Compensation Cafe

Sometimes the Road Less Traveled leads to a Band of Flying Monkeys

We all get bored. Most of us fill that boredom by exploring something new. Often this leads to an exciting new restaurant, but sometimes it means a terrible meal. Sometimes this means meeting new friends, other times it means getting stuck at a colleague's holiday party listening to stories about office politics and sick children. In my experience, very few compensation professionals are also extreme sports fanatics. I seldom speak to someone in our industry who has recently snowboarded off a cliff or free-dived with white sharks.

I bring this up because we are responsible for a huge portion of our companies' success. It surprises me how often professionals make a decision to follow a new path without first calculating to possibility of the path ending in a band of flying monkeys, rather than a better solution.

Are you following the road less traveled in the spirit of Robert Frost or Dorothy from The Wizard of Oz?

I ask because I still see a lot of compensation professionals acting against their nature when it comes to new programs. When an old plan is not working as well as planned, many choose to roll out a new program. This is done instead of enhancing the features and communication around an older plan. While the problems may be driven by failures in the design of the old plan, it is just as likely they are caused by poor utilization of available plan features or poor communication of the same.

Given our increasing responsibilities and shrinking staff sizes, rolling out a new plan efficiently is often beyond our capabilities.  We frequently discover that completion is impossible when we are already well down the "new plan" road, when turning back is no longer an option. This results in abandonment or, worse, partial roll-out of the new plan.  It can also mean that your old plan may still, by necessity, be your ongoing solution.

This year, explore a quick trip down the future of your current program path and ask yourself if you can get where you need to go without starting all over. You may find that you have simply been doing things by rote when a burst of new energy is all that is needed to reach your destination.

Remember that although Dorothy finally got where she was going, the journey was both arduous and terrifying.  We seldom have the luxury (or desire) of putting our employers and employees through a truly frightening experience. Dorothy had the distinct advantage of an author who could ensure that her story had a “Hollywood” ending. We generally drive the ending of our stories and are held professionally accountable for their success or failure.

Take a few days before 2011 disappears to document the reasons for the success or failure of your current (or recent) compensation plans. Be brutally honest about whether you and your staff could have done anything to have made them more successful.

Might I recommend doing those things, before you start down another unknown path?

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 Known That” 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

Why Should I Help You?

Faced with critical skills gaps and an aging workforce, companies are looking for cost-effective ways to develop talent quickly.  One of the ideas in play is implementing mentoring and knowledge sharing programs... which is a great idea if you can get people to share what they know.

Unfortunately, in the majority of organizations there are more reasons for people not to share information.  They may have personal reasons, such as they dislike the person asking, they have no clue, or they just aren’t very helpful (which may be an engagement problem).  Or there may be organizational reasons, i.e., they fear losing leverage or influence, they are incented to focus elsewhere or they don’t have time.

People are naturally reluctant to give away any advantage, particularly in highly competitive environments and uncertain economic times.  Organizationally, companies must find ways to make sharing information a competitive advantage rather than hoarding information. 

Here are a few ways not to do that:

• Ask someone to mentor a high potential then promote the high potential over them.
• Ask an extremely busy expert to mentor a new hire without lightening their work load or recognizing them for their extra efforts.
• Assume 'social media’ will somehow magically inspire people to network and share knowledge in ways that benefit the organization.
• Ask someone to train their cheaper replacement. 

These strategies neglect any form of motivation for the knowledge sharers, such as recognition, development opportunities, measurable objectives or rewards.  In fact, in most of these scenarios the mentor is placed at a disadvantage by helping, which creates a misalignment of objectives.  As a result, some reluctant exchange of information may occur but it won’t transform the organization.

It really comes down to this: How do you get people to share what they know?

