Compensation Cafe

The Perils of Misunderstanding Turnover

Much time and attention is paid to turnover levels and costs.  (I have joked, on my other blog, about the fact that my most popular posts there have not been my clever little opinion pieces, but rather the ones where I share turnover statistics.  Ouch.)

Joking aside, though,  HR pros and business leaders are often guilty about approaching turnover in a rather simplistic, one-sided way -- overlooking the sometimes critical upsides of turnover and failing to consider the unique organizational and workforce factors necessary to properly assess turnover costs and benefits in their own organizations.  This is the point that Mercer Senior Partner Haig Nalbantian makes in his eye-opening article "Perils and Pitfalls of Relying on Turnover Cost Estimates", published in Mercer's Online Journal Mercer Select (membership/subscription by request to Mercer).  He describes not only the cost and potential benefits of turnover, but also uses case studies to illuminate how turnover varies in its impact and discusses how to better analyze an organization's own turnover situation without relying on generic "rules of thumb." 

I particularly appreciate his highlighting of a few of the positive outcomes turnover can bring to organizations and their workforces:

--Turnover may  help weed out poor performers, allowing their replacement by higher performers.

--Turnover can correct for that classic labor market inefficiency: employees poorly matched to jobs and organizations.

--Turnover may open up slots for up-and-coming talent who are competing to move up in the career hierarchy, thereby motivating them to perform better and remain with the organization.

--Higher turnover may enable an organization to transform or "remodel" its workforce to accomodate new business requirements.

--At a more macro level, certain kinds of turnover can end up stimulating greater and faster innovation.  The movement of talent across organizations may allow ideas and know-how to circulate more readily within a sector or discipline as new groupings of talent are forged -

What struck me in reading Haig's article was not only the folly of our tendency to overlook the positive and transformative impact that turnover can have on our workforce, but also our inclination toward reward practices that stop turnover - any turnover - from happening in the first place.  As Haig points out in one of his case studies, organizations implementing premium reward packages in an effort to brand themselves as "best places to work" are often unwittingly dropping in roadblocks to the kind of workforce skill growth and transformation increasingly needed for business prosperity and survival.  This reinforces the point made here at the Cafe in a recent guest post by Keystone Award winners Jay Schuster and Patricia Zingheim, who warned about practices - like many work-life programs - that "are most likely to create a workforce linked to their organization by entitlement rather than a win-win partnership based on being rewarded for adding true value to the organization."

All of which stresses the importance of bringing a deep understanding of our organizations' workforces and talent needs, as driven by business strategy and competitive challenges, to all of our reward design efforts.

Ann Bares is the Founder and Editor of the 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 is a bookhound and aspiring cook in her spare time.  Follow her on Twitter at @annbares.

Image courtesy of clearpathemployer.com

Great Compensation Pros are Like Swimmers not Runners

I recently had a medical issue that put me out of commission for a few weeks. Although this gave me some time to reflect and catch up with friends and colleagues, it also made me realize that, like nearly everyone reading this article, I really didn’t have the time to put my work on hold. That is when I realized that being compensation professional is often like being an open ocean swimmer.

Last year a friend came out to visit San Francisco so her 12 year-old could participate in a swim from the infamous Alcatraz Prison to the San Francisco shoreline. It was an amazing spectacle, with almost one hundred swimmers churning the water. Boats, coaches and support teams surrounded the swimmers of all ages. They were cheered on, helped out and given instructions, but in the end it was their skill and will power that got them to land. (And, no, it did not inspire me at any point to personally participate in the swim.)

In nearly every activity, you can stop and catch your breath without real risk. On a bike you can coast down hills and even pick up speed while doing it. When running or walking you can simply stop and step aside until you are ready to go again. However, when you’re swimming in the ocean, you have to keep moving or you will sink, freeze or get swept away. The compensation world is very much the same.

Very few corporate compensation professionals have the same luxury of specialization as I do. Even with my focused practice, I must always be reading and studying to stay ahead of changes in regulations and trends. And, as an internal compensation professional, you too, have stay current with everything. And when I say everything, I mean everything.

Not only must you work to keep your company on course with its compensation philosophy and execution, but you must also keep everyone else in the company up to speed. As pay for performance moves from a trend to a mantra, you are required to be an expert in business strategy as well as market trends, financial metrics and even motivational speaking. All of this must be done with smaller budgets and tighter timelines than ever before.

