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

What the Oreo Cookie Can Teach Us about Employee Recognition & Rewards

Is your company global? If not global, do you have multigenerational and multi-cultural workforce? If so, then you likely experience many of the same stressors of global organizations in catering to local employee needs for appropriate compensation, benefits, recognition and rewards.

The greatest challenge of all is first understanding local needs. It’s all too easy for HQ to think they know what employees want (in any capacity). Truly understanding and catering to real local desires, however, is an entirely different matter.

This story in Smart Business about Mondelez International (formerly Kraft Foods) is a terrific illustration of my point. For our American readers, what do you think of when you hear “Oreo cookie*?” Chances are it’s not a small cookie sandwich, with a green-tea flavored crème filing that’s not very sweet. Yet that’s exactly what “Oreo” means to Chinese consumers today.

Mondelez was ready to stop selling traditional, American-style Oreo cookies in China because they were losing money on sales. The cookies were too big, too sweet and not at all appealing to Chinese consumers. Yet, by first listening to what Chinese consumers actually wanted and changing the product to align with those tastes, Chinese Oreo sales now account for nearly half of the  global Oreo business.

This is a powerful lesson for HR pros creating global employee recognition programs, too. Simply recreating your program as designed for the country where HQ is located will almost certainly guarantee failure on a global basis, especially when it comes to rewards (the horror stories are quite compelling). Local tastes and local needs dramatically vary. While I know why clocks are a terrible reward for Chinese employees, I was a bit surprised to learn the most popular reward item – as regularly selected by Chinese employees in their own neighborhoods from a vast selection of reward choice – is fancy baked goods.

My point – never assume your way is the best way for all employees everywhere (or from every generation). While you should always work hard to include all employees in your strategic, social recognition program, you must also work hard to ensure it’s a program that is rewarding to them.

How do you localize your global programs?

* Even writing “cookie” instead of “biscuit” was, for this native Irishman, a customization in honour of the home country of the Oreo. Simple localization of language and terminology can also be a powerful means of acknowledging the importance of local needs in global programs.

As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.

One Size Does Not Fit All

"If you find a good solution and you become attached to it, the solution may become your next problem." ----- Robert Anthony

I had an "aha" moment recently and then very quickly became embarrassed for what should  have been obvious in the first place.

“One size does not fit all”.  My “aha” was realizing that this doesn’t apply just to HR/compensation --- but everyone in business --- even (drumroll) CEOs!  

JC Penney, the department store chain, recently fired Ron Johnson their CEO of 18 months.   He came from Apple where he created the retail operation that was a smashing success. 

Many people believe his firing was due to poor execution of a strategy that hadn’t been fully thought out.  Some of his innovations were radical, like ending discount sales in a department store known for its markdowns. Perhaps the biggest reason outsiders give for his failure is that he did not listen to customers.

Let’s look a little deeper.  How could such a wildly successful executive from Apple fail so abysmally at JCP?  He obviously had exhibited both great strategy AND great execution at Apple.  Why would his ability to think strategically and execute flawlessly fail him at JCP?

The simple answer:  “One size does not fit all”.

He took a page from Steve Job's playbook:  “Customers don’t know what they want until you show it to them.”  That sounds arrogant but for Apple it made sense.  Let's look deeper still: “If you ask customers what they want, they will tell you, ‘Better, faster, and cheaper’—that is, better sameness, not revolutionary change. They can describe their desires only in terms of what they are already using."   But big wins happen when you go beyond better sameness.

Ron’s mantra at JCP was --- guess what:  “Customers don’t know what they want”.  Like Jobs he wanted to go with revolutionary change --- not sameness.   But JCP’s products are commodities ---- not revolutionary tech products.  Apple’s business model doesn’t work at JCP.

Here’s an example of someone who wasn’t effective at Apple.   John Sculley took his commodity business model at PepsiCo with him to Apple.  As the new CEO he tried to change Apple from a “techie” company to one similar to PepsiCo ---- buttoned-down, slick and marketing oriented. 

In the end he failed because he began producing mass market machines to compete with IBM and was opposed to licensing Macintosh software. Apple is not in the commodity business like PepsiCo. Its products are about revolutionary change. 

The point to all of this is that CEOs/top management take what has worked for them at Company A and then go to another company, another industry, another culture and try to replicate what was a smashing success at Company A.  And they fail.

Of course we already know this applies to HR and compensation.  Like we haven’t heard it enough?!