There are four key ingredients for making it work: 1) management attention; 2) measurement; 3) tools; and 4) rewards.  Let’s take a closer look at each of these:

1. Management attention - As my Café colleague Derek Irvine put it in his recent post The One Thing You Must Do…, if your top management team doesn’t care, why should anyone else?  For example, a large global organization I worked with had a formal mentoring program where each new employee was assigned to an executive, who was tasked with meeting the employee once a month and smoothing the waters with active sponsorship and sage advice.
2. Measurement - If you don’t have specific goals you're trying to achieve and don’t measure whether you achieve them, you're essentially just bumbling about. How about measuring new hire productivity to track mentoring effectiveness during on-boarding?  Or tracking top performers back to mentors to see which mentors foster the highest performance?
3. Make it easy - There are all kinds of tools out there to facilitate collaboration, networking and knowledge-sharing.  Make sure people have access to them and monitor what actually works and gains traction.  Additionally, make mentoring and knowledge sharing part of the program with clear goals and objectives and - if appropriate - reduced workloads.  
4. Rewards - Deep down most people want to feel useful to others but you can encourage mentoring behaviors by recognizing and rewarding them, as well as ensuring that the best development opportunities go to people who have clearly demonstrated an attitude of service. Because those are the people who will scale and do the most for the organization.

Bottom line: As with anything you're trying to achieve organizationally, people will respond to what you SHOW is important, not what you say is important. 

Laura Schroeder is a global talent specialist at Workday, headquartered in Pleasanton, CA.  She has nearly fifteen years of experience envisioning, designing, developing, implementing and evangelizing global Human Capital Management (HCM) solutions and holds a certificate in Strategic Human Resources Practices from Cornell University.  Her articles and interviews on HCM topics have been published in the US, Europe and Asia.  She lives in Munich, Germany and enjoys cooking, reading, writing, kick boxing (well, kicking things) and spending time with friends and family. If you want to read more from Laura, check out her talent management blog Working Girl or follow her on Twitter @WorkGal.

Either Put Me in Charge or Let Me Be a Lackey. I'm Fine with Either, But I Can't Do Both.

A friend recently updated their status with the title to this article. Ironically, I saw it just as I got off a call with a client who  was explaining that somehow she was expected to serve as both the strategic visionary and tactical processor for her company’s multi-national LTIP programs. The simple request in my friends status update seemed reasonable, well thought-out and familiar. As we traverse the crags of an uneven recovery, companies have found it difficult to create compensation plans that perform as expected. As budgets continue to be bound by uncertainty, companies have been unwilling, or unable, to hire tactical help. This leaves compensation departments in a quandary. When should we strategize and when should we make things happen?

For those of you who are feeling like your personality and activities are being split down the middle, I'd like to suggest a small exercise. Take 4 hours and block it off your calendar. (I know you don’t have 4 free hours, but trust me this may really help.) Let’s just pretend you blocked off 10:00am-2:00pm tomorrow.

• 10:00-10:30: Spend the first 30 minutes making a list of every strategic idea you would address if you were in charge of everything, but not responsible for doing any of the tasks. Rank based on compliance, urgency, cost and benefit.  Call this your “Strategy List”.
• 10:30-11:00: Focus the next 30 minutes making a list of every process you would improve if you didn’t have to worry about planning, administration or reporting tasks. Rank based on compliance, urgency, cost and benefit. Call this your “Tactics List”.
• 11:00-11:30: The next 30 minutes make list of all the tasks you would do if you were never interrupted by other things. Think about the minutiae and get granular. Rank based on compliance, urgency, cost and benefit. Call this your “Tasks List”.
• 11:30-12:00: Go through the Strategy, Tactics and Tasks lists and mark each item that ONLY someone with your skill set or better (not you) can get done. Then mark those that can be done by someone with a lesser skill set.
• 12:00-12:30:  Look at the remaining items. These are the things that you believe ONLY YOU can accomplish. Is this list realistic? Can anything be moved to one of the other lists? When this list is down to two or three items, you are set for a promotion.
• 12:30-2:00: Go have a nice lunch with a friend.  Celebrate that you just figured out how to put yourself in charge or be a lackey.