So, how are you to get it all done well? First, it requires training. It can be tedious and boring. It can be painful and time consuming, but without training you are likely to sink before you make it to shore. Second, it requires a support team. This includes internal staff, external help and the occasional “attaboy” from a random stranger. Finally, it requires perseverance. Sometimes we forget to pat ourselves on the back for diving into a career that, by design, leaves no place in which to rest.

When you get home from work tonight, you will likely still thinking about the remains of your workday, or planning for the urgent project that must be done tomorrow. I suggest you take a moment to congratulate yourself for succeeding in a field that, like ocean swimming, often seems too daunting to even attempt. Then, look ahead to the summer and figure out how to build a little raft to float on for the much-deserved break or even a vacation that you hopefully get to take this year. 

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” and “Equity Alternatives.” Dan is on the board of the non-profit 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

7 Key Trends in Rewards & Recognition

The Incentive Research Foundation recently issued a detailed report that compiles and categorizes research from 46 different sources into its “2012 Trends in Rewards & Recognition” report.

I’ve highlighted seven key trends below with excerpts and my own thoughts.

1) Move Fast

Five year strategic plans no longer serve in a fast-moving, global business world. As organization leaders need to flex and adapt their strategic objectives to changing economic requirements, they need HR systems – including recognition and reward programs – that can flex just as quickly to reinforce those changing objectives in employee daily work.

“‘Fast HR’ encourages throwing out standard tools in favor of more expeditious methods to direct, focus, and energize employees. Non-traditional reward programs are congruent with the ‘Fast HR’ movement in that recalibration is easier and involves fewer legal issues than do standard compensation components. … Moving forward, program owners should expect decision making to be pushed up the chain of command with frequent and abrupt changes in strategy to accommodate shifts in business strategy.”

2) Mobile to the Fore

We now live in a mobile world. Mobile applications will do to business in the this decade what the internet did in the 1990s. Not adapting to mobile will mean being left behind. Indeed, as mobile applications more and more become another way of interacting with the same web-based or SaaS platform, there is little reason to not incorporate mobile into recognition and reward program planning.

“According to McKinsey, 33% of all smartphone owners now prefer using them for Web browsing or e-mail—even when their PCs are nearby. In addition, as more than 50% of mobile applications switch to the next generation base website code (i.e., HTML5), the functional differences between mobile devices and their non-mobile counterparts are becoming negligible. … Better product pipelines, faster processing, and whole generations of native mobile users now in the workforce makes integrating mobile applications a necessity.”

3) Gamification Plays Out

Gamification can play a role in recognition and rewards, but program designers and managers must be careful to ensure they aren’t gaming the wrong behaviors. You never want to “game” a system to encourage more recognition for the sake of recognition alone as that weakens the purpose and intent of the program. Instead, game factors such as “most rapid reward approver” to ensure recognition reaches the intended recipient quickly.

“Increasingly, consumers and employees expect an experience that reflects their own engagement and workflow. At a minimum, program managers should review the achievements required for all reward and recognition programs to ensure their target audiences have been given ample resources and training to achieve the required level of performance.”

4) Research Proves the Point

The weight of research behind moving away from cash-based incentives to non-cash strategic recognition and rewards can no longer be ignored.

“One of the biggest trends has to do with the growing acceptance of non-cash compensation within both science and the C-suite…. In Motivating People; Getting Beyond Money (McKinsey) the authors assert that it’s ‘time to challenge traditional management wisdoms that it is money that really counts.’ Their research points to ‘non-cash motivators (including praise from immediate managers) as being more effective motivators than the three highest-rated financial incentives (i.e., cash bonuses, increased base pay, and stock options).’ They further suggested that, nonmonetary compensation can maximize effectiveness in aligning the goals of the organization with the priorities of its people.’”

5) Economic Stress Impacts Innovation

The last few years have created an environment of fear in organizations. Those that figure out how to overcome the fear by recognizing and encouraging innovation, interaction and teamwork will emerge as the market leaders.

