Bah Humbug!

It’s that time again.  The end of the year, when managers everywhere turn their thoughts to – bonuses!  The calculators are out and everyone from sales managers to the executive suite tries to figure out how fat that check will be.

I’ve been around the block more than a few times, and I can tell you that the same bad script repeats itself year upon year for the annual management bonus process:  objectives created at the last minute, embellished accomplishments dutifully recorded, problems and shortcomings diminished or forgotten and assessment forms looked at with disdain – as in, how do I fill this out to maximize my results?

The process is flawed, yet the foxes are in charge of the chicken coup – and they offer little hope for reform.  Why?  For those in charge the process works, and self-interest pays its own rewards.

Cynical?  You bet.  For many of us in the trenches true pay for performance is an elusive concept best left in Compensation 101 textbooks, suitable only for life as it should be, not as it is.  Sad to say, but senior management is often the worst offender.  I’ve seen executives manipulate, er, adjust financial results to ensure that their bonus awards wouldn’t be reduced.  Senior staff deserves competitive bonus awards, don’t they?

While studies have suggested that the entitlement mentality has weakened through this recession, I’m convinced that it’s still alive and well wherever rewards are viewed as payment due for time served, not the result of job performance.

But we go on hoping, one company and one client at a time, trying to persuade leadership that it is primarily good performance that should provide rewards; that tenure isn’t a compensable factor, that incentive payments should be deserved, not simply an act of delayed compensation.  Lower level employees are expected to earn their rewards; shouldn’t the same case be said for management?

Have you ever told an executive that their bonus would be reduced because of either corporate or – dare I suggest individual performance issues?  They would look aghast at the possibility.  I’ve taken calls from spouses asking when the checks would be cut – and then become upset when told of the review process and that the Board has to approve.  The common attitude is, times up! – where’s the money?

Will the situation be any different for the bonus cycle in 2010?  I hope so, but bucking the trend of human nature is far from a sure bet.

To make a change you need to stand up and speak up.  The process is starting now, so it’s not too late to have an impact, to instill a management pay-for-performance philosophy in your company - one step at a time.  

·         Performance appraisal shouldn’t be an activity list (I was very busy) but a focused statement of achievement against objectives

·         Let the assessment tell you the rating, not the other way around (how do I fill out this form to give a 4 rating?)

·         Confirm that the language in the assessment form corresponds to the performance rating.  Oh yes, you have to check.

·         Assessment forms should be required before an incentive payment is made – negating an old procrastination trick

·         For the 2010 cycle, start with having objectives established early in the year, not in a rush at the end

It’s Christmas, the season of light, cheer and new beginnings, so let’s be optimistic.  Prove me wrong and get it right.  Or at least start.

Merry Christmas and Happy Holidays to you and yours

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.  With over 30 years Rewards experience 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. 

Image: Creative Commons photo by Ivan Walsh

Comments

[Paul Weatherhead]

Chuck,

Thanks for exposing the Machiavellian aspects of pay-for-performance!

For anyone interested in reading more about perverse compensation practices, check out the tongue-in-cheek WorldatWork Compensation Conundrum Blog series "Rewards That Don't" written by H. R. Screwtape at http://www.worldatwork.org/waw/adimComment?id=35680&from=blog-home-comp-cc.

Chuck, thanks for all the great blogs. Merry Christmas to you and yours!

[Chuck Csizmar]

Just to set the record straight, I am a strong proponent for pay-for-performance as the best means of measuring and rewarding employee performance. That's why I get so ticked off to see the concept abused.

As with any worthwhile concept, there will always be those who try to manipulate the workings to serve their self interests. I like to shine the light of truth on those bad guys.