A very smart manager once told me “irreplaceable is unpromotable.” She made it clear that as long as I was the only one who could do certain things, I would remain the only one doing those things. Turns out, it’s basic logic. If you want to stop doing things on your list, you must first figure out a way for others to do them (or to make the items go away altogether.)

Look at your lists again. Which things do you really want to be doing? Of everything that’s left, can you train, hire, outsource, bring in consulting or temporary staff to get them done? If yes, put together a business case for exactly that. If no, keep working on your lists until the answer is yes. I have seen people change things in a week or two and I have seen cases where the changes were so large or numerous that it would take 6-12 months to get them done. I have never seen company where the changes were impossible.

The key is this: If you want to be in charge, the first step is figuring out how to be in charge. Regardless of whether you want to be a lackey or in charge, the first step is to define what those terms mean. The next step is to clearly communicate to those who can help make the change. This may be your boss, colleagues, or the staff working for you. The key is to show what’s in it for them (WIIFM). If they see the personal benefit, they may be inclined to help.  If you communicate things as a plea for help, you may get short-term traction, but nothing will really change.

So, put yourself in charge or make yourself the lackey, but only you can ensure that you’re not both.

Dan Walter is the President and CEO of Performensation an independent compensation consultant focused on the needs of small and mid-sized public and private companies. Dan’s unique perspective and expertise includes equity compensation, executive compensation, performance-based pay and talent management issues, Dan is on the board of the National Center for Employee Ownership, a partner in the ShareComp virtual conferences and the founder of Equity Compensation Experts a free networking group. Dan is frequently requested as a dynamic and humorous speaker covering compensation and motivation topics. Connect with him on LinkedIn or follow him on Twitter @Performensation and @SayOnPay

Curiosity May Kill Cats, but It Saves Compensation Professionals

Do you ever wonder why you are reading this article? No one is paying you to read this. Your boss will probably never even know that you read it. Why take a few more minutes out of your busy day for something that only you truly value?  The answer is simple. You are a curious person. (Fair warning this is a “soft” article with no statistics or compensation rules)

We are always told that curiosity kills cats. The theory is that it gets cats into trouble that eventually cause their demise.  I would augue that it does the opposite for compensation professionals. Compensation is as much an art as it is a science. This means that even though there are great ways to do almost everything, there are very few absolute ways to do anything. It is curiosity that can make, or break, someone in our profession.

We all must keep up with rules and regulations. This requires less curiosity than it does persistence. Sometimes new rules require us to change processes, communications or procedures, but we are seldom forced to change our compensation philosophy or basic structure. Curioisty is much bigger than compliance.

Curiosity is the key to evolution. It’s not just learning about your peers or industry trends. It is about digging in and figuring out how you can apply a mix of new knowledge and best practices to give your company, its shareholders and employees an edge. The need to know new things and explore different paths is what allows you and your company to stay ahead of the competition.

The best compensation departments aren’t checking to see if their programs are correct.  They explore new paths so they can be better. Many of us look to justify our past decisions.The very best look for why they aren’t making new decisions. Given a choice to act on what they already know and the potential for new information and improvement, they choose improvement. These are the companies who create the next “best thing.”  They are also the professionals who we find publicly celebrating, instead of defending, the results of their programs. 

So how is curiosity inspired? While it is against our professional nature, curiosity is seldom motivated by compensation. It is most often motivated by the personal and professional change it can bring. You and everyone on your staff want to know that your ideas count.It is easy to create this culture.

Provide an open environment where the following phrases are outlawed:

1)     We’ve never done it that way.

2)     That probably won’t work.

Replace those curiosity-killing statements with the following questions:

1)     How would you see that working for us?

2)     Can you do a test run and show me the impact?

