

Make sure you have complete and accurate job descriptions, and then hire / promote to those specifications.  A critical test is that you fill only required jobs, not simply because an employee has gained certification or additional experience.  If the business requires four senior engineers, paying for a fifth delivers no additional ROI – only higher costs.

Begin with the low-hanging fruit.  Start a spring cleaning campaign by first eliminating from your systems any position title without an incumbent.  Then nip the backsliding problem with procedures that tighten up the new position approval process.

Congratulations!  You’ve moved from the planning and consideration phases to actually having a cost impact.  Well done.  Now, stay the course.

The Seven Step Compensation Diet: Step # 3 – The Guidelines

Posted by Chuck Csizmar | Posted in Articles, Universal Compensation | Posted on 15-03-2010

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In our last post we introduced you to Step # 2 of the Seven Step Compensation Diet – the need to lay out in your mind the general theme of how you plan to reward your employees.  Without such a governing plan or broad strategy individual manager actions will continue to push your reward costs upward at a rate greater than anticipated or desired.

At the same time, if you don’t know where you’re going (i.e., the Yellow Brick Road), any path will take you there, and odds are you’ll end up right back where you started.  So you had better set up some signposts along the way.

Step # 3: Prepare Compensation Guidelines

By “guidelines” we mean a series of written policies, procedures and how-to instructions that guide your management in dealing with compensation / reward issues.  These compensation policies, programs and procedures should reflect and support the strategies you developed in Step #2 – The Strategy.   Commit them to writing and distribute widely to managers and employees.  Have everyone get the word and don’t let ignorance become an excuse.

This primer should be the policy and procedural instructions your managers will rely on when called on to make spending decisions.  Educating your managers on the tactical application of your company’s pay programs is a critical step; one that will help modify actions and decisions in a way that will support and encourage the enduring change your organization needs.

As you would anticipate, left to their own devises Managers tend to fill an information vacuum (no guidelines) with precedent-setting decisions that will increase costs, foster inequitable treatment and over time alienate segments of the population.  Guidelines (or rules, if you’re strict) serve to rein in these ineffectual leaders by establishing parameters to their freedom of action and limits to their authority.

While aberrant behavior by rogue managers will cost you in terms of money, morale, and productivity,  giving managers policies and procedures to operate by will save you money, as well as time and trouble.

A suggested Table of Contents might look like this:

  • Compensation philosophy (Role of compensation function, pay for performance, compensation strategy [as available])
  • Brief description for each of your direct and indirect pay programs
  • Step-by-step instructions to process every type of pay change
  • Approval process for every type of pay change
  • Hiring, promotion and pay adjustment procedures
  • Administrative issues (pay dates, overtime, new positions, job evaluation, etc.)

You should create a greater visibility for the inevitable exceptions-to-the-rule by establishing a one-up approval process.  Such a technique will highlight remarkable performance through transparency of reward.  If you include templates and sample forms you can help ensure consistency of message while assisting managers to administer the reward programs.

When you shine a little light into those darkened, special interest corners the employees will notice – and applaud.

Having a rulebook-of-sorts will also help provide standards and structure to your reward programs, which in turn will foster greater employee engagement.  As you begin to improve how reward programs are designed, implemented and now communicated you will inevitably:

  • Reduce your overall labor costs
  • Increase effectiveness of money spent
  • Increase ROI of reward dollars
  • Improve morale, engagement and productivity

Final note: Make sure that all managers receive a copy of the compensation guidelines, and then periodically update and use them.  Refer to them constantly and let employees see that they are to be followed.

Let no dust gather on these pages.

Why Managers Don’t Manage Pay

Posted by Chuck Csizmar | Posted in Articles | Posted on 02-09-2009

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When an employee is promoted to their first manager’s position, they are given the proverbial Keys to the Kingdom – your company.  They now have the authority to spend your company’s money.  From hiring, to promotions, to salary reviews and equity adjustments they are now able to make the decisions that directly impact (increase) your labor costs.

