Have you ever found yourself in a situation where someone (usually your boss or a higher-up) makes an announcement or a decision using draft or preliminary figures that you had given them some time ago?  Only today  the correct figures are different from the draft.  Then when you ask why the “old” numbers were used, the finger points back at you? 

Awkward, isn’t it?

Suddenly you’re on the defensive and your credibility challenged because of an earlier estimate or cautionary advice that perhaps you didn’t want to give out in the first place.

You want to scream at the offending party, “don’t you remember that I told you that the figures weren’t final?”  That your analysis was incomplete at the time, that further checking was required, or that you gave your best estimate based only on preliminary data?

But you are the author of those figures, no matter how wrong they are today.  So why are they still in play?

Selective memory

It often turns out that all that was remembered by the fellow with the frown on his face was that particular damning figure, and all the buzz of qualifier terms and conditions that preceded and followed it have been forgotten.  To your chagrin you may now be viewed as someone who either; 1) gave incorrect information, or 2) subsequently changed your mind without telling anyone.

Unfortunately, you can’t say what you’re thinking.  That wouldn’t be a good career move.  The only card you have to play reads “damage control.”  Roll out those qualifiers again.

Earlier in my career, when I was responsible for job evaluation, I would steadfastly refuse to offer a preliminary evaluation, having been burnt by the same scenario as above.  I found that, if the managers liked what they heard, that’s all that they would hear.  Because if, lord forbid the final analysis differed from the preliminary estimate you’d be hauled up before the Inquisition to explain why you changed your mind.

“I already told the employee,” is a phrase I’ve heard more than once – before I learned to keep my mouth shut.

So be careful when you give a number to management before you’re confident enough to defend it.  For their own purposes they’ll grab what you give and lock it down with their fixated, but flawed memory, while at the same time forgetting any qualifier terms or cautions you might have provided.

It’s human nature to remember what you want to hear, or what you can accept.  So that preliminary figure you surrounded with qualifiers?  Chances are management was OK with the number, or at least could deal with it, and so off they ran to integrate your analysis into their plans.

“I don’t remember you saying that”

In their forgetfulness they might even grow irritated with you, for all the plans they made with “draft” or “preliminary” data (shame on them).  These folks suddenly act like you changed your mind, or gave them wrong information.  All your previous explanations and qualifier comments are lost.

Management memories can be quite selective.

What can you do about it?

This is a situation where your options are limited, because; a) you’re likely dealing with your boss or higher, and any critique of their behavior needs be carried out very carefully, and b) when you’re asked for a number you generally have to give one.  Begging off is usually not an option.

So remember a tactic once described to me by a Training colleague:  you have to tell them, then tell them again, then remind them of what you told them.  So if caught up in a “give me a number” quandry, you need to emphasize whatever qualifiers might later modify the figure(s) being discussed.  Then you have to repeat your concerns again before closing.

Finally, put the worrisome figures in writing, nicely wrapped together with whatever concerns you have about its validity.  Cover yourself.

Will it work?  Will it save you from another awkward moment? 

Life isn’t fair, is it?  So no, even this strategy will fail from time to time.  But at least you’ll have positioned yourself to present an effective response.

Just remember to be polite about it.

Have you ever felt like an outsider in a conversation, when it seemed as if the others in your circle spoke in what seemed  a different language – one that left you struggling to keep up?  They may have been using English words, but the phrases, acronyms and technical references peppered throughout the back-and-forth left you floundering.

What are they talking about?  Not wishing to appear foolish, you likely react by tuning them off and simply standing there as a silent listener – or walking off.

Examples of this experience abound.  The circle could be doctors, lawyers, bankers, IT professionals – almost any specialty or interest group that has devised its own short-cut proprietary language.  For example,  if you sat with a group of bankers for more than 15 minutes, see if you aren’t befuddled and “zoning out,” or checking your watch for an early exit.

Now flip the coin.  What if you were one of those from the “inner circle,” someone already comfortable with the specialized jargon, and you were trying to explain an important point to someone not native to your group?  If you’re not careful, while the manner in which you communicate might have the others in your circle nodding their heads in understanding, the object of your discourse could simply stare back at you with a blank look – not following along at all.