Once you have an environment where curiosity is valued and recognized, your staff will instantly seem much smarter and more engaged. You will find yourself working amongst solution creators and game changers and your own work will improve as well. Curiosity is the single catalyst that costs nothing and inspires anything. It may not be ideal for felines, but it does wonders for compensation professionals.

Dan Walter is based in San Francisco, CA and is the President and CEO of Performensation an independent compensation consulting firm focused on the needs of companies not in the Fortune 1000. Dan’s unique perspective and expertise includes equity compensation, executive programs, performance-based pay and talent management issues, Dan is on the board of the National Center for Employee Ownership, helps create ShareComp, a virtual conference addressing equity compensation and founded Equity Compensation Experts a free networking group with more than 1,100 members. Dan is also in high demand as dynamic and humorous speaker. Connect with him on LinkedIn or follow him on Twitter @performensation.

Compensation is a Balancing Action (Not an Act)

Have you ever used one of those workout things called a “Bosu Ball”? A Bosu Ball is half a workout ball attached to a round plastic platform. Many people workout standing on the soft, round ball side.  My trainer turns it upside down and makes me stand on the flat plastic side. Balancing with the round side on the floor requires concentration and constant adjustments.  Add some basic weights or movements and the process makes you stronger, while exhausting you. The trick is making frequent small adjustments.  If you wait until a large adjustment is needed, it is probably too late. So why am I telling you about my core exercises?

I realized the other day that my workouts were also perfect training for compensation professionals. We often talk about having balanced compensation programs.  We work to get Total Rewards just right. We are constantly looking for the perfect mix of cash, STI, LTI, recognition programs and more. So many of us look at balance like a multisided scale.  Put just the right amount of weight on each platform and balance will be achieved.  So long as nothing drastic happens we can focus our attention elsewhere for a while. However, often a “while” turns into multiple years.

In fact, compensation balance is more like standing on that ball or riding a snowboard. The best view balance as an action rather than a status. Ironically, if people weren’t involved, both the ball and the snowboard can maintain perfect balance forever.  Once you add a human, the static nature of the device flies out the window. Compensation programs are also like this. 

It is fairly easy to balance your compensation program on paper. As soon as you incorporate managers, employees, fluctuating stock prices and currencies, changing attitudes and regulations, programs require as much attention and concentration as a kid barreling down a snowy hill. The key is to train and practice enough that you learn how to make the small adjustments that help you avoid the giant adjustments, or crashing into a tree.

The amazing thing about balance is that as you practice it can become second nature. Each workout with my trainer was more complex than the one prior, without being dramatically more difficult.  After a few months, tasks that I found impossible on the first day required little effort as my brain constantly made the required small adjustments.

Compensation is a balancing action, not a balancing act. If you read the Compensation Café blog and similar resources, you are already ahead of the game. Resources like these are your “Bosu Ball”. Pay attention to the small adjustments that your Total Rewards need and see your plans evolve naturally to fit the needs of your company and staff. 

Dan Walter is based in San Francisco, CA and is the President and CEO of Performensation an independent compensation consulting firm focused on the needs of companies not in the Fortune 1000. Dan’s unique perspective and expertise includes equity compensation, executive programs, performance-based pay and talent management issues, Dan is on the board of the National Center for Employee Ownership, helps create ShareComp, a virtual conference addressing equity compensation and founded Equity Compensation Experts a free networking group with more than 1,100 members. Dan is also in high demand as dynamic and humorous speaker. Connect with him on LinkedIn or follow him on Twitter @performensation.

Turns Out Web 2.0 is No Fad -- But Why Should Comp Care???

It's not a fad. It's not going away. And it's not just for marketing cute young performers to twenty somethings. 

