Do you remember this line from the movie “A Few Good Men?”   Jack Nicholson’s character was telling Tom Cruise’s character that average folk couldn’t deal with the harsher facts of life.  As a result higher ups would tell them what they wanted to hear.  They would offer excuses, verbal hedges that sidestepped reality and offered the illusion of comfort.

Today we remain stuck in the mire of a severe economic malaise, a situation that is causing enormous employment anxiety, deep concern for the future and perhaps more than a few sleepless nights.  As organizations ponder the question of whether employees can handle the true state of affairs (health and future prospects) they can choose to deal from either the top or the bottom of the deck with their internal communications.

The troubling issues raised could be pending layoffs, reduced or frozen pay increases, hiring freezes, reorganizations or other such “bad news.”

Management messaging can either be straightforward regarding current events – addressing the cause of problems and how economic circumstances would likely affect employees – or they could toss out a series of artful communication hedges (i.e. excuses).  In other words, employees could be fed “corporate-speak.”

Corporate Speak

By this I mean a headquarters-generated sleight-of-hand communications effort, typically prepared by smooth-tongued professional writers instead of subject matter experts.  The prose, approved by corporate legal to insure that no liability is stated or implied, minimizes the negative and accentuates the positive.  The intent is to say little of substance, while at the same time making a self-congratulatory production of their communication efforts.

Content in these communications is usually a combination of feel-good phraseology intended to instill a sense of confidence.   The target of the communications is expected to walk away feeling that, whatever the problem, management is a) doing the best they can, b) not at fault, c) continues to have the interests of the employees firmly in mind, and d) will be providing more details soon.

When these officious corporate pronouncements inevitably provide little in the way of satisfactory answers, most employees turn to their direct managers in an effort to obtain straight information.  However, when the going gets rough (challenging, complex, contentious), many managers will waffle, dribble their thoughts, obfuscate and start to make their own excuses.  They may even point a finger in the direction of Human Resources.  Poorly prepared managers have difficulty facing issues important to employees without trying to pass the buck.  Employees want to know the why, the what next and what about me?, but managers are rarely equipped to offer an effective response.

So when the straight story is not forthcoming, employees will tend to read between the lines and form their own perceptions of the company message, and that perception is less reliable than the grapevine for spreading accurate information.  It is also more skeptical.

What employees “hear” can usually be generalized by the following attitudes:

• “Where are they going to go?”: Employees are trapped in their jobs and have little choice but to remain, because other jobs will be hard to find.  Management has implied, “We don’t need to do anything for them.”

• “Everyone else is cutting back, so we have to as well”: This trite phrase only gets dragged out when the circumstances being described save the company money.  Has the “everyone else” phrase ever been used to support giving something to employees?

• “In anticipation of difficult economic times ahead we are forced to / reluctantly / have no choice but . . . “: This is a pre-emptive strike while the sun is still shining.  It’s a particularly onerous practice if rewards for past performance are cut, and is often viewed by those on the receiving end as a breach of trust.

• “We employ average workers, so they should be satisfied . . .”: Perhaps an after-the-fact rationalization, but sometimes your senior leadership feels that most employees can easily be replaced, like a commodity.

Not surprising, the reaction to such doomsday communication efforts is always negative, planting seeds in your workforce for a bitter harvest of lowered morale and increasing disengagement.

• The ineffective message lacks credibility with an increasingly skeptical audience, as does the messenger and the organization behind it

• As insincerity is recognized employee listening (and attention) stops – like shutting off the TV – so the communication effort is wasted

• Engagement and performance levels drop as trust, confidence and loyalty erode and employees start to ask themselves, “why bother?”

• The supposition gains traction that the company is lying, holding back or not telling the whole story.  It is hard to see the glass as half-full when attitudes have soured.

On the other hand, when the message is honest, straightforward and without guile the opposite reaction tends to occur:

• Organizational credibility is strengthened

• Company loyalty is fostered

• Engagement levels and management support are strengthened

The implication is clear:  employees can handle the truth, should rightly expect it from their employer, and will not take kindly to bland corporate-speak.   So don’t get caught making excuses; it didn’t work when you tried it with your mother, and it won’t work with your employees either.

One of the most debated issues among Human Resource professionals for the past several years has been the back and forth arguments regarding effective performance appraisal processes.  Everyone seems to have their oar in the water, anxious to join the debate about what works and what doesn’t.

What companies should do, and what they shouldn’t.