If your intent is to reach out to someone, to have them understand what you’re saying, you need to speak the same language.  And that language should be that which is understood by the listener, not the speaker.  Such a concept of effective communications is the root cause of how the message so often goes awry when managers talk to employees.

When I lived in England my British colleagues would often say, “we speak the same language, yet still don’t understand each other.”

Talking isn’t communicating

Perhaps that’s a radical thought, but if your audience doesn’t understand you, then in effect you’re talking to yourself – to an audience of one.  Your message will bounce, not resonate.  But most of us have a default button when it comes to communicating; we automatically talk or write the way we think, the way we are accustomed to conversing within our niche group.  We use the same specialized terms, acronyms and short cut phrases of the group-think.  Have you ever listened to a group of doctors?  For compensation practitioners the sample list of terms could include median, compa-ratio, present value, percentiles, STI, red circles and any of a host of technical terms or “inside” phraseology.

We should remember though, that we’re talking to a potentially uninformed audience whom we need to connect with.  Even if the meanings of our terms are understood, the why they are important can be lost amidst generic corporate-speak language of such throwaway phrases like employee engagement, shareholder value, mission statements and earnings-per-share analysis.  When you’re huffing and puffing about  rewards your employees can easily and quickly become cynical.  Doesn’t everyone think that the company is out to save money at the employees’ expense?

So what happens to your audience when they don’t understand you?

• They stop listening.  That comes first; the glazed look, the befuddled grasp at understanding, and then finally the tune off.  They start checking their emails, watching the clock or simply staring off into space.

• They revert to preconceived notions.  Because they haven’t heard you, in terms of comprehension, they’ll likely not change their behavior or their practices.  They’ll carry on as usual, regardless of your message – because whatever you said simply bounced off without impact.

• They start to mistrust the messenger.  Perhaps the most damaging reaction of all is that your audience can become antagonized by your efforts.  They can feel that they’re being spoken down to, treated by management as poor cousins, and in general become skeptical of the message that you’re trying to sell.

All of which damages the credibility of the message as it becomes lost amidst the distraction over how that message was conveyed.

If your audience doesn’t understand what you’re trying to tell them they aren’t going to respond in the manner you intended.

What are you trying to achieve?

When preparing to deliver a speech the common advice one is usually given is to tailor how the message is delivered in order to suit the audience. That’s how you keep them engaged, never mind dosing off, tuning off or watching the clock while you’re talking to yourself.

If your audience doesn’t understand your message, or if it doesn’t have credibility, you really haven’t communicated – no matter how much effort you’ve put into it.  It’s like sending out a memo that no one reads.

The more technical the topic, or controversial, or even boring the more important it becomes to find a way to reach a connection with those you hope to educate, persuade or simply inform.

How can you test that your message was received and understood?  Have you asked anyone to repeat what you said?  To show that they “got it”?  Try it some time.  You can also test the message with an informal focus group of employees who are outside your specialty circle.

And don’t talk at your employees but to them.  Dumb down the language to common terms if you have to; use pictures, stick figures or colorful designs to illustrate examples and key learning points.  Be a little bit creative, as you have to do whatever it takes to make sure that your audience understands what you are trying to tell them.  Otherwise you’re wasting your time.

Otherwise your employees will feel like outsiders in their own organization.

Have you ever used a babysitter?  This is when you have someone else assume your responsibilities while you take a break and focus on something else.  The babysitter stands in for you, becomes you during the period of your absence.  Someone else does your job.

Typically we think of babysitting when there’s actually a dependent child involved, but it’s not uncommon for ineffective managers in the workplace to use the same concept when dealing with their employees.  These managers seek to use the pay that their employees receive as a surrogate for leadership – for keeping those workers complacent, retained and generally “in line.”

