Compensation Cafe

Pay for Supervisors

The well-established principle that supervisors should praise in public but criticize in private can derail a compensation system.  An article caught my eye recently on how slackers pull down the group because the crew rarely sees the corrective discipline privately applied.  It illustrates that what keeps people productive is effective communication of the appropriate feedback that drives behavior.  That made sense, but the recommended solution sucked.

Two thoughts came to mind:  (1) just as compensation is communication, isn’t communication also compensation? and (2) why are supervisors paid if not to keep the entire staff productive?  This article will focus on the second question, because the first deserves a complete post of its own.

If a boss follows the accepted rules and keeps corrective interventions private and confidential, that apparent silence bespeaks indifference to the workgroup who do not see any improvement steps, remedial actions, reprimands, punishments or open displays of negative consequences to the slacker.  One consultant prescribes intervention by the peer workers with the offender.  Rather than getting pissed off and demotivated yourself, he suggests, you should take ownership of the issue (because you are most affected by it and therefore more responsible than the boss!) and handle it yourself.  If the boss doesn’t act, some claim the peer co-workers should step up and chivvy the culprit.

Whose responsibility is it, to maintain a productive workforce?  Nowadays, it is true, bosses may supervise remotely, having little proximate physical contact with the team and therefore frequently unaware of slackers who goof off.  Even if out of sight, however, bosses are paid and supposedly trained to handle exactly these issues.  It is their monkey. 

Should co-workers be expected to cover for the supervisor, taking up the slack created by ineffective management to “supervise from below”?  I think not.  While social pressure from peers can be wonderfully effective, most workgroups are not elite teams of highly self-actualized experts who require little guidance.  An immediate supervisor is usually PAID to manage the performance of subordinates.  The boss may be called lead person, crew chief, foreman or forewoman, supervisor, manager, director, VP… or any title under the sun, but this role of people-monitor is the sole reason they receive a supervisory title and get higher income.  Leaders don’t neglect the well-being of their followers, because that is a repudiation of their pay grade. 

Remember that supervisors frequently have a more difficult task than mere managers.  Many people get the fancy title of manager (higher rank, pay, status, etc.) while remaining a sole individual performer, handling a project personally or administering a functional area.  Supervisors oversee people.  Managers may have no subordinates reporting directly to them, but all supervisors are responsible for the output of workers who report directly to them.  Handling people is actually a far more complex challenge than dealing with materials, administering plans, generating ideas and doing things that do not require exercising authority over people.  Instead of doing things yourself, the supervisor is supposed to delegate tasks and leverage the application of talent through others.  That is often much harder than handling issues personally as an individual contributor.

Since supervisors are already rewarded for filling that role of monitor and guide, they should be charged with the duty of fulfilling that responsibility.  It seems wrong, improper and unfair to expect underlings to enforce discipline and to maintain the productive work environment when a supervisor is neglecting their duty.  Any boss incapable or unwilling to perform that authoritative human interaction role should be demoted to a coordinator position where they can deal with data and things and not face supervisory challenges. 

Or am I wrong, again?

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 cafepress.com

Ideal Organizations Diversify The Definition of Diversity

What does the ideal organization look like?

Rob Goffee and Gareth Jones have been looking at this question for more than three years. Their research found six common principles that cut across circumstance, industry, and individual ambitions. In their article Creating the Best Workplace on Earth, they reveal these six principles:

1. individual differences are nurtured;
2. information is not suppressed or spun;
3. the company adds value to employees, rather than merely extracting it from them;
4. the organization stands for something meaningful;
5. the work itself is intrinsically rewarding;
6. there are no stupid rules.

On the surface, these are common-sense principles that seem intuitive. But if we stop and really think about what these things mean, there are surprising revelations. Take the first principle, for example.

When we think about individual differences, most of us jump immediately to the standard definitions of gender, race and ethnicity, age, etc. But Goffee and Jones found that it's really about more than traditional diversity categories. It's about cognitive diversity: differences in core assumptions, perspectives, and habits of mind. The ideal organization "is aware of dominant currents in its culture, work habits, dress code, traditions, and governing assumptions but... makes explicit efforts to transcend them."

We're all familiar with the classic examples of the "eccentric scientist" who keeps odd work hours and the "creatives" that can't seem to work in suits and ties. But yet again, it goes deeper than we initially think. It's about tapping into less-obvious talents in unexpected places. It's about blending cognitive differences and combining skill sets in new and unconventional ways. It's about creating a truly interdisciplinary environment. 

