Compensation Cafe

Is It the Person or the Position?

How much value is added by the individual holding that important management post?  Would those same output results occur no matter who was the incumbent?  Should any person who holds a position of substantial impact be automatically highly compensated?  How much of the “job worth” is truly attributable to the talents of the individual versus the normal outcomes anyone could generate from that place of power?  If someone is placed in a spot whose leverage has been created by the larger organization and its systems, why do we assume they deserve so much more pay than if they were an individual contributor with limited ability to affect the bottom line?  Is it the job or the person that creates value and how much comes from each?

These questions are integral to the compensation tradecraft yet are rarely discussed or even mentioned.

A recent article had an interesting take on the global compensation issues from bankers meeting in Switzerland.  Most felt that their generous remuneration was a matter of disinterest to their institutional investor shareholders, because it was a relatively tiny expense compared to the profits.  But a few noted that "it's the seat, not the individual," and found it offensive to see some callow young ignoramus earning millions merely because they had been placed at the head of a hedge fund which almost automatically generated billions in profits.  That comment brought back memories of my compensation childhood when Robert A. Smith preached the distinctions of organizational leverage versus human capital factors (KSAs) back in the early 1970's to his four young corporate comp/org analysts named Dave Thomsen, Gerry Stern, Larry Cook and Jim Brennan. 

He directed our reverse-engineering of virtually every job evaluation plan that existed at the time.  Taking the most statistically reliable elements of each, we then freshly designed and validated a customized point-factor plan universal enough to suffice for the Fortune 50 multinational conglomerate we served.  Besides the traditional personal features people bring to the job like education, experience and specific types of skills, we had an entirely distinct set of other categories we called “organizational factors.”   The personal human capital elements specific to the individual (KSAs) could be carried from job to job and proved to have significant but limited effect on market compensation.  The real money came from the leverage supplied by the organization for the application of the individual performer’s talents.

A skilled surgeon or product designer would have great value up to a certain point.  The personal value of an isolated worker would not continue to increase at the same rate (it showed an asymptotic relationship) as that of a less “skilled” but more “responsible” manager or executive given a higher degree of wider impact.  A great individual contributor only has one brain, two hands and so many hours to ply their trade.  The market value of personal KSAs flattened out fairly quickly.  On the other hand, even an indifferent manager, director or other executive operates as a conductor, coordinator or force multiplier who stirs those diverse KSAs together and applies them throughout the broader enterprise than the individual work unit.  The bureaucrat who applies the creative talents of otherwise isolated Nobel Prize winners will earn his or her value from that application leverage position rather than from their personal stand-alone talents.  Albert Einstein and Stephen Hawking would have had very limited values as ditch diggers but had tremendous values as teachers and publishers and innovators in the field of theoretical physics.  Many a brilliant genius has starved to death in this world due to failure to find an adequate platform from which their talents could be monetized.

There are things only the person can do.  And there are things only the organization can empower the position to do.   

This might be fundamental Compensation 301 to some readers, well known and fully documented in every textbook, but I don’t recall seeing it discussed much, if at all.  Please offer links or references that prove me wrong.  Supply even better elaboration on the topic.  I’d rather be wrong than right, on this point, because it is pivotal to a sophisticated comprehension of compensation tradecraft.

Whether the concept is new or old, just think about it.  It might help clarify some compensation valuation questions you face on a daily basis.

 E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired after over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.) and will express his opinion on almost anything.

Image courtesy of shaneprigmore.blogspot.com

It's a Scandal! Manager Training Exposed! [Implementation Part 4]

This is Part 4 of a series on research that can help your company get better at implementation. Companies that are more effective at implementation -- of business strategy, pay for performance, change, communication -- deliver higher Total Shareholder Return. 

The source of real competitive advantage is the ability to implement practices that other organizations find difficult to implement.

 

In my recent posts we learned that the Most Admired Companies, as tracked by Hay Group and Fortune, act as if they are more committed to achieving their business results than other Fortune 500 companies. 

71% report they are effective at implementing their company's business strategies, compared to 47% of their peer group. In a related finding, 94% report that they have a clearly defined global approach to performance management, compared to 74% of their peers.

