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07/19/2012

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The God Complex - Hmm, apparently I've worked in organizations where there were a number of stakeholders who felt they lived on Mount Olympus. Or where someone felt a "formuala" could tell you down the nearest $.25 what someone was worth. Chuck's proposed win-win is well, a winner. It gives both HR or the hiring manager some parameters within which to "flex". Oftentimes the simpler solution is just for HR and the hiring manager to discuss the issue further. Oh?

Best systems I ever worked under (and/or implemented) followed Chuck's guidelines.

The steps were as follow: Offer pre-approved parameters within which supervisors (not every "manager" supervises a subordinate) are free to exercise their discretionary powers. Assure that every people-manager gets consistent basic training in the rules, procedures and protocols. Permit limited standardized exceptions with an additional approval level. Offer consultation opportunities for special cases and outliers. Resolve those promptly, sensibly and consistently. Have an appeal process with impasses subject to higher top management approval.

Supervisors get trained to sensibly manage their homeground. HR gets to train, advise and recommend, without getting thrown under the bus for political reasons. (You always lose when there are unnecessary power struggles where you pay compensation cop with THEIR budget money.) Top executives get to make their Big Important Decisions. Everyone wins.

Chuck - I need to share an experience that directly relates to your post. Back in the mid 90's I was the chief HR guy for an ISP based in Atlanta. There was no HR before me, so I had to set the stage. I chose to use the company value system as the platform, which, among other values, emphasized managerial autonomy and accountability. The company had traditionally provided annual salary actions that conformed to a salary budget controlled by the CFO. I suggested that we 'decentralize' salary actions by taking the agreed to annual percentage increase, translate that into dollars, and give each manager a budget that he/she could use, completely at their discretion, to reward their employees. There were no guidelines; each manager could determine how best to distribute the allocated salary dollars among their direct reports.

The CFO thought I was nuts, and was convinced that without lots of controls we were going to spend the company out of existence. He fought it vehemently, but the CEO liked it and we went ahead with the plan. Guess what? Managers loved it, employees were appropriately rewarded, and at the end of the year most managers under-spent their budgets. A huge success!

One other reason why Compensation needs to be involved is compression issues with exsisting team members. I had a manager want to offer $2 more per hour than someone he had in his own department. A 9 year emaployee who has been getting good appraisals, at that!

So while we will work to ensure the company does not lose good talent, we need to make sure the talent we have is protected as well.

Chuck,

I have not run across exactly what you described, but there can be subtler forms of tyranny, such as percentile targets. If you need to hit 50%, then salary becomes a zero sum game, which is not conducive to fostering a team attitude.

Great name for a blog, by the way :)

Having recently gone through several external audits on pay, how does one ensure decisions are not based on emotion and are backed up by documented differentiations? There must be a control for adverse impact / pay discrimination? Government agencies are very narrowly defining pay differences, driving towards more formula driven pay decisions.

We've had some good comments on this posting, for which I thanks everyone who has taken the time to write. Several comments (here and elsewhere) have asked my opinion regarding "company-specific formulas." Fueled with a cup of coffee, here goes.

I believe that being a manager requires a degree of balanced emotion for proper decision-making. Otherwise you can close your eyes, ignore the unique elements of individuals and simply point to the policy manual. A clerk can do that. Managers should consider what an employee has contributed (or can contribute, in the case of candidates), regardless of what the resume says. Sometimes that's a gut feel, and hurrah for that!

As readers can detect from my writings, I am not a fan of dependence upon government agency bureaucratic, formula-driven decisions, be it regarding pay or anything else. Those who follow that rote tend to ignore the human element for the safety of the policy, the rule, the numbers.

That's not what management should be about, in my humble opinion.

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