In one corner you have the performance management crowd who want to divorce pay increases from the performance appraisal process.  Two separate discussions.  They prefer to focus attention on performance improvements and career counseling – issues that tend to have a longer term focus. Looking forward, not backward.  The subject of pay determination (the increase) would come later, during some vaguely defined subsequent conversation.

In another corner you have the so-called traditional practitioners, those who tie rewards directly to the work effort and in doing so tend to combine performance, reward determination and career counseling steps into a single conversation.  Performance improvements and the where-are-we-going? discussion are the epilogue here, not the main topic.

And finally you have the employee perspective, those who have delivered the performance and await management’s assessment and reward determination.  They want to see, and expect to see a direct connection between their efforts (performance) and a subsequent connecting reward (pay increase).

What’s wrong with performance appraisal?

Part of the reason for such active and long lasting debate between often opposing viewpoints is that performance appraisal systems are flawed; we all recognize that they are the object of numerous well-deserved criticisms.

• Managers do a poor job of it.  Whether it’s lack of training, lack of interest or simply an attitude of “I’ve got more important issues to deal with,” the result is often rushed, inadequately thought out and . . . short.

• Should pay increases be tied / linked with performance?  Appraisal conversations run the gamut from emphasizing the past review cycle’s performance to “looking forward for a more productive tomorrow.”  The cause-and-effect pay increase may or may not even be discussed.

• Favored son (or daughter) treatment.  The “I like you” or opposite syndrome, regardless of performance.  Fair treatment can be a casualty if appraisals are too subjective.  Refer again to the training issue.

• Job responsibilities not clarified. When the manager expects performance “A” and the employee thinks “B” is called for, and the outdated description shows a muddled “C” – what follows is going to be an awkward conversation.

• Forms gone wild.  Human Resources and systems people always tinkering with forms, creating ever longer, more complicated processes.  The usual result is a manager’s passive resistance and poorly handled assessments.

• Process evolution.  A good idea evolved into something bad, something feared, something to be avoided.  Other than the potential for a pay increase, almost nobody looks forward to these discussions.

• The focal date review.  “Let’s do these things all at once.”  Procedures that mass produce performance appraisal forms and meetings usually result in a loss of quality – and credibility for the process.  Pity the manager who has ten of these to work on at the same time.

What’s good about performance appraisal?

The process of performance appraisal has been around since the first manager – subordinate conversation, and that learning curve of experience has brought about a number of solid advantages:

• How else are you going to tell an employee how they’re doing?

• If your compensation strategy is to have a pay-for-performance program, you’ll need performance appraisal to assess the employee’s contribution, and to somehow assign a corresponding reward – to pay . . for. . performance.

• Employees expect a connection between performance and pay.  That’s what they’re listening for during the performance discussion.

• It makes sense to periodically review performance, to eliminate the need for employees to stress over when to ask for a raise.

During any performance appraisal discussion the employee’s first question (asked or simply thought) is always going to be, “how much is my raise?”  If you’re not prepared to discuss that, even mentioning your “recommendation,” you’re in trouble.  Because employees tend to pay closer attention to career counseling and next performance steps after the raise for past performance has been resolved.

When an employee expects a performance appraisal discussion to include a reference (at least) to a likely pay raise, and you don’t cover that topic, the meeting will go rapidly downhill from there.

• They won’t be hearing your thoughts for the future, as they’ve stopped listening.  You’re not talking about what they want to hear.

• Frustration and lost engagement are going to seep into body language, tone and perhaps even conversation, with the recognition that pay-for-performance is somehow not viewed as a primary concern by management (by you).

• To make the assessment process work employees need to be engaged in the  conversation.  Otherwise what you’re left with is delivering a lecture, a boring monologue to a half-interested party who only hears bla-bla-bla.

What do I think?

I like to connect rewards with performance, because performance rewarded is performance repeated.

I like to acknowledge the elephant in the room, that employees want and expect that their performance appraisal meeting would cover reward determination as a key component, even if senior management approval remains pending.

I don’t like to artificially separate performance from reward, as if somehow the two aren’t connected.  The employee considers it a solid, direct line connection.

Go ahead and disagree, if you like.  There are many valid points of view on the subject, and no single answer works every time, for every organization.

But now you have my two cents.

Really?  Seriously.

Sometimes a warning flag needs to be waved more than once.   Because sometimes the decision-makers out there just don’t get it.   After all, goes the wide-eyed and innocent lament, what’s the big deal if you give an employee a bogus title?  Is anyone being harmed?  It doesn’t cost anything, right?

Some Human Resource advocates even claim that offering an employee a special title is a harmless and inexpensive reward, one that doesn’t raise employer costs.  It’s nothing more than a feel-good gesture.   It also raises the morale of affected employees.