Combining data analysts, professional dancers and product designers into a cohesive work team is no easy feat. Measuring performance is even more difficult. Traditionally defined career paths and competence models don't work. Quantitative measurement systems can't adequately capture the value of that one breakthrough idea, but they do penalize the likely (and necessary) dead ends leading up to that breakthrough.

Such an environment also creates a unique challenge with respect to compensation. A one-size-fits-all rewards package will be sub-optimal. The challenge is to develop a system that encompasses enough variety to be effective in rewarding the data analysts, dancers and designers, but still retains cohesiveness and maintains pay equity. It has to account for differences in individual preferences in risk tolerance (base versus incentive), cash/benefits tradeoffs, and tangibles versus intangibles.

Diversifying the definition of diversity is messy business. Creating the ideal organization is likely an impossibility. So is building the perfect performance measurement system and total rewards package for this ideal organization. But even if we never get there, measurable gains can be made while striving for the ideal. Are you brave enough to dip a toe into diversifying the definition of diversity and see what great things might happen? 

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 quantitative 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 Inc., the host of The Proactive Employer radio show, and author of the upcoming book Compensating Your Employees Fairly: A Guide to Internal Pay Equity. Follow her on Twitter at @proactivemployr. 

Is Co-Creative Analytics the Answer?

There's been a lot of talk about skill shortages at the Cafe lately. Jim Brennan points out that the educational system may be incapable of closing the talent deficit, resulting in a broken link between compensation and education. Ann Bares also discusses the skill shortage, and thinks the answer may lie in cooperation between the recruiting and compensation functions.

Addressing the challenge of the skill shortage in today's economic environment requires a new approach, and I think Ann may be on to something. I'm a big fan of interdisciplinary solutions. The interdisciplinary approach has led to advancements in disease prevention, economic development and global climate change. It has even led to the development of new fields of study like nanotechnology, genomics and bioinformatics. It brings fresh perspectives to old problems, and can lead to astonishing breakthroughs. 

It may be difficult to find a starting point for this inter-departmental cooperation, given that recruiting and compensation are each unfamiliar with the other's vernacular. Data may be the universal translator, and co-creative analytics may be the ideal starting point.

What is co-creative analytics? Here's how the process was described in a recent HBR blog post:

You put together ad-hoc teams that involve not only analysts with relevant domain expertise but also represent skills from other domains, which brings new ways of thinking to old analytical problems. Over a short two or three day period the team will brainstorm around the problem involved and bring together as much data and as many analytical frameworks as they can to both frame up the problem and outline potential solutions or at least pathways to solutions.

As Ann points out, the solution to the skill shortage may lie in a collaborative effort to better understand alternate candidate pools and identify the rewards strategies likely to attract and retain these candidates. It's easy to see how co-creative analytics could facilitate this collaboration.

This same interdisciplinary approach has applications in other areas of the organization. Performance management immediately comes to mind. A co-creative analytics approach could provide better alignment of individual performance goals with the goals of the organization. It's likely that based on different past successes and failures, different departments will approach a given organizational goal in different ways. Sharing those approaches across departmental lines can spark new ways of looking at old problems, pushing the organization forward.

What other kinds of organizational challenges could co-creative analytics address? 

 

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 quantitative 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 Inc., the host of The Proactive Employer radio show, and author of the upcoming book Compensating Your Employees Fairly: A Guide to Internal Pay Equity. Follow her on Twitter at @proactivemployr. 

Real-Life Experiment in Pay Transparency

Would you trust your co-workers with setting your job responsibilities? Would you let them decide whether to promote or demote you? How about determining your compensation? 

That's exactly what's going to happen on Fox's newest reality TV series, Toxic Office: Does Someone Have To Go?

According to a press release from Fox, the premise is simple: 

Frustrated bosses will hand over the reins of their companies to the employees, offering their respective staffs a chance to make changes in the workplace - even if it means letting co-workers go. 

In one of the previews, employees are gathered in a conference room watching a PowerPoint presentation detailing each employee, right down to salary:

The network says that the show empowers employees to solve their own problems. Reality TV issues aside, could such a setup in real life solve problems? Or would it create more problems? 

We talk a lot about creating transparent pay, but can it ever be a good idea to have complete disclosure, publishing every employee's salary company-wide?  