The practice of manipulating rewards presumes that the employee will chase the money and will be happy with their lot, while at the same time not requiring much in the way of supervision, periodic direction or even meaningful conversation.  The thinking here is that, if provided with enough rewards, an employee will act as desired in order to not jeopardize those rewards.  The goal is to place the employee’s attitude and performance on automatic pilot while the manager is engaged elsewhere.

So far, so good.  Not necessarily a problem, right?  The red flag goes up when you ask whether these monies are warranted by either performance or business need, or are they simply bribes?

What are we talking about?

Scenarios where pay is used in lieu of actual management are easy to spot.

• The Grand Giveaway:  Where managers try to give away as much money as they can to as many as possible, not worrying overmuch with distinctions between individual performances.  The goal here is to build an employee’s appreciation of their manager’s largesse.

• Title inflation: The promise of bloated and meaningless titles that distort organizational structures, for the prime purpose of rewarding employees in lieu of cash.

• Over-rated performance:  Play the good guy by over-rating performance during salary reviews.  Culprits are often seen rewarding activity over results.  So look busy!

• Assured compensation: Take the risk out of rewards.  Everybody receives an annual merit raise, everyone earns a bonus.  This fosters an attitude of entitlement.

• Counter-offers: “Let’s make a deal” attitude to keep resigning employees from actually leaving; a dangerous practice that increases costs and lowers morale.

What’s the cause of this behavior?   Managers typically receive inadequate training (if any) on how to use their company’s pay programs, so many use pay as a crutch instead.  Spending the company’s money effectively and efficiently isn’t on the radar screen.  They use employee pay like a club to get an employee’s attention.  And once they have that attention the manager is off doing something else – with the presumption that pay will substitute as supervision and motivation while the manager is absent – kind of like a babysitter.

Weak and ineffectual managers don’t actually manage their employees when it comes to things like performance direction, leadership, setting good examples and decision-making.  Instead, they want to be liked.  They want to avoid conflict and they don’t want anyone to quit.  They want employees to get along, and to help foster a friendly team atmosphere they try to manipulate pay in support of their efforts.

It’s really kind of a bribe.

So what is “managing” to these people?  It’s not about making hard decisions.  Too often it’s trying to get the most for their employees, deserved or otherwise, whether the organization gains in the process or not.  The manager is focused on their own interests, and is using someone else’s money in the doing.

Why it doesn’t work

Relying on pay as a replacement for management has a short term effective life cycle, at best.

• Employees see arbitrary equal pay treatment as de-motivating to high performers.  Why bother extending yourself if you’re going to receive the same reward as the guy doing crossword puzzles?

• Employees resent favored-son treatment; the names of those who benefit for non-performance reasons will always become known.  There goes your morale.

• No amount of money replaces the value of honest performance direction and feedback.  Those with an interest in learning and growing appreciate the help.

• Absentee managers lose the respect of their employees, who know what’s going on.  Remember that employees leave managers, not companies.

• While employees will take any money carelessly handed out, the organization will not gain because of it.  So these “rewards” are ultimately wasted.

For managers who need a crutch to help motivate and retain their employees, to help them do their jobs, the above cautions likely won’t make a difference.  Their goal is not to manage, but to get-by, to be liked by their employees and to avoid disruptions to their routine.  This is not leadership.

But for those managers who wish to make a difference, who understand that managing employees is a challenging and rewarding role, abrogating responsibility through babysitting is not an option.  They recognize it as the opposite of management, a damaging practice that will not enhance anyone’s long-term career prospects.

When you consider the role of Compensation Management it’s natural to first think of the competitive analysis and program recommendation process – where jobs are market-priced, salary structures are tweaked and a merit spend budget proposed for the coming year.  It’s the annual “here’s what I think we should do moment.”

These projects usually consume much of the final quarter, and when you add in the merit review process and short term incentive assessment and payouts compensation practitioners can be very busy for several months running.  To many in senior management, that’s what they do.  That, in essence, is their job.

What about the rest of the year, though?  What’s the role of Compensation Management then, during the day-to-day?