“A lack of consistent recognition has impacted the ‘cooperative’ nature of some work environments. In fact, 59% of managers say that economic conditions—and the competitive stresses and pressures that come with it—have negatively impacted their culture. This ‘fear factor’ within some firms has stifled innovation, creating reluctance on the part of employees to share new ideas or take chances. Recent research supports this, showing that employees at ‘Rewarder Organizations’ generate ideas 250% more frequently than employees of organizations that are not rewarders. Note that 18% of the employees at rewarder organizations were afraid of being associated with failure when taking chances.”

6) Technology Integration Required

Integrating HCM, CRM and recognition and reward systems simply delivers more data value to an organization by giving you more points of information on performance and areas needing improvement.

“All technology-enabled reward and recognition schemes need to be integrated with the company’s internal social media sites and (if applicable) to external platforms as well. … If not already completed, ensure that any systems currently owned or supported by the program can be integrated (as much as possible) with organizational CRM and sales force automation systems. If possible, be aware of your organization’s (or clients’) technology protocols to ensure that you are not blindsided by mandates toward cloud computing or virtualization.”

7) Global Tries to Go Global

Global recognition and rewards isn’t easy. Deploying a program in the US and then rolling it out later in the same exact form to global locations is nearly always doomed to failure. Successful global programs involve globally distributed “influencer” employees from the beginning.

“Generally speaking, although many organizations want to go global with their reward and recognition programs, doing so involves obstacles that are more cultural and managerial in nature: Customs, practices and social norms in emerging economies differ quite markedly from those in the U.S.”

What other trends are you seeing in employee recognition and rewards?

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.

Belief Is Insufficient for Success

Never met anyone who succeeded simply because they BELIEVED in their dream. No, it always required a tremendous amount of very hard work for many years before they suddenly “became an overnight success.”

As a board-certified expert witness for executive compensation challenges in boardrooms and court disputes (Tax Court, Civil Court, Federal Court, etc.), I’ve probably interviewed and investigated more extremely successful people than most folks not in the media business. These subjects were always multimillionaires paid so much money that the IRS or their shareholders or some other government agency commissioned a research study into the appropriateness of their compensation. Can’t recall one in over many decades of interviews who ever cited raw faith as the key to their achievement. According to them, chanting “I believe,” (as in Peter Pan's Tinker Bell recovery intervention treatment) is not enough.

This really is a compensation issue, because knowledge of the total rewards field requires some understanding of how output results that deserve compensation and reward are generated. Success doesn’t “just happen.” Achievement should not ever be taken for granted and expected as a given or assumed because of the attitude or image of the performer.

While belief in personal ability and self-confidence often may be a necessary precondition for success, it is not adequate by itself without the rest of the total package. You have to make it happen. You must actually deliver on the potential behind that theoretical capability. That little engine puffing a resolute  “I think I can” would change its tune to a mournful “I thought I could,” if it lacked the proper power to weight ratio to chug up the mountain. Failure of the railroad to properly maintain the track could also affect the result. Putting the myths of Hollywood aside, wishful thinking doesn’t automatically make dreams come true.

That is the bad news.

The good news is that every person has talents and potentials. Many folks are not self-aware of what those positive attributes are and need external guidance to discover their strengths. People also need opportunities to apply their abilities in real-life situations. This is where the Human Resources profession enters, as the field most directly responsible for identifying, selecting, recruiting, training, developing, protecting, organizing, compensating, retaining and conserving human talent. That, of course, is not a comprehensive list, but I simply got tired of adding commas. Each reader can add another dozen or so gerunds to that string, depending on which job description you have for your piece of the total rewards business.

Perhaps recognizing the roles we play enabling talent to be properly and productively applied can help to reduce the amount of frustration we typically experience trying to do our jobs. Helping people make their dreams come true is an integral part of our profession. Let’s hope we all believe in that.

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.), will express his opinion on almost anything.

Image courtesy of theadventuresoflesalina.com

Wearing Rose Colored Glasses

As a manager within your organization you are expected to provide leadership and direction for those employees who report to you.  Likely that requirement is a key accountability in your job description, and fulfilling that mandate means that you'll have to make decisions that impact your employees - for good or ill.

Bummer.  Not everyone is comfortable with that part of being a Manager.

From the senior management perspective, a key leadership expectation is the matter of employee performance review - and future pay (reward) actions based upon that assessment.  The bosses have placed the ball squarely in your court to render those decisions.