I tried to take a team bonus plan for manufacturing assembly lines (line A, B, C, etc.) to another company and it failed.  In the first company it created a healthy competition where assembly lines competed with each other, had fun and celebrated winning.   In the second company it led to divisive competition where teams laughed at each other's failures, took shortcuts in their work leading to defective parts and scrapped material.   Not so successful.  Different culture.

Morale of the story:  Think about what you need to create.  Is it a revolutionary design for a compensation plan that will satisfy a need the company doesn’t even know it has?   Or is an upgraded  “sameness” plan what is really needed?

Put this someplace where you will see it daily. "If you find a good solution and become attached to it, the solution may become your next problem."

P.S.  Aren’t you glad that compensation people like us aren’t the only ones that forget “one size does not fit all”?

Jacque Vilet, President of Vilet International, has over 20 years’ experience in Global Human Resources with major multinationals such as Intel, National Semiconductor and SeagateTechnology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career.   Her true love is working with local national issues.  Jacque has the following certifications:  CCP, GPHR, HCS and SWP as well as a B.S. and M.S in
Psychology and an MBA.    She belongs to SHRM, Human Capital Institute and World at Work.   Jacque been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications. 

Image courtesy:  http://money.cnn.com

What Motivates Creative People?

Until now creativity has been viewed as important but not essential for the survival of a company.  Companies instead have focused on efficiency, productivity, and continuous improvement to lead them to success.

But priorities are dramatically changing. In a Global CEO Survey conducted by IBM, CEOs identified "creativity" as the most important factor for the successful company of the future. 

By “creativity” they mean truly innovative skills found in jobs like architects, data scientists, designers, etc. ---- skills believed to have true strategic value.   Any employee can be creative in his/her work, but the result is not likely to be a “show-stopper” for the company as would the work results of this “creative group”.

Creative employees are different—certainly in the workplace.   Most of them just don’t care about the same things as other employees.  Because they are different, managers have had difficulty knowing how to motivate them.  None of the usual practices that work with other employees seem to work with them.

Creative employees are intrinsically motivated.  They set extraordinarily high standards for themselves.  Research has shown that management can’t get them to work harder or perform better by saying “here’s some more money”.  When extrinsic rewards are being dangled in front of them like carrots on a stick, they feel externally controlled — which becomes a negative for motivation. It’s almost like the more you pay them to do what they love, the less they will love it.

Of course companies need to pay them “enough” to satisfy them. If they don’t, compensation becomes a sore point and distraction.  In addition, they might have a spouse who is less interested in creativity than in paying the mortgage and saving for the kids’ college.

But if management really wants outstanding creative performance, the key is intrinsic motivation– the work itself. 

This is consistent with what I have been told by a couple of my creative friends who have started up companies and now are venture capitalists.  It’s not the money that motivates them (even though they usually make tons of it).  It’s the challenge, the “aha” moments, the discoveries that lead to significant breakthroughs that are the “highs” creative people live for. It’s almost addictive, and it’s absolutely the driver behind their success.

Example:  The wife of one of these friends tells the story of one of her husband’s “aha” moments.   He was in the shower when he had an “aha” moment ---- bolted from the shower and ran naked and dripping wet through the house to his office pumping his arms and singing at the top of his voice.  His path took him through the family room where she was entertaining some friends.   He was totally oblivious --- caught up in the high.

So how can management use the work itself to motivate creative employees?

1)Provide them the right work environment ---- free from bureaucratic excesses, administrative work, unrealistic/changing deadlines, company politics and micromanagement.  
2) Don’t make status check calls and keep track of what’s done/left to do. Spend time with them and really listen to what they have done. Try to understand how they approach and solve problems and what has worked/hasn’t worked.
3) Give them an important problem to solve that the company urgently needs solved. Let them know (if true) that no one else has been able to crack it. This can be a real motivator.

Being told what to do and how to do it with no tolerance of failure, little expectation of recognition, and arbitrary deadlines, can kill motivation. But providing a positive atmosphere where failures are examined constructively, where management really listens and success is recognized in unique ways, can result in spectacular results.

It takes work.  But isn’t it worth it?   CEOs seem to think so. 

What has your experience been in trying to motivate “creatives”?  Any successes you can share?

Jacque Vilet, President of Vilet International, has over 20 years’ experience in Global Human Resources with major multinationals such as Intel, National Semiconductor and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expat twice during her career.   Her true love is working with local national issues.  Jacque has the following certifications:  CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology and an MBA.    She belongs to SHRM, Human Capital Institute and World at Work.   Jacque been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications. 

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. 