The off season

Dotted throughout the year, during slow periods as well as “all hands on deck” compensation practitioners find themselves constantly challenged by scenarios where the red phone from Leadership has rung.  Questions will be asked, background data researched, and various issues that impact business operations will be explored.  The calls can be unpredictable in nature, timing and import – but have a common theme.   Compensation will be asked to provide information, answer questions and deliver research and analysis reports.  Some of the likely topics that could be raised are:

• Employee turnover is getting to be a problem.

• Our counter-offer policy (or lack) is causing issues with employee retention.

• We have too many red circle (over the max) or green circle (below minimum) employees.

• Managers are asking to increase eligibility for short term incentives.

• Payroll costs are getting out of hand.

• How effective are our pay programs?

• How to secure candidate “X” for the company.

Whatever your response to the question(s) at hand, you should always be prepared for when Leadership follows up with a question – “what do you think“?  That would be like a softball question tossed to a politician, so you’d better be able to hit it out of the park.  You’d better have an answer.

Compensation professionals should always have an opinion as to how rewards can and do (or could and should) affect the business.  You should anticipate the issue(s) that Leadership is concerned about and be ready to provide your own well-considered comments.  You should not simply point at a series of figures and say, “there you are.”

That would not be a career enhancing moment.  That is not managing anything.

The question you want to hear

If your role is to manage compensation, not to follow or administer it, then you need to anticipate the client needs and interests.  It’s like an attorney who advises, “never question a witness where you don’t already know the answer.” So think about what you’re offering up in terms of how business operations might be affected.

To think and act like a leader of the organization you should consider what your facts, figures and recommendations mean for the organization.  Even if you’ve not been directly asked.  On what pathway will your information place the organization, and what might like ahead – given the various options that should be considered.

Some questions that you should anticipate, and thus provide in your response:

• What will this cost, in both hard and soft dollars?

• What if we do nothing?

• What are the risks of the pathway ahead?

• How will these suggestions benefit the organization?

• What do you think we should do? And why?

When Leadership calls, that’s your opportunity to have an impact, to utilize persuasiveness and influencing skills to move the organization in the direction you feel is correct.

Don’t waste the opportunity.

The other day I was trimming the landscape of several plants that had outgrown their space (in Florida everything grows, all year long) when my wife asked me, why are you cutting down those plants?  They look nice and the blossoms have a sweet scent.  Can’t we keep them?

They were ginger plants, and true enough they were pretty and did smell nice – but they had also over grown the area where we had planted them.  Slowly spreading outward they were crowding out other plants and starting to transform our neatly designed landscape into what would soon become an overgrown jungle.   The plants were no longer providing the same value to us as they had done for several years previous.  It was time to cut back or cut out.

Which got me thinking; how hard is it for managers to tell someone “it’s time to go”?  Sometimes employees stay too long at a particular job, year after year racking up higher pay levels while not really delivering more in terms of performance than they did the previous year.  You find them performing the same activities, over and over again – but for increasing pay.

Reliable workers?  Good workers?  Yes.  Expensive?  Yes to that, too.  Is their value to you increasing?  Perhaps not.

After awhile you’ll start to realize that, while good old reliable Bob is doing a fine job, someone else can perform that same job for a lot less money.  So what do you do with Bob?

Ignore him?

Think about it.  If a loaf of bread is priced at $2.00, would you be comfortable with paying $3.00?  Or even $2.50?  For the same product, the same taste?  Would you consider that additional expense well worth it?  Or would you start searching the store shelves for a loaf of bread that costs less and tastes the same?

Creating the problem

How did you get into this fix, having long serving and overpriced employees on your staff, stuck in the same job, year in and year out?

The answer is often simple and straightforward; because they’re comfortable, to the point where they see no reason to change the status quo.

• They like it here; they like the job, their co-workers, the work environment.  They like everything about their situation.

• They know everything about the job(s), as well as the company, and so the stress level is not a concern and they feel able to focus less effort to do the job.  They could do it in their sleep.

• They’re comfortable doing what they do, and have little motivation to do more.  They’re not compelled to break out of their mold.  They don’t see themselves as being in a rut, but comfortably situated.

