Ripped from the Headlines: Breaking News on Pay Transparency

We’ve been talking about transparency pros and cons at the Compensation Café over the last week or so. Today’s a great day for another chat, with so much in the news about pay and benefits.  Here’s what I’ve ripped from the headlines this morning:

• The New York Times took another shot at pay transparency today.  Eric Dash tells us that few executives fled the companies where the pay master set post-bailout limits, in spite of the unwelcome “meddling” of Kenneth Feinberg, special master for executive compensation for the companies who received bailout money.  85% of the affected executives were still with their companies even though their compensation is down nearly 77% from 2008. This year, more than 70% of their (approved) compensation is expected to be given in the form of stock instead of cash.

The facts are in, through transparency enforced by a legal requirement.  But do the numbers tell us why these executives are still engaged in their company’s future? What the new packages mean to them in terms of recognition for their performance? 

We need far more insight to learn from this unusual executive compensation case study, but boy would it be valuable to know how these executives feel and why.

• President Obama signed the landmark healthcare overhaul bill today. Immediately after yesterday’s vote, there were content pages all over the Web that explain how the bill will affect you, your family, your business, your employees, your taxes and so on. If we take a minute or two and be patient, each one of us can determine what the bill will mean for us.

We’ve been getting descriptions of potential plan provisions in the media for months and months. Did any of us really understand what was going on? Were all of us frustrated? Yet within 24 hours, the mess was turned into cogent bullet point lists. To me, this is a great example of how transparency (if it only relies on facts) can actually be amazingly confusing. While clarity (understanding how decisions and information influence us) is a far more useful goal. With our new bullet point lists in our back pockets, we can think more calmly about this “landmark” in our life, and make some balanced decisions.

• Buck Consultant’s tells us that 2010 bonus payments will be similar to 2009, which is a bit surprising considering the continuing financial challenges. There has been a lot of speculation in HR discussions recently about a trend toward variable pay, with more employee compensation shifted into incentives. Buck Consultant’s make the same guess. But is it really, truly what’s going on? And wouldn’t it be more useful to have that insight, too, so we can understand what is influencing these pay decisions?

As Becky discussed last week, the public is eager for more insight into compensation practices in the public and private sectors. But I believe experience shows that transparency is only part of the challenge and we overlook this at our peril.  As I illustrated in my last post, if you offer facts without context, you may actually cause confusion and frustration even though you are trying very hard to build trust. Today’s headlines illustrate that we can learn so much more -- and be better prepared to make up our mind -- if we look behind the numbers and answer just a few more questions.

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 dialogue 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.

Comments

[Becky Regan]

Margaret,

I think that part of the challenge today is from information overload. People get so much information that they don't really dig beneath the surface to learn more unless they're compelled to do so. Or unless it's laid out for them to read & digest in quick bites.

I'm with you; I'd like to know more detail about all of the topics you presented. In particular why more of the execs haven't fled in spite of their drastically reduced total comp packages. Thanks for sharing the highlights of the day with CC's readers!

[Margaret O'Hanlon]

Hi Becky! As I communicator by profession, I can tell you that many of us fall into the pattern of making those quick bits of info very surface, and so not about helping me (the employee) make decisions. (Plus, reducing employees interest in the communications, BTW) Insights can be provided in quick bits, too. That's where the clarity comes in, and the communicator should take the time to help the reader in that way.

Info overload isn't going away! (In fact, it's becoming 3D) We're so distracted, we don't notice that we've been complaining about it for years now. Let's make the best of it . . .