In fact, internal Web 2.0 applications like blogs, Wikis and tweeting are contributing to higher margins in early adapters, research shows in December's McKinsey Quarterly article, "The Rise of the Networked Enterprise: Web 2.0 Finds Its Payday". Here's the short of it:

"A new class of company is emerging—one that uses collaborative Web 2.0 technologies intensively to connect the internal efforts of employees and to extend the organization’s reach to customers, partners, and suppliers. We call this new kind of company the networked enterprise. Results from our analysis of proprietary survey data show that the Web 2.0 use of these companies is significantly improving their reported performance. In fact, our data show that fully networked enterprises are not only more likely to be market leaders or to be gaining market share but also use management practices that lead to margins higher than those of companies using the Web in more limited ways."

OK, but what does that have to do with our compensation work on a day to day basis? Plenty, actually. Think about it. Designing incentive plans, sales strategies, performance management initiatives, value driver analyses all typically involve the formation of a task force staffed in part by Department Heads. Those guys who have to solve most of the problems, it seems, that companies trip over every day.

What if it was easy for them to discuss their project work with you? You know that energy that you carefully build up in the meetings? What if it didn't deflate, but encouraged team members on into active innovation between meetings -- which, by the way, you would need fewer of.

Or what about those other initiatives that involve headquarters and the field? What if you weren't stuck on conference calls so often, carefully choosing you words? What if you could have a more natural, daily give and take with these colleagues?

In an earlier article on, "Six Ways to Make Web 2.0 Work" McKinsey's writers describe how the interactivity of the technology sets up expectations that users generate new information and content.  In other words, productivity increases because people independently choose to collaborate as they are drawn into the freedom and timeliness of the technology.

I know that many organizations are not nearly there when it comes to technology applications. But one of the points that the articles make is that Web 2.0 is a "lightweight overlay to existing infrastructure". Which means adoption is far faster and easier than any of our HRIS horror stories. And, as the McKinsey research points out, the success stories of the companies alluded to in the report will influence the attitudes of the companies that are holding out.

Worried about starting with collaboration? What if it limps instead of sprints? Head towards employee communications. I've worked with companies who've been willing to experiment. Here's two of the recommendations that I've made.

How about a blog written by a new supervisor or manager? Talking about the people issues that he or she runs into, and how the companies resources help -- with a particular emphasis on performance management and payroll budgeting? Try it out and see what you learn about user expectations, what types of info works best and why.

Or here's an even less politcally worrisome suggestion for all of you who have working on building up the career development aspect of Total Rewards. How about a blog written by an employee who has been assigned a special project or is pursuing a development plan? Wouldn't it be great encouragement to others to hear how the writer thinks his/her experience is helping to build new skills and perspectives?

It's early days yet, but it looks like you'll be telling me about full-blown implementation case studies within the next twelve months . . . in the meantime, do any of you have experience or insights to share with the newbies? I bet they'd tweet their thanks!

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 communication to the dialog at the Café; before founding re:Think Consulting, she was a Principal in Total Rewards Communications with Towers Perrin.  Margaret 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.

Offer the World First and Money Second

My 16-month old nephew inspires today’s posting. The other day, while watching a video of him, I couldn’t help be amazed at the vastness o f his world.  This is true both in physical space and size relative to his little body. He lives in a small town in Nebraska, but it couldn’t seem larger to him. I often envision him in twenty years.  This seemingly large world will in fact turn out to be very small. Nearly every adult male in his area works for the railroad or in some capacity of agriculture. The physical space won’t change, but the world of opportunity will become increasingly smaller.
 
This reminds me of the time when I worked at a small service provider. In addition to my assigned tasks, I found myself embracing every opportunity around me to learn the industry and contribute to the success of the company. For example, I found myself taking on such endeavors as redesigning the company logo as well as producing the company’s first report guide (200 pages of fun). Simultaneously, I was learning about IT, security and the fastest way to stuff six pages into a number ten-size envelope. I embraced every task as an opportunity to learn, make mistakes, take chances and be accountable for parts of jobs that extended beyond the scope of any job description. Best of all, I was not alone in this. My colleagues all put in similar efforts. During this time, my coworkers and I were earning far less than others working in our industry. In fact, the company’s first employee bonuses weren’t paid until our third year of operation and the top recipient received $1,000!  Yet we could not have felt more gratification for the work being done.

