I am sure that when some people saw this title, their first thought was of the mighty compensation professional standing above the fray, bullwhip in hand, directing executives and employees to do what is required to ensure their company success. But let’s be realistic, that’s probably not going to happen. More importantly, in this case I am talking about an entirely different type of “crack the whip.” Changes to corporate strategy, compensation rules, market forces and other influences mean that compensation departments are often asked to move at a pace that leaves others behind.
Many of us played this game when we were kids. You and your friends got into a line. One person was chosen as the front or “head” and their job was to run around in such a way that the person at the far end was disconnected, or flung off, from the end of the line. When this was accomplished you had “cracked the whip.”
Let’s talk about the velocity of change that's possible in our industry. Rules change randomly and more frequently than in the past. The market vacillates at speeds and levels that make compensation predictions difficult and unreliable. Corporate actions are kept secret longer, but expected to bear fruits faster. In addition, new executives are coming into companies tasked with making a big impact in short timeframes. While rapid change may work well for small groups, it can be counter-productive for large organizations. Far too often I see compensation professionals getting caught up in the melee and being the unwitting head in game of crack the whip. The results are seldom positive.
CEOs and other executives have short attention spans for our profession and limited understanding of its complexity. Also, we are all incredibly busy. Many of us have only a few windows a year where we feel we can focus on change. We think all year about potential changes and try to implement all of them during a month or two that is not dedicated to other “mandatory” tasks.
When information moved a bit slower and expectations were focused on months and years rather than hours and weeks, an approach of annual modifications generally worked. Today, very few companies or individuals have the attention span for large-scale compensation projects. We try to get things done before everyone loses focus or budget. As a result, employees are getting flung off into space, left to find their own reasoning for, or understanding of, compensation plans.
Our past approach has been to connect everyone and run as the forces push us; while hoping that those at the end can hang-on. We need a process that better meets our current needs. Before you make your next philosophical or structural shift, ask yourself if the implementation and communication can be broken into smaller pieces.
Consider a creating a new process incorporating multiple steps. Compensation should still lead the way and stay in sight of the group following them. As we leap off of each step to the next, we must leave carefully documented instructions for followers. While this process can seem tedious and certainly requires more ongoing coordination and communication, it may help ensure that every critical employee makes it to the destination. To make our jobs easier and more effective, we must be willing to change our ways to meet the size, structure and information flow of our companies. You are not really leading your employees to success if the process ultimately cracks a whip that leaves some of them fending for themselves.
Dan Walter is the President and CEO of Performensation an independent compensation consultant focused on the needs of small and mid-sized public and private companies. Dan’s unique perspective and expertise includes equity compensation, executive compensation, performance-based pay and talent management issues, Dan is on the board of the National Center for Employee Ownership, a partner in the ShareComp virtual conferences and the founder of Equity Compensation Experts a free networking group. Dan is frequently requested as a dynamic and humorous speaker covering compensation and motivation topics. Connect with him on LinkedIn or follow him on Twitter @Performensation and @SayOnPay
Good perspective points, Dan. Planning roll-outs of new programs requires more intensive communications with shorter and tighter feedback loops than ever before. I always said that although compensation is not the most vital single element of HR, it is where the rubber hits the road. We tend to "lay rubber" nowadays, don't we?
Posted by: E. James (Jim) Brennan | 08/31/2011 at 08:47 AM