Well, are you a tough manager with high expectations, or do you have a “rep” as an easy rater - as someone easy to please, someone who hesitates to make up or down decisions about their employees?  Do you feel that all employees deserve an annual raise?  Are you reluctant to choose?

Perhaps you have a tendency to make your decisions based on emotional factors (employee needs and wants), versus on the basis of business-related practicalities (performance assessment, company affordability, most deserving, budgets, etc.)?

Well, you probably say, the truth is that it’s a matter of balance; that managers need to weigh both factors (employer and employee) in trying to do the right thing.

True enough in concept, but . . . a balanced approach suggests use of a carrot and a stick.

Signs of the "softie"

When it comes to doling out the company's money, easy-to-please managers believe in giving as many employees as possible as much as the company allows, with the expectation that recipients will:

•  Be grateful and work harder out of personal thanks

•  Be satisfied and not leave

•  Appreciate your efforts on their behalf

These managers wear rose colored glasses, kidding themselves, thinking that their emotional pay decisions are going to deliver results that help them (the manager), and maybe even the organization (there's that unfortunate priority again).

Why do Managers make emotional decisions?

Managers have a choice, and what unfortunately comes naturally for too many untrained folks is the tendency to protect themselves.  Many still think of themselves as supervisors, not members of the organization's leadership cadre.  In simplistic terms they still take the so-called "employee side," versus the "company line" (and that's how they see it).

•    They want to be liked.  They want to be a friend as well as a boss.  They still remember sitting on the other side of the desk.  So they empathize.

•    They don’t want to make career-impacting decisions.  They'd prefer that someone else play judge and jury with an employee's career.  Or let the performance figures speak for themselves ("numbers don't lie").

•    They don’t understand (or defend) the company’s pay program.  These are the ones who tell employees, "I wanted to do more, but HR wouldn't let me."  They fail to defend company policy on rewards, preferring to be seen as on the employee's side.

•    They’re afraid that someone would quit - because that might be a reflection on them as a manager.

•    It’s really about them.  Having employees unhappy for any reason usually means more work for the managers themselves.  It could mean extra attention to subordinate work (vs. their own), training replacements, doing the work themselves to fill in, etc.

These managers are not helping the organization; they’re not even managing.  What they’re doing is administering the pay programs as if they didn’t have a balanced decision-making role to play as part of the leadership team.  It's managing from a distance - being the disengaged leader.

For sure it’s not easy for some new managers to “flip the switch” and start thinking like one of the leaders of the organization.  But when they took on the mantle of "manager" they stepped up to additional responsibilities.  They're no longer “one of the boys,” but now the boss of those “boys.”

Those who wear rose-colored glasses to make reward decisions are in truth ineffective managers, who over time will harm the organization through their inability to make effective, objective decisions.

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 Leeks

Is There a New (Reward) Deal?

If a new reward deal is put in place and nobody hears anything about it, does it exist?

I had the chance this week to spend some time perusing the What's Working Around the World report issued by Mercer, which highlights the work views and attitudes of nearly 30,000 employees in 17 markets around the globe.  The report focuses on the erosion of employee engagement and the shift in the employee value proposition (aka the "deal") that has occurred in response to the economic turmoil of the last few years.

As the report summary notes:

Without question, employees liked the "old deal" of more generous benefits and pensions, steady pay increases and lifetime job security.  They have - reluctantly - accepted that it is not coming back and are even willing to take tradeoffs, such as more training instead of job security (to keep them employable in case they are laid off) and pay for performance (in lieu of tenure-based annual pay increases) to reward their good performance.

But the perception that came through clearly in our survey results is that employees believe employers are not living up to their revised promises and are not delivering on this "new deal".

Not surprisingly, much of the angst - for employer and employee alike - centers around base pay opportunities, the most expensive and inflexible (for employers) and the most highly valued (for employees) element of the employment deal.  Mercer's results for North America, for example, suggest that not only has satisfaction with base pay dropped, but fewer employees report that they understand how their pay is determined. So the stakes around making changes here are pretty high.

While many employers are still working to get their arms around the specifics of their own particular "new deal", many others have already taken solid steps with thoughtful and specific changes to the configuration of their total reward programs. 