I never learned more.  My world was never bigger.

A few years later the company had been acquired for the second time.  After the first acquisition I asked for and received a large raise. After the second acquisition I received a nice chunk of equity. While my pay was growing my world was shrinking. I was no longer able to create logos; there was a department of people in a separate building responsible for marketing. I could no longer grab a few people after work and brainstorm on a holistic solution to the day’s grand problem. Everything had been compartmentalized and while many were now responsible for something, very few were accountable for anything. It is probably not a coincidence that the equity I received after the second acquisition eventually expired without me making a dime. It was a perfect example of a big company offering a small world.

I never earned more. My world was never smaller.

The small company ran well, but it barely made a profit. Although the company just squeaked by each year, it redefined an industry. In fact,  a large percentage of the company’s original employees have gone on to run their own successful businesses in that industry. When I have an opportunity to speak with any one of them, they continue to speak fondly, almost longingly, of the days when we made almost no money, but the world was at our fingertips. As a result, the company grew, the employees grew and the owners made millions.

The big company that our small company became a part of also ran well.  It still makes billions of dollars annually. I often speak with people from this company as well. (It should be noted that the two groups are almost mutually exclusive.) The employees who were at the big company years ago have mainly stayed there. The exceptions are generally victims of the almost annual layoffs. The survivors still moan about compensation and bonuses even though their income dwarfs even the CEO's pay from the small company; few of them seem truly happy. Their world is a ladder under a narrow spotlight with rungs that are too far apart for most to reach. 

The behavioral psychologist, Abraham Maslow has been quoted: “If the only tool you have is a hammer, you tend to see every problem as a nail.” We often hear that money is not the strongest motivating factor for employees. But when your only tool is compensation, you tend to look at every problem as pay-related. We tend to offer more innovative and expensive ways to entice people to stay in their little world. We augment this with more information, recognition programs and clearer paths to job advancement.

I am not suggesting that any of these things is wrong. I am simply suggesting that we try and offer them the world first and money second.

Dan Walter is based in San Francisco, CA and is the President and CEO of Performensation an independent compensation consulting firm focused on the needs of companies not in the Fortune 1000. Dan’s unique perspective and expertise includes equity compensation, executive programs, performance-based pay and talent management issues, Dan is on the board of the National Center for Employee Ownership, helps create ShareComp, a virtual conference addressing equity compensation and founded Equity Compensation Experts a free networking group with more than 1,100 members. Dan is also in high demand as dynamic and humorous speaker at events around the U.S. Connect with him on LinkedIn or follow him on Twitter @performensation. 

The Challenge... Summer Time, Pools and Work

"Uncle Dan, give me a challenge!"  My 12-year old niece was at the edge of the huge community pool. She and her brother were enjoying the last “pool day” of summer. They had been playing and leaping off the diving boards for almost an hour.

Give me a challenge! The first translation of this phrase was easy. “Make this pool interesting, my brain is getting bored.” As she swam underwater across the pool in four breaths, she turned and waved at me after every breath. The second translation became more apparent with reflection: “I want you to pay attention and interact with me.” I realized that this is the real purpose for goals at work.  I also realized why goals so often fail.

My niece wanted to prove she was more interesting than everything around her.  The keys to this were: 1) Provide her with a challenge that could be met only if she pushed herself. 2) Provide her with almost instant validation that her efforts were being appreciated.

Employees start their time with any new job, or boss, with this same attitude. First, let me have a little fun and explore. Second, give me something that makes me think or stretches my abilities. And, whatever you do, pay attention to me and interact with me as I reach my goals.