How do they pull this off? There are lots of contributing factors, but there is one implementation method that we all rely on -- managers. As we all know well, leaders may have great strategic ideas but managers are the people who actually make the strategy happen. They implement annual priorities through objective setting, communication, feedback and performance management.

How do we prepare managers? We sure send them through regular bouts of training, don't we? Towers Watson wanted to learn more about manager training in its 2011 - 2012 Change and Communication ROI Study. TW has spent 10 years comparing companies that are more effective at communications -- and as a result, delivering higher Total Shareholder Return -- to less effective communicators.

In this report we find out that more effective companies spend more time preparing managers to act in support of the company's Vision and Values than less effective companies do. No big surprise.

But, check out the bombshells here.


Bombshell #1-- Less effective companies spend almost as much time training managers on performance management as highly effective companies do. So, commitment to training is not a real differentiator. Pretty much all of us are busy getting managers to sit through the PowerPoint experience.

Bombshell #2 -- The differentiator is the effectiveness of the training. Less effective companies have barely one good word to say about their manager training, even though they are devoting a lot of attention to it. Time wasted, it seems.

The most effective companies have a relatively good level of confidence in the effectiveness of their manager training. It could be better, of course, but what training program couldn't be improved?

The point is that when you ask your managers to spend time finding out what you think is good for them, you should be very sure that you are using their time wisely. Garbage in is garbage out, and managers have a right to resent any waste of their time.

Design training so that you are targeting behavior change. e.g. writing better objectives, linking objectives to strategy, coaching employees on their role, etc. Give them training that is interactive and gives them a chance to practice and get feedback. Then measure your effectiveness in concrete ways like auditing objectives, rolling up objectives for exec review, and then adjust follow-up training/communications accordingly.

That's what the highly effective companies are doing. They have a strategy, not just a bunch of information to shovel at managers. Implementation -- of manager training, in this case -- is their acknowledged source of competitive advantage.

Margaret O'Hanlon is founder and principal of re:Think Consulting.  She has decades of experience teaming up with clients to ensure great Human Resource ideas deliver valuable business results.  Margaret brings deep expertise in total rewards communications and change management to the dialog at the Café. Before founding re:Think Consulting, she was a Principal in Total Rewards Communications and Change Management with Towers Perrin. Margaret is a member of the Board of Directors of the International Association of Business Communicators (IABC), Pacific Plains Region. She earned her M.S. and Ed.S. in Instructional Technology at Indiana University. Creative writing is one of her outside passions, along with Masters Swimming. 

These Companies Actually Want Something to Happen [Implementation Pt. 3]

Companies that are more effective at implementation -- of business strategy, pay for performance, change, communication -- deliver higher Total Shareholder Return. This is Part 3 of a series on research that can help your company get better at implementation.

 

The World's Most Admired Companies act like they actually want something to happen. They take performance measures seriously.  Yep, that means they closely manage their objective setting process.

1. Most Admired Companies have a well-defined approach to performance  management.

As Hay Group's research indicates, 93% of the Most Admired Companies have a clearly defined global approach to performance management, compared to 74% of their peer group. That means almost all know the outcomes they want to achieve through performance management and  track whether they have achieved them.

Odds are, they define what a high quality objective looks like and can give functional examples. Senior management plays a visible role. Objectives are submitted on time. Measures are checked to ensure they will impact business results. Everyone talks the same language about performance management.

2. Their performance management approach involves linking performance planning with their strategy.

3. This may be the most powerful finding -- the Most Admired Companies use performance management to help employees understand HOW to balance short-term and long-term priorities.

Ah, the power of alignment. Most Admired Companies expect their business priorities to drive performance measures. Compared to their peers, they pay more attention to measures beyond the short-term delivery of growth and profitability. Operational excellence reiterates their long-term focus. Performance measures address the customer needs, so all employees can direct their efforts towards the customer. And they include measures that encourage focus on "Human Capital" issues like management skills, career development, performance management, and so on, so their leaders and managers know they are serious about it.

How do they help their managers prepare performance measures and conduct performance management? In my next post, we'll look at what Towers Watson's research tells us. Their topic is, "How Top Companies Create Clarity, Confidence and Community to Build Sustainable Performance."