• The pay is good, or at least satisfactory, so why leave and start fresh somewhere else – where they would have to prove themselves all over again?  To this way of thinking job search is a real bother, stressful too, and should be avoided until absolutely necessary.

That’s why some employees stay in the same job, content to remain on their own private treadmill.  It works for them.  But why do their managers allow this problem to develop?

It’s a management issue

Why are some managers reluctant to take action with these employees; to cut them off or promote them up and out?  Because many times taking such actions isn’t perceived as being in the best interest of the manager.  And there’s the rub.

• The cost and headache of obtaining a replacement; the time it would take, the disruption to schedules, the added stress.

• More work would be created for themselves, filling in for planned projects that still have to be completed; their time lines may be negatively impacted.

• The perceived damage to the manager’s reputation (employees have quit them), and leadership is watching – and perhaps wondering, why?

What’s a manager to do, then?  Moving someone along when there isn’t a performance problem is a tough decision to make and to implement.  Though sometimes it’s the right thing to do, both for the company and for the employee.

• Encourage employees to learn and grow within the company – preparing themselves for better positions.

• Be open to losing an employee to another department, one that may be able to better utilize their capabilities.  Holding on to someone too long doesn’t help either party.

• Managers should expect and demand continued and improved contributions from all their employees; no sitting back and coasting.

• Managers should plan to move employees up or move them out as part of managing an evolving staff.

Ask yourself, where is the balance – of contribution provided (performance) versus value paid out (compensation)?  When the balance tips too far in either direction, it’s time for action.  When an employee recognizes that there is more contribution on their part than value received (more work for less money), they look for the exit.  However, when the manager sees that there is more value (reward) provided than continuing  performance contribution, perhaps  it’s time to consider moving such employees along.

I’m just saying, the day will come – for some employees.  When it does, will you recognize that it’s time to pull the plug?

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 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 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 stretch ourselves, we’d likely never fly high.  We’d 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?  Your ego would swell with self-importance and what had been healthy self-confidence would’ve morphed into over-confidence.  You’d start reading your own press releases, and on that pathway lies a steep cliff followed by a fall.

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

So take a calculated risk.  Not a roll of the dice, but a decision or an action 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 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 that environment there’s always someone 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 are fostered in an environment that nurtures decision-making and 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.

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 penalized.

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

It used to be a common view that the Human Resources department in large companies was more sophisticated, more professional, and more forward-thinking than what you’d expect to find from HR in smaller companies.

We all presumed that the “big guys” knew what they were doing.

But current thinking among some practitioners now challenge that presumption.

The pendulum of thought has begun to swing the other way.  Indeed, sophisticated has become cumbersome, professional has become bureaucratic and forward-thinking has created a chasm of credibility between philosophical concepts and the practical realities that managers deal with every day.

Remember the K-I-S-S principle (keep it simple, stupid)?  Many large organizations seem to have forgotten that common sense caution as they saddled their reward programs with ever more forms, procedures and bureaucracy.

The Evolution of Performance Appraisal

A good example of HR systems gone wild is the difference between a small company performance appraisal and the convoluted processes often followed by large companies.  Herein lies a stark contrast not only of styles but of methodologies and core beliefs that a more complex better way will increase the effectiveness of employee reward programs.

This growth of complexity is commonplace; by the time an organization achieves a certain population size HR feels compelled to complicate their processes – usually in the name of increased employee sensitivities and streamlined procedures.  What worked well before (when the business was smaller) is suddenly suspect, deemed somehow less effective, less desirable.

What began as direct cause and effect, performance followed by assessment = reward, suddenly becomes much more complex, more confusing to some, more aggravating to others.  Communication becomes critical but is often flawed and ineffective as both employees and managers question the additional complexity.

What follows is a brief comparison between how small and large companies approach the critically important performance appraisal process.

The Small Company Experience:

• The employee’s performance is assessed against what’s expected of them.

• Performance discussions usually take place on the anniversary of either employment or promotion.