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

Top Performers Are Least Engaged in 42% of Companies - What You Can Do About It at Yours?

Have any of your employees “Gone Galt?” It’s a term I learned from the HR Capitalist, Kris Dunn. “Going Galt” means you follow the example of John Galt from Ayn Rand’s Atlas Shrugged. You’re sick of the lazy (ahem… the disengaged) taking advantage of your productivity, so you stop working so hard.

Employees going galt is terrible for your organization. These aren’t the low performers suddenly deciding to perform less well. No, these are your top performers, your high potentials, who realize there is no reason to continue to work so hard. Their exceptional efforts aren’t recognized and appreciated, so why bother?

Are you skeptical about this occurring? Research from Leadership IQ discussed in Forbes compared the employee engagement and performance results to each other, making it clear just how much of a reality this is.

“More than a third of companies are so dysfunctional, the best people don’t really care about what they’re doing and the worst people don’t know that they are doing a lousy job. Those are the findings of a new study by Leadership IQ, a twelve-year-old Washington, D.C. company that does employee engagement surveys and leadership training…

“Companies should be worried about these findings, says Murphy, because high performers tend to thrive on feeling involved and challenged. They also act as company ambassadors with clients, customers and potential hires. If they are bored or they feel under-appreciated, they will stop talking up their employer, mentally unplug from their work, start looking for opportunities elsewhere and eventually jump ship.

“As for low performers, companies want them either to become more productive or to disengage and find work elsewhere. Companies don’t want deluded low performers, who think they are contributing when they are really doing poorly, to stick around because they have fallen in love with their cushy jobs.”

More to the point, employee engagement surveys without analysis can tell a quite deceptive story. Leadership IQ reminds us of the importance of correlating engagement results with performance results because, quite frankly, we should be deeply concerned when our most engaged employees are our worst workers.

Can you blame your top performers for disengaging when they clearly see the worth of their efforts is the same as the sub-par work they see their under-performing colleagues delivering? I can think of little as demotivating as this. Intrinsic motivation is important, and this is one the fastest ways to destroy it.

That’s why I get concerned when people try to separate too fully intrinsic and extrinsic motivation – both are deeply intertwined. Restoring the balance in situations such as that described by the Leadership IQ research requires intentionally creating strategic recognition approaches to praise and acknowledge the top performers for their exceptional performance. You must differentiate recognition and rewards.

And don’t mistake the use of the term “differentiate” for how Jack Welch’s approach to differentiation has become misunderstood over the years. Remember, he said in Winning:

“When people differentiation is real, the top 20 percent of employees are showered with bonuses, stock options, praise, love, training, and a variety of rewards to their pocketbooks and souls. There can be no mistaking the stars at a company that differentiates. They are the best and are treated that way.

“The middle 70 percent are managed differently. This group of people is enormously valuable to any company; you simply cannot function without their skills, energy, and commitment. After all, they are the majority of your employees. But everyone in the middle 70 needs to be motivated, and made to feel as if they truly belong. You do not want to lose the vast majority of your middle 70 – you want to improve them.”

Recognition is strategically important. Differentiated recognition is even more so, to ensure the people at the top know they are the top, yet the people in the middle – the “Steady Eddies” who make it possible for your stars to shine – are recognized and rewarded appropriately, too.

Have any of your employees “gone galt?” Have you?

As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.

Image credit: Sunshine State Sarah

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.

Finding Meaning at Work (and Why Compensation Doesn't Help)

In my daily blog, I write regularly on broader topics around the idea of employee recognition – employee engagement, motivation, meaningful work, the value of values, and more. Here on Compensation Café, I try to focus my posts on topics that link directly to the topic of compensation, but I’m thrilled when my two blogging worlds collide in unexpected ways.

For example, over the weekend I was reading an article in the McKinsey Quarterly about the “meaning quotient” at work. The researchers see this as the third-level measurable quotient for effectiveness and impact, following the much better known intelligence quotient (IQ) and emotional quotient (EQ). I knew this would make a great post in my daily blog, but the longer I read, the more I knew I would have to share this with fellow imbibers at the Compensation Café.

First, an explanation of what the researchers mean by “meaning quotient”:

When we ask leaders about the ingredient they think is most often missing for them and for their colleagues—and by implication is most difficult to provide—they almost invariably signal the same thing: a strong sense of meaning. By “meaning,” we and they imply a feeling that what’s happening really matters, that what’s being done has not been done before or that it will make a difference to others.