My concern is that emotion would come into play. Cliques, jealousy, and conflict are a fact of life in the workplace. Decisions might be made in response to a "can you believe he makes that much?" reaction, rather than considering the full picture.

There are numerous factors affecting compensation other than job title and seniority. Differing salary histories in previous employment, negotiations, and salary expectations play a role, as do market conditions, the importance of the position to the company, and individual performance. Could the typical employee get past the initial emotional response and make an objective decision based on a rational assessment of the full picture?

There may be a role for employee input for some types of compensation. For example, IGN Entertainment created a profit-sharing system where employees awarded each other "tokens". The more tokens an employee receives from his co-workers, the larger percentage of the profit she receives (Ann Bares provides the details at Compensation Force). But could this system work for base pay as well as it does for incentive pay?  

We'll have to tune in and see how all of this plays out, but my guess is that going beyond transparency and disclosing salaries to co-workers is likely to create more problems - the kind of table-flipping, name-calling drama that we've come to expect from reality tv - than it solves. 

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 quantitative 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 Inc., the host of The Proactive Employer radio show, and author of the upcoming book Compensating Your Employees Fairly: A Guide to Internal Pay Equity. Follow her on Twitter at @proactivemployr. 

How You Can Transform Performance Management

If you work for a company that focuses on "what we want to become" then I've got some research findings for you. Instead of overdoing it with lots of details, I thought I'd just skip to a practical application of one area of the research findings. I'm covering insights that you can use to upgrade and update your performance management practices.

There is a world of exciting insights in "Global Talent 2021: How the new geography of talent will transform human resource strategies." It is a completely practical and fascinating report. Executed by Oxford Economics, it was produced in collaboration with an impressive list of heavy hitters: Towers Watson, AIG, American Express, British American Tobacco, the Center for Effective Organizations at the University of Southern California, Cummins, Coca-Cola, Edison International and the Organization of American States. You may want to check out the rest of the findings (highly encouraged) or wait until my next blog post for some more coverage of the study.

Imagine this. Instead of prodding employees to struggle through "what do we do next," you can use  these findings to apply performance management to the future. 

Here are the four skill areas that will be in most demand over the next five to ten years. Notice, not job titles or professions -- skill areas. Areas that are most likely applicable across your business and jobs. Areas that can be addressed now via MBOs, development plans and internal communications -- through your guidance -- to advance your company's capabilities as well as address your employees' desires for career development.

1. Digital skills. Here they are talking about an employee's ability to solve problems via digital applications rather than specific jobs. There is a exploding array of applications that make possible digital expression of work or collaborative processes. Much of this work entails marketing literacy. Anything else? Employee experience in ecommerce is an obvious example of a future need; so is addressing internal efficiencies digitally and overcoming inefficient legacy infrastructure.
2. Agile thinking. Most of us in HR understand that the future will bring increasing complexity and some "paradoxical" leaps (instead of iterative change). Do our employees have these expections too? Are they prepared to deal with them without extreme emotional upheaval? In the near future, the acceptance of this level of turmoil will be demonstrated in work practices that prepare for not only the preferred, but also additional scenarios. This flexible mindset, and these work practices, can be introduced to a business (and HR) with great immediate value.
3. Interpersonal and communication skills. HR is ahead of the curve in understanding the need for co-creative, collaborative, team-focused competencies. But few of us have gotten our companies to move very far ahead on the fundamental for innovation -- employees with such a deep understanding of the business and its strategy that they can adeptly align with them as they make any decision.
4. Global operating skills. Here's what the near future has in store. ' . . . according to Jeff Immelt, Chairman and CEO of GE, firms will increasingly move from "glocalization," where home market products and services are tailored to the tastes of overseas customers, to reverse innovation, under which innovation is led from emerging markets and then brought back home to mature markets.' Each company is at a different notch on this continuum, but I think it would be really helpful to employees if they could see this strategic shift more clearly. Use the performance management process to talk over this evolution together in the larger terms, instead of describing changes as one-at-a-time updates to individual products and clients.

Margaret O'Hanlon is founder and Principal of re:Think Consulting. She'll join Ann Bares and Dan Walter of the Compensation Cafe to speak the unspoken -- Everything You Do (in Compensation) Is Communication -- in an upcoming book. Margaret brings deep expertise in compensation, career development and communications to the dialog at the Café. Before founding re:Think Consulting, she was a Principal with Towers Watson. Margaret is Deputy Director 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, Bloomington. Creative writing is one of her outside passions, along with Masters Swimming.