I don’t think so.  So pay attention to the red flag I’m waving.

Why does this happen?

• Managers grant esoteric titles to those for whom they have limited means of reward.  “I can’t give you the increase you deserve, so let’s change your title.”  Like greasing a squeaky wheel for a short term fix they want to do something to keep the employee quiet.

• Employees are given opportunities (titles) where none should exist.  Have you experienced the long serving Secretary / Administrative Assistant promoted to Office Manager, while performing the same job?

• As a salve to employees a “special” title is used because the position (usually clerical) is considered so different from other jobs that it needs to be specifically identified.  Special titles can also be seen as reflecting on the importance of the managers themselves.

You Can Reap A bitter harvest

Let me explain what you can expect from planting these problem “seeds.”

• Role clarity (job duties, business impact, decision-making, etc.) behind questionable titles becomes blurred.  This in turn generates more confusion as the company creates Senior Managers and Group or Area Directors and other in-between titles to differentiate the “real” jobs from inflated titles.

• When attempting to determine market competitiveness the less accurate the title is in relation to the work performed, the more likely your analysis will be skewed.  Benchmarking unique, employee-specific and inflated titles hampers an accurate assessment of your competitiveness.  This could have real cost impact.

• Those with inflated titles will expect the perks or privileges that accompany the title, and their absence could cause difficulties.  What do you think went through the Receptionist’s mind when her title was changed to “First Impressions Manager?”  It’s an awkward conversation when you tell an employee that the import of their new level in the organization is “title only.”

• Inflated titles can be a detriment to incumbents as well, such as the “Director” who now only qualifies for a “Manager” title with a prospective employer.  These employees have limited opportunities outside your company because other employers would be reluctant to hire someone where the title is lateral or even backward to what they currently hold.  The result could be that mediocre performers remain with your company.

• The natural extension of inflated titles is inflated grades / salary ranges, as the bogus “senior” position would be placed in a higher grade than the “intermediate” position.  This practice will gradually increase your fixed costs without a corresponding rise in either performance or capability.

• Employees don’t like giving up inappropriate titles.  Thus employee relations issues will likely develop if you try to correct past practices.  You may have to develop creative “buy out” scenarios or grandfather employees.

What to do

If you are in a situation with inflated, redundant and confusing job titles, what steps can improve your lot?

• Organize a cleaning exercise: start with the low hanging fruit by eliminating all questionable titles that are unoccupied.

• Accompany that initiative by implementing tighter authorization procedures before a “new” title is created.  This would cut off the flow of new problems even as you address the core issue of incumbents.

• The company would need fewer job descriptions if the wording was more generalized.  Standardized titles would clear away much of the role responsibility confusion.

Fewer titles provide greater role clarity for your organization, improved accuracy in assessing pay competitiveness, more control of labor costs and higher morale as employees know where they stand and what they must do to succeed in your organization.

A final caution: be careful of setting up titles without occupants, ”in case we want to promote someone down the road.”  Guess what?  You will.

Over the past three years a litany of bad economic news has been the daily fodder of economists, corporate managers, the politicians and of course the media pundits.  Collectively we have slogged our painful way through reductions-in-force (RIFs), wage freezes, hiring freezes, benefit cutbacks and in general having to do more with less while we looked over our shoulder for the next axe to fall.

And of course we’ve all experienced the painful shrink of our 401k down to a 201k.

So there hasn’t been a lot to smile about.  But perhaps this is finally the year when the freeze starts to thaw, just a bit.  Salary increases are slowly trending upward toward pre-recession levels, according to first results coming out of the latest WorldatWork Salary Budget survey.

• Salary budgets increased by 2.8% in 2011 and are projected to rise by 2.9% in 2012.  Not much, but in the right direction.

• Base salary increases were awarded to 88% of employees in 2011, vs. 86% in 2010 and only 80% in 2009.

• Only 3% of employers are planning across-the-board salary freezes in 2011, vs. 10% in 2010 and 43% in 2009.

So much for the good news

Given all that employees have suffered through is it any wonder that those still employed (and especially those under-employed) are cynical, agitated and teeming with unresolved anger over their treatment?  How many have heard the attitude voiced by “where are you going to go?” or “you’re lucky to have a job.”  Attitudes like that stay with a person, and they burn deep; those phrases are remembered, to be acted upon when the time is right.  Because the worm will eventually turn.

The clock is ticking for organizations who have mistreated or taken advantage of employees on the back of the bad economy.