Margaret O'Hanlon is founder and principal of re:Think Consulting.  She has decades of experience teaming up with clients to ensure great Human Resource ideas deliver valuable business results.  Margaret brings deep expertise in total rewards communications and change management to the dialog at the Café. Before founding re:Think Consulting, she was a Principal in Total Rewards Communications and Change Management with Towers Perrin. Margaret is a member of the Board of Directors of the International Association of Business Communicators (IABC), Pacific Plains Region. She earned her M.S. and Ed.S. in Instructional Technology at Indiana University. Creative writing is one of her outside passions, along with Masters Swimming -- she swam two miles yesterday!

Stubborn Is As Stubborn Does

I share my house with a brood of cats and it’s been that way for as long as I can remember.  I love them, but recognize that they are stubborn, stubborn, stubborn creatures, and at times it seems like they’re the ones who run the place.

Have you ever tried to change a cat’s food, or their litter box, or their water dish?  They don’t react well to the new and different, and when they don’t react well their loud and disdainful behavior can really disrupt your day. 

These felines are also creatures of habit, preferring a daily pattern of repeated behavior that in their view creates a safe and reassuring environment – where they feel the most comfortable.  Break that pattern and you get the look, or worse.  I can attest to the fact that dealing with the stubborn and habitual can be a real trial.

In the business world there are many companies run by a leadership who possess similar inflexible behavior, an aversion to breaks in pattern.  Those who like things just the way they are.  Whoever coined the phrase “if it ain’t broke, don’t fix it” was probably a charter member in that "blinders on, head in the sand" leadership cadre who likes things just the way they are.

While it’s a truism that yesterday's strategy and operating principles are rarely a recipe for future success, how often do you see managers hang on to what used to work - until the signs of failure become so visible and so painful that it can no longer be accepted?

Comfort

These folks with their heads in the sand are not necessarily bad managers, or even poor business leaders.  What they are is comfortable, and when we’re comfortable we feel safe, relaxed in our surroundings, familiar with what needs to get done and a bit over confident about our control of our business environment.

When we feel comfortable and confident we prefer to repeat those same actions that brought us to our present state of mental ease.  In other words, we don’t like to rock the boat, we don’t like “change for the sake of change,” and we’re skeptical of new and unproven techniques.  We get stubborn and dig in our heels.

It’s worked before, it brought us success.  Let’s leave it alone.

However, when someone or some event breaks that comfort level (new competition, weakened economy, technological advances, etc.), the first thing we experience is anger that our warm cocoon could be shattered by new business realities.  Soon enough though, that anger will convert to a sense of fear, whether we admit it or not.  More likely we’ll act out in an aggressive fashion that disguises the panic we feel.

Fear

People can be fearful of change, especially leaders.  Because they don't know the new rules, because there are risks when implementing new strategies, and those who stick their head above the crowd can get it chopped off.  We’ve all seen that happen.

When you must get yourself up and out of your comfort zone it’s a natural reaction to feel defensive and unsure about what you should do next.  Leadership may not have the competencies or the experience to adapt to new business challenges.  It’s not difficult to lead when things are going well.  But when the going gets rough, when the pressure is on to change course, to implement new strategies, not so much.

I’m not sure about what to do; everything has changed.

Pushed out from their safe environment management can find itself unsure, defensive and unsettled about the correct way forward.  And until matters settle down again they can be difficult for practitioners to work with.

You can help them 

You may consider managers stuck in the past as living dinosaurs, but have a care because these beasts have teeth.  They don’t like this uncomfortable new world, and they tend to shoot the messengers.  To offer assistance to a leadership challenged by the unfamiliar, practitioners need to step up and provide steady, confident and reliable advice.

• Acknowledge the past: Yes, previous strategies have worked well and brought the company success and financial strength, reputation and a strong foundation for the future.  A pat on the shoulders for management.

• Focus on the why: Whenever advocating change, focus your message, your research, your examples and your entire business case on why your recommendations lead to solutions.  Keep your eye on the goal, not that you’re changing patterns of behavior.

• Dangle the carrot: Always point toward the business and personal success that would be the result of your recommendations.  Besides showing the achievement of business success, emphasize that the deciding leadership will gain credit for managing the organization through these difficult times.  Stroking the ego doesn’t hurt here.