When Am I Going To Get Mine?

Over the past several years most companies impacted by the recessionary economy have dealt with the crisis by cutting back on employee reward programs, what with frozen salaries, minimal pay rises, shrunken incentives and even the elimination or reduction of 401(k) matching funds and other benefit provisions.  And of course there have been the layoffs.  So many layoffs.  Even today companies seem resistant to hiring new employees, to expanding their business with additional headcount.  Unemployment levels seem stuck on high.

But it's not all gloom and doom.   With several sectors of the economy starting to show sputtering signs of life we've seen some elements of the shrunken workforce actually begin to push back from the period when they felt like replaceable commodities.  When they felt that they were lucky to have a job.  Some of those survivors are now asking when their employers would be reinstating the monies lost through those recessionary restrictions and cutbacks.  Their view is that if an employee's salary was frozen or if pay increases had been restricted in recent years, when the company begins to regain its financial strength management should acknowledge and recompense payback for the loss of income.  To put a figure on it, that might mean an additional 6% - 7% pay rise in 2013 to simply play catch up – and perhaps more.

Ain’t gonna happen.

That ship has sailed.  As each fiscal year closes your company tallies up the figures, reports the results upward and to the Wall Street financial analysts and then they move on to the new year.  Case closed.  The recessionary years are in the past.  There is no going back.

Unfair?  Do you think that employees are owed those “lost” dollars?  Consider the question as a business problem.  The company cannot afford being burdened with additional fixed and recurring costs just as their operations are struggling to regain its competitive strength.  While they will likely strive to reward employee performance in a competitive fashion, as long as it’s affordable given their financial posture, they will not revise their rewards program to pay for historical entitlement vs. current performance, or on the basis of whether or not they’re doing well in a particular time period.

Ain’t gonna happen.

Picture the scene in the Boardroom when the question comes up – if it even does - of returning to employees those increases that were not granted during the dark times.  How much would that cost, and how big a dent in future plans would be caused by the additional fixed expenses?  Management will consider that the tight fiscal measures put in place for Human Resources, as well as other functional areas, were necessary to get the company through a rough patch.  To keep even more employees from being laid off.  Now that better times are slowly returning it makes business sense to begin reducing those restrictions going forward or otherwise trying to return to normal operations.

The use of bonuses and merit increases will return to more normal levels this year, as will company matches for 401(k) contributions and other temporarily suspended activities. But they will not be made retroactive.  Companies need to look forward, not backward.

To add incremental, unbudgeted funds to reinstate missed salary increases from prior years is not going to happen, as management has its hands full bringing itself back to a healthy financial posture and preparing for the future.  Supplemental “make-up” compensation, especially in the form of fixed costs, is not viewed as a financially sound strategy.

So in case you're thinking of asking, have a care that you might already know the answer.  Your company has moved on, hopefully toward better times for everyone involved.

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 Ano Lobb

Leaning in, Weisure and Work Life Balance

Have you read Shery Sandberg's new book Lean In? If not, you've probably heard about it. It's receiving rave reviews and generating a lot of conversation. Oprah Winfrey referred to the book as "honest and brave... The new manifesto for women in the workplace."

The book - and the author - have created quite a stir. In a PBS interview, Sandberg stated "there's no such thing as work-life balance. There's work, there's life, and there's no balance." The book encourages women to challenge assumptions about themselves and the workplace, and urges us to give up the myth of 'having it all.'  

In her review of the book, Carey Goldberg argues that Sandberg has missed the mark:

Our greatest obstacle is not any girly self-doubt. It is a rigid workplace culture that won't let us ratchet down. It is employers who do not offer flexible alternatives that drive parents out, by offering only a binary choice between full-time-plus or the highway.

Could the problem really be as simple as workplace (in)flexibility? It might be. But flexibility isn't a 'women's issue' - it's a 'worker's issue.' All of us, irrespective of gender, suffer from workweek creep. Our workweeks are expanding because we're performing work-related activities during non-work time. We live lives of weisure, a term coined by sociologist Dalton Conley. 

Conley notes that "activities and social spaces are becoming more work-play ambiguous" and it's becoming increasingly difficult to segregate the work aspects from the non-work aspects of our lives. The source of this ambiguity? Technology. 

It should come as no surprise then that Sandberg, the COO of Facebook, doesn't think that work-life balance exists. In an always-on, always-connected world, the boundary between work and life is significantly blurred, if not altogether erased.