What are we seeing now?  While the economy continues to sputter along this year amid mixed labor reports and market volatility, US employee confidence related to pay raises, job security and the labor market fell to levels last seen during the height of the 2008-09 recession, according to the Glassdoor Employment Confidence Survey.

According to their report, 48% of employees reported that they did not expect to receive a pay raise in the next 12 months – the highest level of negativism seen in almost two years.  On the other hand 36% do expect a raise in the next year, but that figure is down 4% since the same time last year.

They don’t like their jobs either

Mercer reports (What’s Working Survey) that 32% of US employees are seriously considering leaving their organizations, up sharply since the 23% from the good times of 2005.  Meanwhile, a further 21% were not looking to leave but viewed their employers unfavorably and had rock-bottom scores on key measures of engagement, reflecting diminished loyalty, commitment and motivation.  So you have 44% of employees actively dissatisfied with their job and their employer.

How many of those do you think are silent about their discontent?  How many are your better performers?  How many can you afford to lose?

Overall scores were consistently down across critical engagement measures, while intention to leave was up across all employee segments.  The youngest workers were most likely to be considering the exit: 40% of employees aged 25 to 34 and 44% of employees 24 and younger were thinking about leaving.

A lone light in the window?

One hopeful light in the gloomy picture I’ve just painted is an uptick of activity in market pricing studies commissioned by management.  Even with an uncertain future ahead more and more organizations are coming to the realization that you can’t hold down employee pay forever.  At some point you have to move forward, or risk seriously damaging morale and forcing a mass exodus of talent toward the first competitor who says “Come work for us.  We value you, and we’ll treat you right.”

Of course, studying the marketplace, understanding how competitive pay levels have changed over the last few years is not a solution in itself.  Companies can still decide not to take action.  They may still not be able to afford to take corrective action.  But at least more of them are asking the questions, which means more are growing worried that this leaner workforce of theirs needs to be valued and rewarded competitively for their efforts.  Just like companies did before the great recession.

But the clock is ticking; employees are growing less patient.  Those who have options to leave are already starting to do so.  Be careful that those left behind are not merely a combination of “average” performers and the unmotivated who only occupy a chair.

I once supervised a Compensation Analyst who had spent a great deal of time attending professional seminars and workshops.  She had attended these instructional sessions to learn about Compensation, as part of her professional development.

One result of that education was a favored response when faced with a challenge at work; she would fall back on her class work experience by saying, “the greatest minds in Compensation say that . . . “.  It took a great deal of patience on my part to educate this part time practitioner / part time student in the difference between the classroom / textbook answer and the reality of the workplace.

A short while ago I came across an HR blog in which the author was instructing readers in how to create a merit performance matrix.  Very good stuff, I thought, admiring the technical step-by-step instructions, except I knew from long experience that the procedure being described would never work in the real world.  Didn’t the author realize that?

Yes, it is very important to understand the technical foundations of Compensation methodology and practice.   But first and foremost you need to anchor yourself in the real world, to know what will work and not work in your own organization, what will be accepted and what will be rejected – no matter what the finest minds in Compensation think.

So you ask, why doesn’t Compensation theory match with compensation reality in the workplace?

• Business realities:  management will typically know more about a particular business situation than you do.  What you are able to provide to the decision-making process as a Compensation professional is limited to your particular subject area, while management usually has the bigger picture – the perspective of multiple viewpoints. Your compensation advice may not fit their business reality, no matter how logical an argument you make.

• Bias of decision-makers:  decision-makers may feel that they intuitively know the right approach to take (they’ve done it before, if-it’s-not-broke-don’t-fix-it, a friend / relation / old college chum suggested an approach, etc.).  Perhaps they read an article just the other day and now are insistent to follow the advice of an author who doesn’t have a clue about their particular business.  Years ago I worked for a company whose CEO forced HR to implement a particular benefit plan because he had read a magazine article.  It does happen.

• Problem avoidance:  short of killing the messenger, one solution for management is to do nothing about a problem (you’ve exaggerated it, the solution costs too much, there’s still time, etc.).  Senior managers can be like politicians in avoiding the big decision unless and until it bites them in the leg.  Have a care, as it can be dangerous to your career if you try to force a decision.

• Business culture or model: some initiatives just don’t “fit” in your organization.  Managers with a laid back organization style will not be interested in recommendations to document everything, standardize policies and procedures and have approved forms for every possible use.  Picture your head banging against the wall.

Sometimes those subject matter experts who instruct in Compensation techniques fail to ground their instructions with a caution to their students;  check this process out in the reality of your workplace before you take a classroom or textbook technique and wave it in the face of management.