The next time someone comes to you with an idea to build a better mousetrap, listen to them.  Keep your eyes, your mind and your options open.  Instead of being afraid of change embrace the opportunities presented.  It can make for a better tomorrow, and you’ll shake the tag of “stubborn.”

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats. 

Creative Commons image courtesy of Jo Bowling

Who Owns HR?

There are problems with communications about employee performance that become most evident when pay is involved.  This seems to be the most common theme in the articles posted on the Compensation Cafe in 2012.  Fingers are pointed in all directions, but the blame seems to be most properly shared widely.

People want to be well compensated: being told that they are performing well is both part of their emotional compensation and a sign that their financial remuneration will continue to climb.  It also contributes to unit morale and creates a more pleasant situation for the supervisor, who is rewarded for giving high ratings and punished for communicating negatives.  By the way, some managers and VPs only control things or functions rather than people, so they don't meet my definition of "supervisor," which calls for very unique sets of knowledge, skills and abilities (KSAs).  The reality that those KSAs are rarely taught to supervisors and managers, and even less often safely practiced and positively reinforced, only complicates the situation.

Something tells me that everyone wants to be told they are great.  Even consultants prefer to be praised rather than be criticized.  It is simple human nature.  Nevertheless, the encouraging words that create mutual pleasure among employees and their supervisors sometimes are not true.  The gaps between what was said and what is done become most painfully obvious when compensation is involved.  If the reward does not meet expectations, if the pay increase seems paltry or if the reinforcement is considered substandard, unhappiness results at all levels. 

 Whose problem is this?  HR says that supervisors should level with their subordinates.  Managers confronted with grumbling workers respond that this is HR’s fault. 

• Pay systems should be more liberal
• Compensation rules should be better defined
• More training should be delivered to supervisors
• Human resources specialists should create foolproof language for reviews
• Manager should be given practice in the art of letting the employee down gently

At the very same time, of course, the supervisors and even the managers and executives with merely one direct report who oversee sections or functions continue to maintain their claim that their vital role as people-managers make their jobs more valuable.  Most executives are convinced that their exalted ranks and impressive titles endorse their expertise as performance management experts.  But when issues arise, they belong to the department called “Human Resources” or maybe the compensation section.  All positive credit accrues to the line manager but all defects are the fault of the folks with a title that includes HR, compensation or “personnel” … only a few remain still alive with the IR or LR title.

Do you see where we are heading?  This is a mess.  It’s not a new one and it won’t go away just because we each point fingers at each other. 

Whose monkey is this?  Who will take the initiative to take the blame?  It sure doesn’t seem that it will be the ones so quick to take the credit.  Please share your ideas for mutual win-win solutions to this consistent problem.

E. James (Jim) Brennan is Senior Associate of ERI Economic Research Institute, the premier publisher of interactive pay and living-cost surveys. Semi-retired after over 40 years in HR corporate and consulting roles throughout the U.S. and Canada, he’s pretty much been there done that (articles, books, speeches, seminars, radio/TV, advisory posts, in-trial expert witness stuff, etc.) and will express his opinion on almost anything.

Image courtesy of referenceforbusiness.com

Implementation: Are you the 71%?

71% of the "World's Most Admired Companies" report that they are very effective at the implementation of their business strategy.  Only 47% of the less exalted companies can claim the same accomplishment.

What does that mean to compensation and rewards? It probably means that more than half of the companies outside of the Fortune 500 often do not meet their business goals. It certainly means that they don't execute very well. Whether there is a correlation with their revenue - and their ability to fund salaries, bonuses and benefits - is another topic.

But really? Pay for performance? How can we seriously say we are pulling it off if we can't even get the company pointed in the right direction?

Look at the commitment that the Most Admired Companies have made to communicating the strategy and more importantly to our work, making sure that managers and employees understand their role in it.

from "Rewards-Program Effectiveness: What Makes the World's Most Admired Companies Great",World at Work Journal, First Quarter, 2009

Yes, research has indicated that employees are more engaged when they know how their work is connected to the business strategy. But let's look at something even more fundamental.

Can we truthfully claim our compensation programs are pay for performance when we spend more time on the numbers than we do on helping employees achieve the right business results?