Our workdays have also been reshaped by the kinds of work we're doing. The rise of the "creative class" means we're working differently, manufacturing ideas rather than widgets. It may be the case that a weisure lifestyle is the best fit for this creative class. 

I'm not sure if work-life balance is possible, at least in the conventional sense. But I do think that if it is, flexible workplaces will help us achieve it. It's up to each individual to find their own balance, and workplaces that embrace a variety of options for these balancing acts will be the ones that lead us into the 21st century.

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 quantitative 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 Inc., the host of The Proactive Employer radio show, and author of the upcoming book Compensating Your Employees Fairly: A Guide to Internal Pay Equity. Follow her on Twitter at @proactivemployr. 

The Complete Job

When reviewing an employee's performance, what do you as a manager look at?  Results, right?  You'll try to be as objective as you can, considering quantifiable metrics like deadlines met, sales targets  achieved, projects launched, budget compliance and products or services delivered.  Figures don't seem to lie.

But is that the whole job?  Is that all you expect from your employees, a targeted end result?  Or is there more involved when you consider what successful performance means to you and your company?  Are you assessing an employee against the "complete" job, or just the visible tip of the iceberg?

How you get it done

For many companies performing the "complete" job encompasses the how as well as the what.  An increasing number of organizations are recognizing that the manner in which results were achieved (the how) has a bearing on the impact of the results (opportunities reached or missed, short vs. long term thinking, building relationships, etc.).  They are coming to realize that employee behavior can also create ripple effects with other employees, as well as with clients, suppliers and even with the organization's reputation in the community.  And those ripples can have negative consequences.

Have you ever seen a touchdown called back because of a penalty?  The points get taken off the board.

So how we view success is not just about results, or at least it shouldn't be.  Organizations are considering in the overall assessment "how" the work was done, as sometimes an employee's behavior can affect not only their own individual results - but the success of other employees as well.

An employee who doesn't cooperate with others, who displays arrogance, takes undue risks, alienates vendors, or is self-centered and doesn't have the company's financial interests in mind - that person is like a bull in the china shop of your business, a time bomb waiting to explode.

What will the casualties look like?

• Bodies in the hallway: Not literally, but an "end justifies the means" mentality takes no prisoners and can be ruthless with co-workers.  It's every man for himself and you'd better get out of the way.

• Nobody likes Bob: This is the employee that no one wants to work with, who doesn't understand the word "collaborate" and who doesn't share toys with anyone.  They don't receive Christmas cards.

• Ethics?  What are ethics? This is the short-cut artist, who isn't above bending the rules well past recognition, as long as their tactics gain a short term advantage or deliver results.

• Loss of respect: Here we have the player who may gain measureable results, but for whom few workers have a professional trust or respect.  And for those we don't respect we don't move mountains or go the extra mile.

How managers act

Some managers have a short term focus, anxious to sidestep their own pressures by looking only at results achieved; the monthly or quarterly figures.  But the impact of a "results first and always" business practice plants seeds for eventual ruin as behavioral factors may eventually supersede the value of gaining those quick results.

• Lost business: The most direct impact, where inappropriate employee behavior has sent a customer or client heading for the exit.

• Talent drain:  "I'm outta here" is an often heard refrain from employees no longer willing to deal with certain employees.  How many high caliber employees can you afford to lose?

• Negative press: You don't want to see your company exposed by the media, unless such self-advertising was orchestrated by your own people.  The company will be splattered by the same mud when employees are caught for their transgressions.

So have a care when considering what you view as successful employee performance. After all, it's easy to simply look at the figures to assess what results were delivered.

It's a bit more challenging to tell employees that an assessment of the complete job requires that the behavior surrounding those results is going to get a look-see as well.

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 Southern Methodist U.

The Golden Ratio of Performance Feedback

Which is more effective in improving team performance: using positive feedback to let people know when they're doing well, or offering constructive comments to help them when they're on track?

Jack Zenger and Joseph Folkman posed this very question in their recent post at Harvard Business Review. While both are important, they note that some new research suggests there may be a golden ratio when it comes to achieving a balance between positive and negative feedback.