I think nearly all of us will agree that “meaning” by this definition is both important, but also hard to pin down. How do we know what has “meaning?” As the more skeptical among us will ask, why does this even matter? The researchers tell us:

When a business environment’s Meaning Quotient is low, employees put less energy into their work and see it as “just a job” that gives them little more than a paycheck. The opportunity cost of the missing meaning is enormous. When we ask executives during the peak-performance exercise how much more productive they were at their peak than they were on average, for example, we get a range of answers, but the most common at senior levels is an increase of five time.

A five times increase in productivity – from knowing that our work is meaningful. Not too shabby. Indeed, Teresa Amabile and Steven Kramer tell us in The Progress Principle that the number one motivator for employees, by far, is making progress in meaningful work. In other words, we can’t wait until the annual bonus or the end of a multi-year project to acknowledge, praise and recognize the meaningful work occurring along the way. We need to be far more deliberate in our efforts to “catch someone doing something good."

Finally, here’s the link to compensation I promised. The McKinsey article ends with several strategies to uncover the Meaning Quotient. Strategy #3 is “Use small, unexpected rewards to motivate”:

When business objectives are linked to compensation, the motivation to drive for results is rarely enhanced meaningfully. The reason is as practical as psychological. Most annual-compensation plans of executives are so full of key performance indicators that the weighting of any one objective becomes largely meaningless in the grand scheme of things. Furthermore, most compensation plans typically emphasize financial metrics whose results depend on myriad variables, many beyond individual control. On top of that, most companies don’t have deep enough pockets to make compensation a significant driver of MQ in the workplace.

The lesson here is that when we aren’t expecting a reward, even a small one can have a disproportionate effect on our state of mind. And that’s also true of employees in the workplace…

Some managers might dismiss these as token gestures—but employees often tell us that the resulting boost in motivation and in connection to the leader and the company can last for months if not years. As Sam Walton, founder of Wal-Mart Stores, put it, “Nothing else can quite substitute for a few well-chosen, well-timed, sincere words of praise. They’re absolutely free—and worth a fortune.”

It always comes back to the difference between incentives (if you do X, you’ll get expected reward Y) and real recognition (now that you’ve achieved X, here’s unexpected praise and reward Y).

How well do you understand the meaningfulness of your work? On a scale of 1-5 (1 is low, 5 is high), how do you rank your own “meaning quotient?”

 As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.

A Lack of Company Enthusiasm Doesn't Mean a Lack of Job Passion

I was at a sold-out sporting event recently. The sport, as it turns out, doesn’t matter. Neither does the team. Heck, even the players are unimportant. I learned something great from a woman selling burgers and beer. I was reminded that you don’t need to love your company or its mission to be an incredibly valuable employee. I was also reminded, once again, that our lowest paid staff members are not simply interchangeable parts. Every one of them can make just as big an impact as our highest paid “stars”.

I left my seat during the action to grab a quick bite to eat. All the lines at the closest food stand were about the same length accept one, which was about 50% longer. I jumped into one of the short lines and watched as the longer line moved faster while every person walked away smiling or laughing. I had to change lines.

When I got to the counter a cheerful woman, with smile so genuine it made me smile back, asked what I would like. I ordered my beer and burger and she said something like, “Honey, you’ve gotta get the garlic fries with that.” She then turned around, sang out my order, complimented the person in the next line while she grabbed a drink for the counterperson on her other side.

I asked her if she was tired and she responded that as long as people were in line she didn’t have time for being tired.  As it turned out, they were shutting down in ten minutes, as the game would end in about twenty. As we waited for my order, I asked if they got seats for the end of the game. She laughed and told me that she had never watched even part of a game. She didn’t like the sport, didn’t know the players and always left before finding out whether the team won or lost.

Yet, she loved the organization and valued the job she held for the past fifteen years. She looked forward to work every day and made sure that, “those people who pay so much for tickets got their money’s worth when they ordered their food from her.” She meant it.  I believed it. Then I walked away with a smile and watched my team win the game.

I am sure away from the game you would have little idea who she worked for. It’s unlikely she comes across as a fan or wears any team clothing other than her work uniform. Here’s the amazing thing. I can’t remember what team was visiting, but I do remember that wonderful employee at the food counter. I am certain there are tons of people like her in jobs everywhere. I know I have met many over the years. It’s unlikely that any compensation program I can design or communicate will ever create another version of her. I can only work to make sure that I never screw up and ruin an attitude like that.

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”, “If I’d Only Know That”, “GEOnomics 2011” and “Equity Alternatives.” 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 at @Performensation and @SayOnPay.