Two examples:

1)      Merit matrix:  when designing a pay-for-performance merit increase matrix the standard rule is to place the average increase percentage in the cell block most populated by employees (average performance and average position-in-range).   The sound reasoning for this technique is to better manage the costs associated with that year’s annual increase process.

A long time ago I followed that approach in my first compensation leadership role.  I still have a little bump where my head hit the wall.

Here’s the rub; such a technique requires that the matrix change every year, as the analysis demands that each year you study your population averages.  But management will likely have none of that.  They’ll want the same matrix every year, for ease of administration and communication.

2)      Cost of living as a basis for pay increases:  I once watched over a fascinating exchange on a Compensation bulletin board, where a debate raged on for several days.  The dispute was over the appropriate formulae to use for calculating the cost of living vs. cost or labor as it affected average pay increases that management would approve.  Each side of the argument provided formulae, charts and graphs and quotes from notable experts to press home their opinion.

The underlying reality behind this exchange is that management does not use the cost of living as a prime determinant in their decision-making.  They are more likely to roll their eyes at the technical debate and focus on competitiveness and bottom line cost (affordability) – and why can’t we do the same as we did last year?  If their ultimate decision relates to the cost of living in some way, that’s only a nice coincidence that they can use with their employee communications.

A skill-set that separates the compensation technician from the compensation professional is the ability to deal with what I call the “softer” side of compensation.  Survey statistics, charts and formulae are very good to a point, but management will want to know what it means and what to do about it.  So the answer isn’t simply reporting the data, but in taking that next step to help management understand and strategize their next move.

The contribution you can make to your organization is to blend your technical knowledge (the how-to) with seasoning and experience to understand what will work for your organization, considering culture and management bias.  Technical knowledge will give you the same answer every time, but knowing how to use that knowledge like a craftsman’s tool to aid in achieving business objectives – that is the key to success as a Compensation professional.

Are the employees in your organization informed of their salary grade, or of the minimum, midpoint and maximum values of their salary range?  Do they know where their job stands in the company’s hierarchy (mine is bigger than “x,” but smaller than “y”)?   In effect, do they know how they and their job are being viewed by the company’s compensation program?

If they don’t, why not?

Is this privileged information, tightly held by Human Resources and only doled out in small drips, when asked?

Is it a secret?

Some companies don’t tell an employee their grade or salary range; or if they do, that’s all they give – the employee’s present status as a single, unrelated piece of information within a huge jigsaw puzzle.  In such a case the employee is unable to find out the grade or salary range of any job other than their own.  Without a frame of reference, such a restricted disclosure is not very helpful in planning that next career move.

Employees also won’t know if they’re being treated fairly.

Limitations on disclosure are strictly for the benefit of the company.  No one will say that the employees don’t want to know, or that such information isn’t important.  Instead,  reluctance to disclose is inherently a management decision meant to advance tactical considerations in support  of their own agenda.  In other words, it helps management freedom of action when employees are kept in the dark.

But what’s such a bad idea with informing employees about the broader compensation structure, to let them know where they stand within the organization?

• Unless there’s something to hide

• Something the employee should not discover

• Some policy or practice that cannot be defended

Given these potential cautions, while the concept of open disclosure often gets the heads nodding as a grand idea, negative practical implications may point in the opposite direction.  It’s the old “but not for us” ploy.

What could go wrong?

When the pay structure is posted on the wall for the first time, there for everyone to have a look-see, the phones will start to ring.   That signals the start of the “what about me?” questions.   Let’s look at a few common scenarios that managers would dearly love to avoid hearing about.

• If the midpoint is 100 and the employee is at the minimum, say 80 (-20%), even after five years of good performance reviews, how does the manager explain that?

• Why is that job (point at anyone) in a grade higher than mine?  No manager wants to defend job evaluation results, especially as it’s an inherently subjective process.

• Why is the job I want to bid on only a lateral move for me?

• If my job is so important (manager said so), then why is “job x” in the same grade?

Management doesn’t want to get these calls, because often times they’re woefully unprepared to answer the employee’s questions.   And they want to be liked, to have someone else be blamed.  So wouldn’t it be easier if the employee just didn’t know?  Wouldn’t it be easier to operate the business with employees left in the dark about their grade and salary range status, rather than face potentially awkward questions out in the light?

It does make sense, but for who?

How many of you reading this article have a piece of paper that you can lay your hands on, one with the title, “Compensation Strategy”?  Or, do you know if such a document exists in your organization?

The common response at this point is usually a blank look.  But why is that?  If paying employees is the single largest expense item for most organizations, why don’t they have a plan to manage it?