• Forms are basic, even simple.  They may not be standardized, and one or two pages are usually enough.

• The process doesn’t take a lot of time.  Meetings tend to be short and focused, so both parties can get back to work.

• What the boss says – is what’s going to happen.  The approval chain is abbreviated.

• The money discussion (pay increase) is front and center, a cause-and-effect dialogue.  “You have performed thus and so, and your pay will be changed from x to y.”

The Large Company Experience:

• The employee’s performance may be assessed against other employees, as much as against what’s expected of them (based on their job description).

• Performance discussions use a Focal Point strategy, where everybody is reviewed at the same time.  For managers with more than two or three subordinates, this represents a challenge in terms of time spent and quality of assessments.

• Managers are often subject to intricate, multi-part, multi-page forms designed by a specialty section within HR.

• Employee performance as a group may be viewed against a desired bell-shaped curve of results.  Individual assessments may later be modified to fit the expected / budgeted shape of the curve

• The boss makes upward “recommendations,”  which may or may not be approved.  Thus the reward conversation with the employee ends on a “we’ll see” basis.

• Other topics like developing future performance, improvement strategies / action plans, and “where are we going”? discussions may predominate.  Sometimes talk of pay is deferred, raising the question of whether performance actually relates to reward.   Meanwhile, the employee wants to hear about a raise.

• Employees could feel lost in the bureaucracy, a faceless ID number trapped within a huge spreadsheet.  For them, cause and effect becomes a pep rally concept, with little connection between individual performance and reward.

So what has been lost as the organization grew larger?  Has it become more impersonal, forms-centric, process controlled, and standardized?  And is that better than before?  Perhaps more has been lost than gained.

How did the organization evolve itself into something potentially less helpful, less effective?  Perhaps the poking and prodding of systems and procedures in the name of improvement went too far, until they created a convoluted and twisted version of their desired state.

Perhaps we’ve let specialists over analyze the psychology of a boss rewarding a good performer.  We’ve exchanged hard decisions with real impact for a muted “everyone deserves something” approach.  The following scenario is common.

• Sub-function specialty groups are created within HR, be they Training, Management Development, Succession Planning or a host of others popularized in prevailing industry jargon.  Each group has advocates that push an agenda of change.

• These specialty groups must justify their existence, must validate the worth of their profession, and their mission.  The result is additional layers of forms, procedures and extra time constraints for managers to struggle with.

• Over time these experts lose touch with the managers they should be trying to help.  By pressing their own agenda they tell management how to assess performance.

• Ultimately these groups become blockers, getting in the way of a smooth-running operation.  Objecting managers tend to respond with a campaign of passive resistance.

Can we make our large companies “feel” smaller when dealing with employees?  Can we reverse the model of increasing complexity and confusion?

When the state of affairs has gone off the tracks, how many times have you heard – or used the phrase, “let’s get back to basics”?

Perhaps that thought could be useful today, no matter what size organization you hail from.  Simply return to the fundamentals of performance management, where performance is assessed, which in turn leads to reward.

It doesn’t have to be any more complicated than that.

K-I-S-S

I once supervised a Compensation Analyst who had learned her craft through professional seminars and workshops.  One result of that education was her favored response when faced with a challenge at work; “the greatest minds in Compensation say that . . . “.   It took patience to educate this budding practitioner in the difference between classroom / textbook answers and workplace reality.

A while ago I came across an HR blog where the author instructed readers in how to create a merit performance matrix.  Very good stuff, I thought, admiring the technical step-by-step directions, except I knew from long experience that the procedure being described would never work in the real world.

While it’s critical to understand the technical foundations of Compensation methodology and practice, first and foremost practitioners need to anchor themselves in the here and now, to know what will work and not work in their organizations – no matter what the finest minds in Compensation think.

Why does Compensation theory sometimes clash with workplace reality?

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

• Bias of decision-makers:  Management may feel that they intuitively know the right strategy (they’ve done it before, if-it’s-not-broke-don’t-fit-it mentality, a friend / relation / old college chum suggested an approach, etc.).  Perhaps they read an intriguing article and are now insistent to follow the advice of an author who lacks an understanding of their particular business.  Years ago I worked for a company whose CEO forced HR to implement a particular benefit plan solely because he had read a magazine article.