I'm not saying it's easy. But I do think it's our job. So more on implementation, including communications, in my future posts.

And in the meantime, take these findings to heart. For many companies, this is only the first month of strategy implementation. What will you do throughout the year to continue to educate managers and employees about their role?

The information will help them take their objectives far more seriously -- oops, what I meant to say is that managers and employees will be more engaged!

Margaret O'Hanlon is founder and principal of re:Think Consulting.  She has decades of experience teaming up with clients to ensure great Human Resource ideas deliver valuable business results.  Margaret brings deep expertise in total rewards communications and change management to the dialog at the Café. Before founding re:Think Consulting, she was a Principal in Total Rewards Communications and Change Management with Towers Perrin. Margaret is a member of the Board of Directors of the International Association of Business Communicators (IABC), Pacific Plains Region. She earned her M.S. and Ed.S. in Instructional Technology at Indiana University. Creative writing is one of her outside passions, along with Masters Swimming.

That Comment Bubble Could Get You In Trouble

We all know about the importance of document creation and retention. But there are times when documentation is not a good thing. Consider the following (extreme) example:

This comment bubble is age discrimination litigation waiting to happen...

While most cases are not as extreme - and outwardly discriminatory - as the example shown here, there are hundreds of examples where a written remark in interview notes, records of conversations, performance evaluations or other documentation has created significant problems for employers. A remark on new hire paperwork that a candidate "accepted initial offer - didn't negotiate" might be interpreted as gender-biased. A comment like "needs work on oral communication" could be interpreted as race-biased.

It's important to think about the comments and notes you commit to writing. There are lots of remarks that may seem innocuous when you write them, but could be interpreted multiple ways. Common examples include statements regarding:

• adaptability and ability to learn new skills;
• "commitment" to the job or organization and "drive" to advance to higher level positions;
• potential for future advancement within the organization;
• "toughness" versus "sensitivity";
• compensation negotiation skills and knowledge of market rates for job in question;
• personality traits and characteristics not related to the job.

Also avoid comments directly referencing protected status (age, gender, race and ethnicity, disability status and medical conditions, family composition, etc.). While references to someone's medical condition is appropriate in FMLA documentation or short term disability paperwork, it's not appropriate in documentation regarding merit increases, training opportunities, and so forth.

In a perfect world, we would never have to worry about this issue. Everyone would be basing all decisions on 100% objective criteria and no thought would be given to the personal characteristics of the people being evaluated. We would read the comments of others with 100% clarity and know the exact meaning and intent behind every remark. But we don't live in a perfect world. We do let personal characteristics and preconceived notions influence our decisions, consciously and subconsciously. Semantics can be a real problem. People twist words to make them mean what they want them to mean, not necessarily how they were spoken or written.

Before committing pen to paper and writing comments on official documentation or entering your handwritten notes into an employee's permanent record, think about whether anything you're written could be interpreted more than one way. Even though you may not have meant the comment to have a discriminatory meaning, it might be read that way.  If it is, that comment bubble could get you in trouble.

Stephanie R. Thomas is an economic and statistical consultant specializing in EEO issues and employment litigation risk management. Since 1999, she's been working with businesses and government agencies providing expert analysis. Stephanie's articles on examining compensation systems for internal equity have appeared in professional journals and she has appeared on NPR to discuss the gender wage gap. Stephanie is the founder of Thomas Econometrics and is the host of The Proactive Employer Podcast. Follow her on Twitter at ProactiveStats. 

Don’t Tell Me I’m Great If I’m Not!

I have both friends and clients who have been struck by an unfortunate dilemma. I have a couple of friends who have been told one thing for months, and perhaps years, only to find out that the truth they knew wasn’t the “real” truth. I have clients who need to realign pay for people who have been told they were top performers when, in fact, they are less than adequate. In both cases it seems more like senior managers were trying to be nice, rather than sneaky.

Why have confrontation when you can have everyone like you? It’s easier to be nice to everyone. Many managers have made this their approach to leading their staff. Rather than point out flaws, they point out only the positives. Rather than prepare their staff for bumpy water in the future, they keep things on the bright side right up to the moment the boat hits the dangerous rapids. The discussion of a potential demotion, cut in pay or job-ending decision never seems to make it onto the agenda.