This simple concept has driven each of us since we were first able to communicate. When we were just one year old, we made sure mom and dad watched as we walked or got into things we shouldn’t. When we were ten, we sang in the choir with the full intent to find our parents in the audience and get a smile from them. Answering a question with “nothing” as a high school kid meant: “please spend a bit more time inquiring what is really wrong." College and pro athletes get on camera and immediately say hi to their mom and friends.  We have always wanted recognition for doing something that required effort.

Do we use this innate human need for growth and attention to our advantage at work? Cash or equity compensation can be used as a real link to goals and engagement (performance-based compensation), or it can be used as reason for why employees should be engaged (time-based compensation). This difference is often subtle, but always profound. Employees, like all people, crave challenges and validation. Providing one without the other will result in failure.

Think about what you wish your employees were doing. Brainstorm on ways to turn these things into interesting challenges. Insist that managers and executives pay attention to goals as they are met. Tie employee pay and recognition to these challenges and work will be like the interesting fun of childhood, instead of the boring labor of adulthood. (P.S. I want to go swimming!)

Dan Walter is based in San Francisco, CA and is the President and CEO of Performensation, a firm focused on improving its clients performance and equity compensation programs. He has worked with small start-ups through the Fortune 100 for more than 15 years. In addition to being a frequent speaker in the US and abroad, Dan is on the board of the National Center for Employee Ownership, helps run ShareComp, a virtual conference for the share plan industry and heads Equity Compensation Experts one of the largest free networking groups for equity compensation professionals. Dan loves to share ideas and information. Follow him on LinkedIn or Twitter at @performensation.

Creative Confidence & Reward Design

We are facing challenging times in the field of rewards - working to create, implement and administer programs that support employee and organizational success in an increasingly turbulent landscape.

Many of us are well-schooled in the technical aspects of our discipline and work hard to stay abreast of professional trends and developments through formal schooling, certification courses, seminars and outside reading. Even with this strong foundation, though, we can feel overwhelmed by what the world dumps in our laps.  Successful reward design - solving reward problems in today's complex and fast-changing organizations - demands that we be able to transcend our technical knowledge base.

Rising to this challenge requires something that David Kelley (co-founder and first CEO of legendary design firm IDEO, now founder of the Hasso Plattner Institute of Design at Stanford, aka as the d.school) calls creative confidence.

As reported by Stanford professor and author Bob Sutton in his Work Matters blog, Kelley describes creative confidence in this way:

Certainly, ... definitive technical knowledge is crucial.  I want engineers who can calculate the right answers so that bridges don't fall down and airplanes don't crash.  As valuable as it is, however, such training -- with its focus on individual achievement under conditions under which the right answers are already known -- means that a lot of the people who come to the d.school for classes lack both the skills and the confidence to work on messy problems where the faculty don't know the answer (this is very disconcerting to some of our students) and the only hope is to keep pushing forward, observing the world and the people in it, identifying unmet needs, brainstorming solutions, and trying to develop prototypes that work -- and failing forward through the disconcerting process.

I think reward professionals have a lot in common with the engineers, mathematicians and scientists at whom Kelley aims his remarks.  In some sense, we are the engineers, mathematicians and scientists of the HR profession.  And, in the same way, part of our development as professionals in this field requires taking our well-honed foundation of technical knowledge and applying it to solve (from a reward standpoint) the messy, unstructured business problems our employers now face.

Getting there?  I don't have the answer, I'm just asking the questions.  But I leave you with a few parting thoughts as well as a great resource for beginning the journey.  I think that interacting and brainstorming with our peers - inside and outside the reward profession - is one avenue to increasing our creative confidence. Traditionally, we did this face-to-face.  Now social media (blogs, Twitter, online communities and the like) provide exciting opportunities to expand the boundaries of those interactions.

And here's a bonus to support your own creative design confidence, an amazing and free ebook called the Bootcamp Bootleg, which comes to you courtesy of the Stanford d.school teaching team.  The structure, steps, tips, models and illustrations that pack this little book are priceless ... and as on-target and applicable to reward plan design as anything else I've encountered.  Download it today; I guarantee it will become a staple and a source of wisdom to guide your own design efforts.