• Problem avoidance: A favored management solution is to do nothing (you’ve exaggerated it, the solution costs too much, there’s still time, etc.).  These senior managers avoid major decisions until the issue bites them in the leg.  In such a situation it can be dangerous to your career if you try to force a decision.

• Business culture or model: Some initiatives don’t “fit” the organization.  For example, Managers with a laid back organization style will not be interested in recommendations to document uniform policies and procedures and have standardized forms for every action.  Picture your head banging against the wall.

Sometimes those experts who teach Compensation techniques fail to ground their instructions with a caution: check this process out in the reality of your workplace before you take a classroom technique and wave it in management’s face.

Another example:

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 lot of years 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 you study where the average population falls each year.  But management will likely have none of that. They want the same matrix every year, for ease of administration and communication.

Another area that separates the compensation technician from the professional is the ability to deal with what I call the “softer” side of compensation.  Survey statistics, charts and formulae are very good analytic tools, but management will want to know what it all means and what to do about it.  So the answer isn’t simply reporting competitive data, but taking that next step to help management understand and strategize future action.

The contribution you can make to your organization is in blending 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’s the key to success as a Compensation professional.

That’s what a manager is saying to their staff when they show a reluctance to distinguish between their high performing employees and the “Joe Average” types when it comes to the granting of performance rewards.   These “leaders” make excuses to avoid tough pay increase decisions, instead manipulating the Pay-For-Performance system to ensure that, whenever possible everybody gets something.  If there isn’t enough money in the budget, well, there’s Human Resources to blame.

This is what happens when managers aren’t able, or aren’t willing to manage pay.

They want to be liked, and who can blame them?  We all want to have friends.  These managers have to control a team, have to consider the good of the entire staff, to keep spirits high, and limit any grumbling in the ranks to a minimum.  They’d like to be appreciated by their employees for those efforts, while at the same time keeping their problems to a minimum.  So in their view treating everyone the same, or as close to that as possible, would provide a leveling of the playing field – so they can proudly boast, “we treat everyone the same.”  In other words, there aren’t any “special people” here – not even performance stars.  They believe in a kind of reward redistribution that balances everything out.  Everyone deserves to get something.

And they hope to get Christmas cards from the staff at year-end.

Ah, the angst!

At the same time this type of manager is afraid as well.  They’re afraid of being criticized for making the wrong decisions – or for not making a decision at all.  Some are actually paralyzed by indecision into non-action.  Why?

• If any employee quits, that could be a mark against the manager; that they couldn’t successfully manage.  Why else would someone quit?

• Such criticism could be doubled down if it’s a valued employee who has left.

• Some managers take to heart the adage, “people don’t quit companies, they quit managers.”  So they could take it personally when one of their employees decides to abandon the  team.

And then you have the angst over the replacement process.

The losing manager will have more work on their plate, having to cover for the missing employee, then having to take the time to recruit and ultimately provide training for the replacement.  How long will it take to get everything back to normal?  How long will their life be disrupted?

So it’s worth it, the logic goes, to keep everyone as happy as possible.  Because to a manager a departing employee is bad news all around – unless of course that person is in the bottom 5% that we want to leave.  But how many managers actually point a finger at an employee and say – you’re a 5%?

For such reluctant managers you would need an employee’s taped confession to a federal crime, one that was also committed on company property, in order for them to feel justified in taking a hard line.

On the other hand, effective managers strive to be respected.  Being liked is nice, but shouldn’t be bartered or purchased at the expense of doing their jobs.  Which raises a question.

So what is a leader?

There are many answers to this question, of course, but for the purposes we’re discussing here let’s focus on the ability to make timely and thoughtful decisions for the good of the organization.  That’s why the employee with the “manager” title was promoted, wouldn’t you say?