Employees want to be led, and generally want the truth. I also think managers generally want to tell the truth, but seldom have the skills to do so delicately. While these managers do a disservice to employees by not laying out a realistic path, those of us in the compensation community do even worse by not providing them with the tools, words and examples that will allow them to discuss both the good and bad.

We can’t expect great employees who have been promoted to be great managers to be able to talk about pay issues with any amount of expertise. We also can’t expect that they will always do this task well, even if they have been trained. We need to make it clear what needs to be said to underperformers and check back to make sure it has been communicated.

This is not about avoiding lawsuits or angry ex-employees. This is about not being jerks in the eyes of those we need to keep working hard. Once the trust on performance has eroded in a single example, you risk the chance of other employees questioning their value to the company. Rebuilding trust is far more difficult than maintaining it. Like a swimming pool, it is far easier to keep it full than it is to fill it up.

So look at what you've asked managers to communicate. Then ask yourself if you have provided them the skillset to do so with a complete level of truth. It is not only our job to make sure that pay is properly designed and set, it is also our responsibility to ensure that the discussions around pay reflect the sometimes harsh reality of underperformance.

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 a co-author of “The Decision Makers Guide to Equity Compensation” and “Beyond Stock Options.” 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

Should We Define Superior Performance?

I think most of us agree on the importance of setting performance goals and clearly communicating performance expectations to employees.  Without this, you're left with something like management by mental telepathy.

But here's a question that has dogged me for some time:  Should managers, as part of the setting of performance expectations, give employees information on what they must do in order for their performance to be considered "superior"?  What it would look like to "far exceed expectations"?  Or is it better, even necessary, that we fall back to the Justice Potter Stewart position - that excellence is hard to define but we'll know it when we see it?

I hear more arguments against than in favor of pre-defining superior performance.  That it would give too much - even too specific - direction to workers.  That it boxes employees in and limits the possibilities of what they might accomplish.  In a world as fast-moving and uncertain as ours, these are compelling points.  Yet I'm left with the nagging sense that we're letting ourselves off the hook too easily here.

And here's another angle to consider.  In my admittedly unscientific observations, I am left with the impression that compensation professionals favor predefining superior performance and that leadership/OD/learning professionals typically fall on the side of leaving superior performance undefined. 

Are these sweeping generalizations on target?  If they are - why would it be so?  Is it that we who practice in the rewards field feel tend to be too black and white, too linear in our perspectives and preferences?  Or, like me, have too many of us had conversations with motivated employees who want very much to do what it takes to excel (and to earn the rewards associated with excellence), but who are frustrated by a boss who refuses to provide concrete suggestions - or even hints - of what they can do to better their contribution to the organization's success.  For an employees in these shoes, the response of "I can't tell you but I'll know it when I see it" can feel like a big fat cop-out. 

Is it?

Where do you come down on this question?  I'd love to hear the thoughts of those both in and outside of the compensation field.

Ann Bares is the Founder and Editor of the Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and is a bookhound and aspiring cook in her spare time.  Follow her on Twitter at @annbares.

Creative Commons Image "Trophy 1" by Shorts and Longs/The Both And

Don't Use Pay As A Babysitter

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, is you during the period of your absence. 

Typically we think of babysitting when there’s a dependent child involved, but in the workplace it’s not uncommon for ineffective managers 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 will not require much in the way of supervision, periodic direction or even meaningful conversation.  The thinking here is that, if I provide you with enough reward you will act as desired in order to not jeopardize those payments.  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.  The red flag goes up the pole when you consider 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 key 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:  Playing 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 and encourage an attitude of entitlement.  Everybody receives an annual merit raise, everyone earns a bonus. 

• 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.  Spending the company’s money effectively and efficiently isn’t on the radar screen.  They use pay like a club to get an employee’s attention.  And once they have it 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, in the sense of 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 to fund their behavior.

Why it doesn’t work

Relying on pay as a replacement for management has a short effective life cycle.

• Employees see arbitrary same-same 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 and 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.

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 administration.

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.

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a brood of cats. 

Creative Commons image courtesy of _DarkGuru_