<Postscript - A few people have mentioned difficulty in downloading Bootcamp Bootleg from the link above. If this is happening to you, please try this alternative link.  Thanks!>

Ann Bares is the Editor of 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 enjoys reading in her spare time.  Follow her on Twitter at @annbares.

Image: Creative Commons Photo "Brainstorms at INDEX" by boetter

What Can We Learn About Rewards From a Company With No Rewards?

I came across a funny short video the other day of a nihilistic machine that turns itself off as soon as you switch it on.  One man's stubborn determination to defeat the machine reminded me that people want to feel in control, although it’s easy to forget this when it comes to employee motivation and rewards.  

Designing rewards to motivate employees is a complex and multi-faceted task.  Rewarding individual performance may motivate people to work harder or in a particular way but also tends to encourage competition rather than cooperation.  Some companies try to offset this risk by rewarding team performance, which can work well but can also lead to frustration unless all team members pull their weight.  Rewarding based on company performance makes good financial sense but unless clear and attainable goals are defined it’s difficult for employees to see the link between their own performance and business outcomes. 

I’m over-simplifying in order to make the point that paying for performance in a way that makes people work toward a common goal, share information and help each other be successful is harder than it sounds. 

Despite challenges, many companies with a strong pay for performance culture have achieved impressive business results.  Moreover, companies are becoming increasingly creative and open minded when it comes to rewards.  For example, see 2010 Salary Increase Plans Dip; Employers Look to Non-Salary Rewards by Ann Bares.  The primary motivation seems to be a reluctance to spend on base salaries rather than a grassroots movement toward a more holistic talent management strategy but let’s not split hairs. 

So, we’re definitely getting there but there’s still uncharted territory when it comes to rewards and motivation.  And interestingly, one company that seems to have the inside scoop on motivation isn’t a company at all but a non-profit organization that doesn’t even pay people: Wikipedia.

Wikipedia has managed to capture the collective imagination of subject matter experts all over the world without using monetary rewards of any kind.  They have achieved this by embracing a modern business philosophy that allows contributors to be self-selected and largely self-directed as long as they work on a common platform toward a common goal.   Their reward is the unfolding of that shared goal and the satisfaction that comes with creating something worthwhile. 

Wait a minute.  Self-selected?  Self-directed?  But… we can’t just let people do whatever they want or they’ll… do whatever they want! 

Which is why Wikipedia strikes a balance between creative freedom and clear rules of engagement.   Self-appointed content approvers ensure that these rules are followed and non-compliant content is removed.  And as a final check, Wikipedia users can report violations.  It’s the ultimate example of collaboration with the broadest possible reach and least possible bureaucracy, where ‘suppliers’ and ‘consumers’ collaborate from different locations.  Perfect?  No, but pretty darn good.

Since the primary goal of rewarding performance is to motivate people, it is remarkable that Wikipedia has managed to harness the creative energy of 85,000 active contributors all over the world without paying them.  They do this by tapping into the desire most people have to contribute, to share, to be acknowledged, to be part of something. 

I’m all for rewarding business success and I’m not suggesting that salaried employees would embrace self-direction in lieu of cash.  But it may be time to broaden our definition of rewards to include more chicken soup for the soul, such as acknowledgement of expertise, opportunities to teach others, increased autonomy and non-traditional career paths.

Or… we could just keep flipping that switch.

*Picture courtesy of The Most Useless Machine EVER! on YouTube.

Laura Schroeder is the Product Manager for Compensation Solutions at Workday, headquartered in Pleasanton, CA.  She has more than twelve years of experience designing, developing, implementing and evangelizing Human Capital Management (HCM) solutions in the US, Asia and Europe.   Her articles and interviews on HCM topics have been published in national and European trade journals.  She currently lives in Munich, Germany and enjoys reading, writing and spending time with friends and family.