Emily Heaphy and Marcial Losada looked at the "effectiveness" of 60 strategic-business-unit leadership teams at a large information-processing organization. They measured "effectiveness" based on customer satisfaction ratings, financial performance, and 360-degree feedback ratings of the team members. Heaphy and Losada found that the main difference between the most and least successful teams was the ratio of positive ("I agree with you", "That's a great idea") to negative ("I don't agree with you", "We shouldn't even consider doing that") comments:

• Highest performing teams had a ratio of 5.6: nearly 6 positive comments for every one negative comment;
• Medium performing teams had a ratio of 1.9: 2 positive comments for every one negative comment;
• Lowest performing teams had a ratio of 0.3: three negative comments for every positive comment.

Negative feedback is a double-edged sword. While it's an important part of growth and development, a little bit goes a long way. As Zenger and Folkman point out:

Negative feedback is important when we're heading over a cliff to warn us that we'd really better stop doing something horrible or start doing something we're not doing right away. But even the most well-intentioned criticism can rupture relationships and undermine self-confidence and initiative. It can change behavior, certainly, but it doesn't cause people to put forth their best efforts.

As with most things, it's a delicate balancing act. Think about how close you are to the golden ratio of performance feedback - the closer you get to the "6 positive per 1 negative" ratio, the more effective your team is likely to be.

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 quantitative 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 Inc., the host of The Proactive Employer radio show, and author of the upcoming book Compensating Your Employees Fairly: A Guide to Internal Pay Equity. Follow her on Twitter at @proactivemployr.

Time for Spring Cleaning?

Many of us look around our homes in the warming spring light and think, boy, could this place be in better shape! Maybe it's because the lighting in most offices is far from warm, but the impulse doesn't seem to be as common in Compensation departments.

Thing is, most of us can think of more appealing projects than purposely looking for the messes and (contentedly) cleaning them up. Maybe that's why most of the audits that my clients do are part of a planned compensation program redesign. They have already admitted that there are problems and have decided they have the fortitude to deal with them.

"Yearly audit? But I've got fires to put out! My time is booked out." I can hear you now. Problem is, if there are so many managers and employees that need you urgently -- or programs with ugly loopholes -- it's a safe bet that things aren't really in order. 

After all, part of the "art" of compensation is making our practices systematic and consistent. In addition to the competitiveness of our pay levels, DIY routines should be audited to make sure the wear and tear hasn't caused some holes.

I thought I'd mention a few audit ideas just to get you inspired. I've put some of the traditional ones at the end and begun with a few less common ways to obtain important insights via audits. Be sure to commit to making the needed changes before you get started. Just like housecleaning, you don't want to turn your back on the messes once you find them.

• Create an overall, combined compa-ratio for your jobs and decide if you like what you see.
• Break down your compa-ratio audit by job family and analyze where actual pay is vs. the market rates for the jobs. Are employees really being paid competitively?
• Use compa-ratios to tell you whether there are compression issues in high growth departments and, if so, how big the salary differences are.
• Interview managers who approve overtime to determine if there are consistent practices and understanding of the regulations.
• Audit promotional increases to determine if the decision-making about eligibility and amount has been consistent across the organization.
• Catalogue hybrid jobs -- I bet you don't have all the titles in one place -- and confirm that job assessments and pay determinations have been made following the same guidelines and with equivalent outcomes.
• If you have anniversary date performance appraisals, check out the backlog, contact the managers and eliminate it.
• If you have focal review performance appraisals, sample some departments and evaluate whether the written employee feedback truly differentiates between employees and substantiates their ratings.
• Tell the truth! Are your filing methods up to date and compliant? Are your files?

Of course, there are also FLSA and equitable practice audits. I recommend that you engage legal assistance to get those accomplished.

Want to really air the place out? What about a candid assessment of your strategic efforts? If your pay-for-performance efforts were linked to improved customer satisfaction or profit, for example, did they really have an impact? How can you draw a line of sight between department objectives, employee objectives and company results? What aspects of planning and operations worked and how? How can you build on these successes? Finding this sweet spot would be a valuable investment for your company. Imagine how much useful, field-proven data you could share with your managers to improve business results . . .

Margaret O'Hanlon is founder and Principal of re:Think Consulting. She'll join Ann Bares and Dan Walter of the Compensation Cafe to speak the unspoken -- Everything You Do (in Compensation) Is Communication -- in an upcoming book. Margaret brings deep expertise in compensation, career development and communications to the dialog at the Café. Before founding re:Think Consulting, she was a Principal with Towers Watson. Margaret is Deputy Director 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, Bloomington. Creative writing is one of her outside passions, along with Masters Swimming.