The question is: do employees understand them?

My experience on-the-ground and the conversations I've had with colleagues suggest that many of our bold redesign efforts have been followed with timid, even reluctant, communication efforts.  To some extent, this is understandable.  We are aware that much of the "new" rationale and details will likely not be greeted with a standing ovation from employees.  And so there is the undeniable temptation to get it over with quickly and efficiently - like ripping off a bandage - and move on.

The result is that employees don't really see - and their managers are unprepared to elaborate on - the whole story, the full underlying rationale, the manner in which business requirements and employee needs have been considered and balanced in the purported "new deal".  And when they are forced to fill in the information gaps themselves, with their own conclusions and the say-so of their cohorts, the resulting picture can be a mighty unflattering one.

The "new deal" often forces employees to accept a more adult partnership with their employers, taking on a great share of the responsibilities and risks of the relationship.  We will never pull this off, nor convince employees that we are honoring our end of the arrangement, unless we raise the stakes on communication and information sharing.

That's my take.  Yours?

Ann Bares is the Founder and Editor of the 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 is a bookhound and aspiring cook in her spare time.  Follow her on Twitter at @annbares.

Image courtesy of redtreetimes.com

Citigroup Investors Speak Out on Pay! But What Did They Say?

Here's what The Wall Street Journal had to say yesterday morning about the loud "NO" they heard from 55% of Citigroup shareholders who refused to approve the executives' compensation package.

"Shareholders of Citigroup Inc. on Tuesday handed the bank a scathing rebuke, rejecting a board-approved compensation package for its senior executives that boosted Chief Executive Vikram Pandit's 2011 pay to $14.9 million from $1 a year earlier."

Although the Wall Street Journal article goes on to talk about shareholder discontent, the authors seem to want to point to unfairness or shortsightedness on the shareholders' part in the way they presented the news summary -- he was only making $1 a year earlier!

The New York Times, which put the story on the front page, reported that the shareholders' revolt was an expected extension of the current climate, where us 99% keep trying to make a point to those 1%.

"The shareholder vote, which comes amid a rising national debate over income inequality, suggests that anger over pay for chief executives has spread from Occupy Wall Street to wealthy instutional investors like pension fund and mutual fund managers."

The Washington Post reminded us that this vote was unprecedented in its lead quote. Then they got practical.

'"This vote is historic," said Eleanor Bloxham, CEO of The Value Alliance, a board advisory firm. "None of the Wall Street firms have received this kind of a review yet." . . . Wall Street's massive compensation packages have raised the ire of shareholders for years, expecially when they appear to have little relation to the performance of specific objectives."

By the end of the day, the opinions were getting a lot more pointed. The interviewees on PBS NewsHour said the U.S. cultural climate had nothing to do with the vote. It was a question of pay for performance pure and simple. Pandit's performance measures are too short term and inappropriate to a strategic leader.

I'm listing these competing views because it's going to be important to have a clear, data-driven assessment of what really went on here. It's not clear yet, so let me weigh in with additional data. Since all of us have our own filters on, let's try mine out for size.

From this practitioner's view, communications plays a large part in Citigroup's failure and potentially in its next steps.

They apparently did not make a believable case for their proposal, especially because they were indifferent to their audience's concerns. As evidence, we know that they ignored the shareholder organizations' recommendations to vote the package down.

It's hard to figure why they weren't more focused on the shareholders' stated issues when we all know that Citigroup fared badly with the Fed recently, leaving shareholders holding the bag. But I guess they thought they didn't have to listen, based on the way it always used to work before Say on Pay.

Citigroup has said that it is going to meet with shareholders to understand their concerns. At this point, given the "No" vote, they will need to go the extra mile to make that seem like more than an empty gesture. To build credibility, they would need to report to shareholders by naming interviewees and summarizing the truth of their feedback. Then, Citigroup will need to go to some lengths to describe how they are going to use the feedback -- or suffer further inroads in shareholder trust and positioning on the Street.

For those of you who are deep into Say on Pay, there's a fascinating post by Steven M. Davidoff on the New York Times DealBook blog entitled, "Citigroup Has Few Options on Say on Pay Vote." For those of you who work with your Board's Compensation Committee, it's time to think about how your company communicates with your shareholders -- investors who have the company's future performance in mind, and yet can act a lot like customers.