However, most of these managers turn out to be, at best, well intentioned amateurs at the process of making pay decisions that are appropriate for the needs of the business.   Fresh from being anointed they often lack the basic internal education necessary to make business vs. emotional decisions – and their actions commit you and the company to costs that may not be in your company’s best interests.

Actions taken by these managers not only increase direct costs, but often irritate other staff members as the circumstances become known, creating morale and internal equity problems at the same time.  The net result is usually a corresponding lack of engagement and ultimately separations by disenchanted employees.

Note:  Most employees leave managers, not companies.  Thus actions do have consequences.  Likely this is not what you envisioned when you made that promotional decision.

Now, how did (fill in the name of your company here) get themselves into this mess?

First of all, no one *really* trains managers on how to properly attract and reward employees via base salaries and incentive pay.

A few anecdotal examples:

  • Just because some bloke is a good “XYZ Operator” does not mean they will be an equally good “XYZ Manager”.  The skill sets for success are dramatically different.
  • How many managers understand your company’s philosophy about pay?  Do you?  How many understand the workings (the what and the why) of the company’s pay practices and methodology?  These are the folks responsible for spending 40% to 60% of your revenue in the form of employee pay, and even the most well-intentioned is prone to make mistakes.
  • Managers want to be liked; they do not wish to pick favorites, do not want to discriminate on the basis of performance and definitely do not want to have their decisions challenged.  They would rather point a finger at HR and assign the blame to them for having to assess performance and distinguish one employee from the other.  Left to their own devices they would give everyone as much as they can.

If you were a high performing employee, would you like to work for this sort of Manager?  If you were coasting at work, barely putting your time in, would you want to work for this sort of Manager?  Which sort of employee do you think will eventually tire of being undervalued, and quit?   Leaving the Manager with a staff of . . . .  You get the picture.

Ineffective managers are always afraid that an unhappy employee will decide to quit, but that is usually a selfish thought.   Their prime concern is more often what your departure would mean to their deliverables, to their reputation as a manager.  Your departure is typically viewed as an inconvenience to them, not an avoidable loss for the company.  A reflection of this is when managers resist a transfer that is clearly in the employee’s career interests.  The manager’s concern is how that transfer affects their department – and whether their personal success becomes that much more difficult to attain.

Ineffective Managers can be a defensive lot, challenging attempts at reform.  Why?  Because of their fear that spotlighting reform action will demonstrate their ineffectiveness (make them look bad), and that is unacceptable.  Typically their advantage within the company is that the more ineffective the manager, the stronger their political connections.   And as senior management oftentimes surround themselves with those most agreeable to their own way of thinking, it’s not surprising.

Assuming the company’s willingness to make key decisions and the presence of the all-important support from senior management, companies can correct the problems that they’ve created.  They can:

  • Select candidates for management positions on the basis of their skills / potential for actual management (dealing with people, managing projects, business-oriented, professional demeanor, etc.)
  • Educate Managers in the philosophy and methodology of the company’s pay programs, ensuring that this information is shared with their staff
  • Construct job specifications that call for a Manager to manage, as a prime accountability, limiting or even eliminating the retention of individual contributor responsibilities.
  • Measure and reward the performance of the Managers  primarily on the basis of how they have actually managed their employees, or on the performance of their unit
  • Encourage Managers to develop the potential of their employees, to the point that a staff member being promoted / transferred upward is a mark of success for the Manager
  • Ensure that procedural checks and balances are in place to ensure that pay decisions are reviewed by at least one higher level
  • Hold Managers to an annual salary budget; let them develop the budget and monitor / adhere to it during the year

Consider the above as a checklist that can be used to test your company’s vulnerability to wasted money, employee morale problems / turnover and avoidable cost increases.

Would you be comfortable with how your own company would score?

My advice to clients is to face these issues straight on, to implement policies & procedures that save money without penalizing high performers or mistreating their employee base.  But the challenge will always remain, as there is an inherent reluctance on the part of many managers to make the tough decisions, because we do want to be liked, we do like to give good news, and we do not like to play judge and jury with an employee’s career.

But that behavior is not managing is it?