Because that’s what a strategy is, – a plan of action, a guideline or directional map that lays down a series of principles to be acted upon.  A plan helps you avoid the “let’s try this and see what happens” tactic.

Look around you; if Marketing has a plan, as well as Manufacturing and Finance, and of course you have the Corporate plan – then why not a plan that encompasses how to spend a lion’s share of the organization’s money?

Of course, when prodded a bit, most do seem to come up with an answer to my question – though they often sound reactionary, if not defensive.

• “We already have a Mission Statement.” But broad, aspirational phrases like “market leader,” “shareholder value,” “supplier of choice,” etc. are little more than a series of vague terms and buzz phrases meant to capture media attention.  There is no meat here.

• “We know what we want to do.” As if the plan for effectively and efficiently spending the organization’s money is somehow intuitive – that everybody knows it.  Sort of like a secret plan.

• “We use our annual objectives.” A claim that annual organization or department objectives are in fact the strategy – offers little more than short sighted thinking often vulnerable to swings in corporate focus.

So what we’re often left with are excuses, not effective responses.

The importance of strategy

Then what should be the focus of a compensation strategy?  And why is it helpful for an organization to lay down a tactical plan, a well-considered outline for present and future action?  Because . . . .

• It provides specific, motivating direction.  Having a plan establishes a pathway for action – for what you intend to do – and it helps point everyone in the same direction

• It helps guide and engage the workforce. Telling employees what you believe in, and how you intend to convert those beliefs into concrete action always pays dividends in the court of employee opinion.

• It identifies the focal points. It focuses attention on key program design elements (such as competitiveness, specific marketplace, pay-for-performance, cost sharing, etc.)

• It helps leverage the company investment in people. It makes a commitment to employees regarding how they will be treated, thus elevating their worth as a true asset important to organization success.

• It brands the company in a positive light and helps recruit talent. A compensation plan provides an opportunity for the organization to identify itself in a way that attracts potential employees.

So, if one accepts the importance of a plan for controlling costs and managing the effective and efficient use of payroll dollars, what are the barriers that stand in the way?

• Senior leadership disagreement. Lack of consensus over what to say (broad vs. focused, basic Compensation vs. Total Rewards, commitments vs. aspiration, etc.) stymies progress as the debate could take on a life of its own

• Vaguely worded messages.  Using generic phrases that are vague and meaningless, which don’t differentiate you from any other organization, or puffery and “mom and apple pie” phrases that sound great but mean little

• Ineffective communications.  Fears of raising employee expectations, high brow corporate-speak messages that employees ignore, and cultural insensitivities on a global playing field all serve as minefields for the unwary.  These are usually compounded when the message is prepared by professional writers little versed in the subject matter.

What if you do without?

Sounds like a lot of trouble, doesn’t it?  So why not do without?  Others have; so could you.

Which would then leave your single largest expense – employee pay – without a guiding principle, without a plan to ensure that such a large amount of money is spent in an effective and efficient manner.  Money would be wasted, like a steadily dripping faucet  – or a flood if you’re not careful.

Without a standard universal message the risk of multiple messages rapidly increases.  The information being communicated gets confused, blurred and often at odds between the messengers themselves.  Plenty of room then for inconsistent and inequitable treatment.

You would see your employee costs rise as a direct result of a no-plan environment.  Because the vacuum left by not having a plan will be filled by multiple pay practices that lack consistency, standards and internal equity.  Squeaky wheels and political insiders will be favored.

This is not for the faint of heart

Developing a compensation strategy is not an easy process, and even the strongest advocate would acknowledge the challenges to be faced.

First of all, building a consensus philosophy and message among senior management is a difficult, and often time consuming endeavor.

You should also expect a degree of passive resistance from naysayers and supporters of the status quo.  Or from anyone else who would benefit from your failure.

So in order to push the project across the finish line you will need the active support of senior management.  This doesn’t mean the lip service memo authored by professional writers, or even a brief appearance at a kick-off project meeting.  Organization leadership needs to be seen as effectively leading, pushing this initiative, walking the talk, so to speak.  The strategy needs to have a highly placed sponsor, one whose support is visible and easily heard.

And you will have to keep at it, too.  Monitoring adherence, updating as necessary and constantly reviewing that policy, procedures and practices remain in sync, mutually supportive and offering employees a consistent message is no small task.

It’s a lot of work, but worth it for the organization and the employees.

We’ve all seen the comic strip cartoon where an employee gets themselves pumped up to ask the boss for a raise.  It’s often good humor, and always at the expense of the bumbling employee.  They always seem to get it          wrong, and we the reader have a good chuckle as the payoff.