It’s not a matter of making a decision in the purest sense, because bad decisions, even idiotic decisions would qualify.  One could also construe that a manager’s non-action, non decision is in fact a form of “decision.”  It’s decisive action in the face of challenge that sets the effective manager apart from the rest of the pack.

Is there a difference between a manager and a leader?  Both can have the same title, but their outlook on roles and responsibilities could be quite different.

Technically, a manager can be someone who simply administers an ongoing operation, keeping it running, maintaining processes and completing assigned work.  An important role to be sure, because we need Indians as well as Chiefs.  We need someone to be the mortar that holds the bricks of the business together.  But perhaps that’s more management than leadership.

For its part, leadership has coined the phrase, “follow me.”  These are the individuals who set the course, stand up for themselves and make the tough decisions.

So, yes, there is a difference between someone acting as a manager, vs. another who is driving forward as a leader.

Which one are you?  Which one do you report to?

What do you do when an employee informs you that they have just achieved an academic milestone:  a college degree, an advanced degree, or even a certification from a professional association?  After offering congratulations, do you take them to lunch, perhaps tell them to take the next day off, or do you do more?

Do you provide a specific reward for that accomplishment?  Perhaps a salary increase, or a promotion?

Many employees seem to expect that, when they receive academic or professional credentials – something that comes with a piece of paper suitable for framing – that they should receive an increase in pay, a bump in title, if not an outright promotion.  “I’m more valuable to you now,” they seem to imply.

However, if you don’t need another MBA graduate, or a senior engineer, legal counsel or whatever, should you pay extra to have one?  Should you increase your labor costs to gain something that you don’t need?

Some managers feel compelled to react with salary / title increases; they want to acknowledge the employee’s personal achievement and avoid the risk of de-motivating good people.  They especially don’t want to lose someone who is ambitious and career-oriented.  Such a loss might be perceived as a mark against their own management capabilities.

But is raising the cost structure a good business decision, or a feel-good, I-want-you-to-like me emotional knee-jerk reaction?  Do these managers have the right answer to the “why more money?” question?

If you already pay for educating your employees – through some form of tuition reimbursement – should you be expected to follow up with even more expense once the company-paid courses run through to completion?  Chances are you don’t require employees to remain with you for a defined period afterward, right?  So, technically they could use your money to prepare themselves to work somewhere else.  Where is the fairness in that?

Pricing a piece of paper

Have you asked yourself, what’s the market value of an employee with a higher education or certification level?   Compensation surveys don’t differentiate on the basis of whether employees have a particular degree or other credentials.  In some cases educational requirements are mandated before one can assume certain roles (Engineer, Attorney, Nurse, etc.).  At the end of the day what the market highlights is the common pay rate for experience, for knowing the job and being competent at performing it.

Does the market say a premium should be paid?  No.

Perhaps a promotion then?   But job grades are not typically influenced by formal education levels either, and no credible job evaluation system scores on that basis – only equivalencies.  Job evaluators recognize that, while what the employee knows how to do (job knowledge) is critical, how that knowledge was attained is less important.  The professional seasoning of life experiences does count, trumping the piece of paper.  Book learning is not an evaluation factor.

If ultimately the newly certified or graduated employee returns to the same job function, their day job, then what does the company receive for granting extra money?  If the job role remains the same, where’s the ROI to balance an increase to fixed costs?

What you need vs. what you have

If you use any sort of position control process, you should know how many heads for each job the organization needs to fulfill its mission.  When you create more heads than you need, your costs will increase but likely not your effectiveness.  So why would you pay for an extra MBA, senior engineer or legal counsel – when you don’t need them?

You can acknowledge an employee’s personal achievement without increasing your fixed costs and possibly creating disruptive internal equity concerns among other employees.  Remember that fair and balanced treatment is a perceived state-of-play, and the employees are always watching.

So offer your congratulations, take the newly minted certificate holder out to lunch, and give them a day off.  Tell them that they’re now eligible for advancement when a higher position comes available – but have a care before raising your fixed labor costs without a corresponding increase in ROI.

They may be more valuable to you – but that is for tomorrow.