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 communications and change management to the dialog at the Café. Before founding re:Think Consulting, she was a Principal in Total Rewards Communications and Change Management with Towers Perrin. Margaret is a member of the Board of Directors of the International Association of Business Communicators (IABC), Pacific Plains Region. She earned her M.S. and Ed.S. in Instructional Technology at Indiana University. Creative writing is one of her outside passions, along with Masters Swimming.

Image courtesy of findingfatherslove.com

How Much Do You Make?

I was thinking the other day about Singapore.  Not unusual.  I enjoy thinking about my time spent there.  Oddly one thought popped into my mind that I had forgotten.

The first time I visited Singapore was on my first trip to Asia.   I was making the "circuit".  

One of the local HR people took me to lunch.   As we were talking, she all of a sudden asked me:   “What do you make?”    I heard what she said but could not believe she would ask such a personal question.   After regaining composure, I laughed and said:  “Well just like everyone else I don’t make enough!”  Then I quickly changed the subject.   Fortunately she did not ask again.

But that incident started me thinking.   This employee asked an innocent, albeit embarrassing, question --- but why?  What would she do with the information if I had told her?   Would that help her to understand any better how she was being paid?   Do employees tell each other what they make?

Most of my career I have worked for companies that did not believe in communicating compensation.  It was left up to managers to answer questions as best they could.   HR gave them some basic information, and they took it from there.   God knows what they told employees.

There are two camps.   One camp keeps information about compensation very confidential.   They treat the subject about the same as they would hemorrhoids.  Maybe they communicate the compensation philosophy/strategy.   And this, folks, is about as clear as mud to the average employee.   Sometimes, even to me.   The other camp is more open ---- providing information to employees very freely and answering all questions.

It is easy to say you are in the “open” camp.   I say that too.  You might as well be. Employees are smarter today.  They look on the internet at survey data, and the younger ones talk more freely about salary and analyze the “whys” and “hows” more.   So you might say that as long as they are looking for answers --- we should make sure they get the correct ones.  Somebody once said that the mind seeks closure.  And what information it doesn’t get ---- it makes up.

I have no trouble with communicating the standard song and dance.   BUT ---- the questions that follow the “speech” are tough.  And you are very naïve if you don’t think employees will ask them.    How can you put together simple and clear answers for questions like:

 * If I am doing the work of 2 people now since the last layoff 2 years ago, why am I not being paid more?

 * Why didn’t the company give all of us a 10% salary increase like Google did for their employees?

* If I’m at the top of my salary range and my manager tells me my performance is outstanding, why don’t I get an increase?

* If I’m doing such a great job and get the highest rating, how come my increase is 2% while everyone in our group knows that (name) is not performing and he got 1.5%?   Why should I work so hard for just .5% more?

* I know our company has $X million in profits.   Why didn’t we have bigger increases this year since everyone knows we can afford it?

Questions like this are complicated to answer.   For instance, the third question:   “Well Johnny, according to the market you are being paid quite well, and you won’t be eligible for another increase until you are promoted.”     Now, if I were a smart employee I would ask:  “How do you know that the maximum for my range is correct?  Do you know for sure?  How do you decide the maximum anyway?  If it's not correct, you're not treating me fairly.”

How do you explain the Google story?   That gets complicated too.   What about all the profits stacking up in a lockbox somewhere?

I’m not saying there are NO answers. It’s easy to give a “professor-type” answer ---- one that we all learned at the WorldatWork courses.  But it’s off-putting to say the least ---- cold and scientific --- and can’t be explained simply in 5 minutes.  If you’re not careful, the effort to communicate can turn out worse than if you had done nothing. Before you know it conversations get complicated, and employees start getting frustrated because they don’t understand what they are being told.

So . . . at the very minimum have very clearly thought out answers before you communicate.   Even answers to impossible questions.  Make sure all managers are singing from the same hymnal.  

Not a good time to explain your compensation program with the “same old, same old”.   If anyone has some good answers, please let me know.

Jacque Vilet, President of Vilet International, has over 20 years’ experience in International 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 WorldatWork.   Jacque has also been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications.  She lives in Dallas and has 3 four-legged children and one Chinese daughter (it’s a long story).  She’s had a life-long love of animals and the ocean.   So what is she doing in Dallas?