But how often do we look at that same scenario from the manager’s perspective?  Not much humor there, I’m afraid.  An awkward conversation with an employee rarely is.

In reality most companies of any size have a regularly scheduled performance review for their employees, where past performance would be assessed and a likely pay increase granted.  Usually the two are connected.

When an employee request for a pay raise comes between the review cycles, a common response is to tell the employee to wait until the scheduled review. That’s why a review is scheduled in the first place, to make sure an assessment of performance and pay does take place for all the employees.  Everyone gets treated the same.  If that wasn’t happening, everyone would be asking for the same special consideration and the company’s annual review cycle would be thrown out the window.

So much for the easy part.  However, the greater challenge is when such an off-cycle request comes in the form of a disgruntled employee who feels that they are being short-changed in some way, taken for granted or otherwise being (in their minds) grossly underpaid.

Handling the angry employee

In this case telling them to wait won’t do; you have to deal with the emotion of anger, as well as the growing cynicism that the company has been talking advantage of them, for pay purposes, for some time.

And you can be certain other employees will have their eyes and ears out for what is happening – and the respect you show for the employee.

While each conversation with an employee can be a unique experience for both parties, consider several pointers that might help you and the unhappy worker.

• Remind the employee that there is a process.  Always start with the reminder that the company does review performance and pay levels, that there is a process.  No one is being forgotten.

• Get them to talk about their qualifications.  You still need to let the employee have their say, but try to steer the conversation toward the employee’s own capabilities, background and experience.

• Do not address emotional issues like need.  That’s a slippery slope that pulls the conversation away from business and into the grey area of personalities, home life and pressures from outside the work environment.

• Keep the conversation about the employee, no one else.  While you’re willing to discuss how the employee facing you is being treated, you should not open the conversation as to how other employees are being treated.  There are too many variables at play here, but perhaps most important is that it isn’t any of the employee’s business – as long as they themselves are treated correctly.

• Show an open mind.  Never give the impression that you’re only going through the motions, offering only a “courtesy” meeting.  You need to genuinely listen, ask questions and show the employee that you’re prepared to listen and consider.

• Don’t get defensive.  Avoid being trapped into defending the company’s pay programs against the employee’s “research” into market pay.   Company pay programs are typically developed by professionals (again, in companies of any size), and it’s likely that the employees is using biased and simplistic figures.

• Don’t get into an argument.  No one wins here, but you’ll likely lose more because the court of employee opinion likely gave you one or two stikers before you came to bat.

• Don’t make promises, especially if you’re not authorized.  And don’t use throw away phrases like “I’ll look into it” or “let me talk to HR”, unless you mean it.  Unless you are actually going to take up the employee’s issues and run with it.  Because that will obligate you to report back to the employee, thus initiating another awkward conversation.

At the end of the day, your prime goal should be to come away from the discussion where the employee has had an opportunity to have their say, you’ve had an opportunity to listen without pre-judgment and the points raised by both parties can be further considered.  It doesn’t mean that you have to agree, but that effective communications has taken place.  Meanwhile the employee should come away with a better understanding of the company’s pay programs, where they stand and how they can improve themselves.

Note:  if perchance the employee has a point, and can make a case for improper treatment, don’t be a stickler for the “rules” but immediately raise the matter with higher ups and those in a position to further review and institute changes.

Have you heard this complaint before? “The Company would rather pay more to a green outsider than give one of us insiders a decent promotion”?

How have you responded?

The reason for the gripe is that, when considering two individuals for the same job the employee on the inside oftentimes will be offered a lower salary than if the company went outside to hire a stranger.  To compound the insult, it is not unusual for managers to ask insiders to train and orient the new ‘wunderkinde” to learn how the company operates.

Aggrieved employees feel that an insider already knows the company, the people, the products / services as well as the relevant policies and procedures.  That knowledge and experience is an advantage, they say, shortening any learning curve and cultural orientation.  And the “fit” has already been established. Taking on the role and responsibilities of the new position and not being paid the “going rate” seems unfair – actually a penalty for being an insider.  It’s as if the company realizes they don’t have to pay as much for an existing employee, that the time spent in the company somehow reduces their market value and limits a willingness to pay a competitive wage.

Some insiders may feel that the technical experience they have gained in their current job could be used in the new position, so that in effect they have already prepared for the new role.

However, the prevailing practice seems to be that, when a company looks to the outside recruiters will be instructed to search for someone who already meets all the qualifications of the job; an experienced candidate who has already performed the job, whose only learning curve would be a short term acclimation to the new company’s policies and procedures.  They can hit the road running.

Outsiders are considered to be free of “baggage”: no biases, preconceived notions or internal social network, and are thus considered more able to become immediate agents for change / improvements within the company.

You should also note: if someone already has performed the subject role the chances are good they are already being paid at or about the competitive or going rate.  If that is the case then the company would be compelled to pay a premium in order to attract such a qualified person.  The offer of employment would likely have to be above the going rate (or above the midpoint in some companies).

Here’s another common office complaint: “I’d be paid more money if I quit and the Company rehired me”

Unfortunately there is some truth to this gripe.  Over time the external marketability of good performers is rarely matched by annual performance awards within the organization.

Merit increases averaging 3.0% (less for satisfactory performance) may not keep pace with competitive wage growth, especially for in-demand skills.  Thus over time a company would find the prevailing external wage greater than what they are already paying experienced people.  And if you have to hire an experienced person you would likely have to pay more than the going rate, thus potentially creating internal equity issues.

You can do the math; if market pay increases at a faster rate than annual performance rewards, employee pay will fall behind.  At some point this will become a serious problem.

The cumulative impact of annual merit increases is a difficult issue to resolve, in that all employees are likely being reviewed at the same time (focal date).  Special treatment requests might create equity or precedent challenges for managers – both of which Human Resources would have warned against.

Managers should therefore take periodic stock of their staff; assess their backgrounds, experiences and performances, with a weather eye toward whether current compensation is both competitive and internally equitable.  To do less would run the very real risk of disengagement and separation – of likely your better performers.

Can you recall an instance at work where you made a mistake, an error in judgment, a bad decision?  An “oh cripes!” moment that you would have liked to have had back again?  Perhaps it was a rash decision, a lapse in sound thinking, or simply poor planning that caused you to take a wrong step.  And if you were unlucky, that error was noticed far and wide.

You remember how you felt then, don’t you?  You were likely embarrassed, surprised or even angry.  Certainly you felt awkward that you had messed up and that people had noticed.  To cap it off, in that memory of yours the wrong people had noticed, hadn’t they?

Bet you won’t do that again!

Perhaps not, but that doesn’t mean you shouldn’t stick out your neck again.  Turtles don’t make for good leaders.

Because when we make a mistake and learn from it, when we use a negative experience to help us prepare for the next opportunity, we grow as professionals – as individuals and as leaders.  That painful lesson will be more deeply embedded in our consciousness because of the fact that we did screw up, made a bad decision or used poor judgment.  It’s human nature for us to remember our foibles, and because of that to hopefully not repeat those circumstances where we had burned our fingers.

If we were risk adverse and played it safe throughout our career, if we avoided decisions, kept our head down, didn’t stretching ourselves, we would likely never fly high.  We would also never be noticed by the higher ups and our career would never quite get us where we wanted to go.

No pain, no gain?

If you use your mistakes as a learning experience, what would you learn if you never make a mistake?  Chances are your ego would swell with self-importance and what had been healthy self-confidence would have morphed into supreme over-confidence.  You would start reading your own press releases, and on that pathway lies a steep cliff.  it’s only a matter of distance.

I remember my father telling me, “at least try.”  That’s good advice for managers too.

So take a calculated risk.  I’m not talking about a roll of the dice, but a decision or an action plan based on your knowledge and experience.  Use your professional judgment and put a stake in the ground.  Stand up for something.  Learn from the experience.  And if you stumble, pick yourself right up again and get back in the fray.  Just don’t make the same mistake twice.

While most companies talk about the advantages of risk taking, many don’t walk the talk.  Instead, some organizations simply get rid of those who had the misfortune to make a mistake.  In such an environment there is always someone out there trying to trip you up (passive resistance, nay-sayers, the overly critical, etc.), or to take advantage when you stumble (enter the political animal).  All of which sends a powerful message that risks are only entertained when in fact they aren’t risks at all.

On the other hand, creativity and innovation will be fostered in an environment that nurtures decision-making, that encourages measured risks as a method of stretching oneself.  Instead of killing the risk-taker when they stumble such organizations seek to stretch the capabilities of their employees by encouraging them to do more than they thought themselves capable.

Remember, it’s only a risk if there’s a chance of failure.  Employees who are not afraid of making decisions, of standing up for themselves, of taking a risk for the good of the organization – they should be valued, not criticized or otherwise penalized.

In an atmosphere free of threats and quicksand the leader can emerge and thrive – to the betterment of the company and the employees.