Image courtesy of:  goin2travel.com

Take The Equal Pay Day Quiz!

Today is National Equal Pay Day! This date symbolizes how far into 2012 women must work to earn what men earned in 2011.

Every year, Equal Pay Day is celebrated with educational programs, rallies, new research publications, and even Presidential proclaimations. I wanted to do something a little different, so I put together this 10-question quiz on equal pay. After you complete the quiz, I'll show you the correct answer and give you a brief explanation for each question.

After you take the quiz, post your score as a comment! 

Click here to take the quiz!

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 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 and is the host of The Proactive Employer. Follow her on Twitter at proactivemployr. 

The Grass Isn't Greener

Imagine you just spend a fortune recruiting exactly the right candidate, as well as offering a premium over market price to their salary in order to attract them to the role.  In doing so, you’ve offended at least one internal candidate who’s always been a loyal solid performer but now hates you and is looking for a new job. 

To add insult to injury, the new person’s performance is mediocre for the first two years at which point they leave for a better offer.

Don’t you just hate it when that happens?  Unfortunately, according to a new Wharton study, it probably happens quite a bit.

On paper it sounds like someone made a bad call.  But there are a couple of different dynamics in play here that help explain how people caught up in the old pay-more-get-less trap.

1. They’ve got blinders on - Once you’ve worked with someone for a while you start to feel like you know their strengths and weaknesses, especially their weaknesses.   External candidates have weaknesses too but since you don’t know what they are it’s like they aren’t there.
2. They’re stuck in a time warp - A few years back I found myself working once more with someone after seven years which had been spent - on my side - managing global teams and projects.  This person still saw me as a recent college graduate rather than an experienced global project manager.  Probably still does.
3. They don’t want to cause strife in the team - It can cause bad feeling in a cohesive team when one person gets promoted over the others so it may seem easier to bring someone new in.
4. They don’t want to lose a good resource - It can seem daunting to move someone doing a great job to a new area where they have less experience and at the same time getting hit with the need to backfill their position, train someone new, etc. 
5. They didn’t define the job clearly - Some of the job postings out there today look like they were typed up by 12 monkeys who after a thousand million years of random typing accidentally cranked out a job description. 
6. They need someone who can do the job now - If you promote that internal candidate you’ll have to train them and give them some time to come up to speed in the new role.  Whereas if you hire someone who already has the experience needed you’ll have less down time.  This isn’t actually true but it sounds good.
7. Their company stinks at onboarding - You found a great person, got them to sign and they’re starting tomorrow.  You sent them information about benefits enrollment and a nice welcome video from the CEO.  But how will you convey to them all the tribal knowledge of the company they will need to navigate the new role and succeed?

According to a 2011 Manpower survey, one in three global employers can’t find the skills it needs, making a company’s ability to develop internal talent a key component of competitive business strategy.  Although companies can benefit from new talent and fresh perspectives, there are at least two additional advantages to developing internal talent: 1) you avoid paying a premium for external talent; and 2) you give people a reason to stick around when they feel ready for a new challenge. 

The catch is that companies aren’t very good at finding ‘hidden gems’ or matching internal talent to critical gaps in the organization. They typically assess people in the context of their current job, rather from a broader perspective of background, aptitude and personal career goals.  As a result, managers tend to look outside the organization to grow the organization, rather than growing the organization from within. 

With, according to the Wharton study, disappointing results.        

How can companies do a better job developing internal talent and ensuring the success of external talent?  Here are a few tips:

• Assess talent holistically rather than based on a particular role. 
• Encourage internal talent to apply for new roles in the organization.
• Have clear and transparent processes around candidate selection.
• Train managers to develop people and hold them accountable for doing it.
• Provide tools and resources to help people define and pursue personal development plans.
• Create clear job descriptions, i.e., be very clear about what the job is and keep away from vague references to what it might be.  
• Develop an onboarding process that includes regular communication and checkpoints.

Each of these could be a post in its own right but the basic idea is to stop assuming the grass is greener and focus on the people you have.  When you bring in external talent, give them the tools they need to become internal talent.

The war for talent is won from within.

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.

Picture courtesy of delightful clutter.