Good For The Goose, But . . . .

Are your pay practices good for the goose, but not for the gander?  Do you find recurring instances where your senior leadership is considered exempt from the equal treatment clause that governs everyone else? 

You know what I mean.  You know that sometimes the rules of the game are applied on the basis of who you are.  One common example concerns executive pay.  How many times have you heard the story that the company needs to continue paying high compensation levels to senior executives, no matter what, "because we need to provide competitive packages to attract and retain such talent"?

Does anyone say that about you?

There is a rationale, of course.  As a defense against those who criticize excessive levels of executive reward, the point is made that “we have to pay these levels, or else we won’t be able to attract the proper talent to run our business.”

Really?

When business is good and the road ahead is smooth you’ll hear the common refrain of "we're all equals," or "we're all in this together."  These platitudes sound great in press releases and employee communications, but walking the talk is even better.  And therein lies the rub.

Attraction is one thing, but when leadership doesn’t deliver the performance they were hired for, the defense rationale of executive pay levels will shift from pay-for-performance to something quite different.  

The logic of the attraction argument usually breaks down when company performance has been particularly poor, or certainly less than expected.  Contrary to those oft-repeated platitudes executive pay often isn’t significantly affected, while elsewhere in that same organization poor business performance commonly equates to dramatic changes – like layoffs, pay freezes and other negatives.  The individual employee takes it on the chin for poor performance, with reduced or lost opportunity for pay growth (if they still have a job), and instead are saddled with the burden of additional work to take up the slack for their separated colleagues.

But the leadership who steered the ship onto the rocks in the first place is somehow held harmless.

Unless of course you don't believe that there's a correlation between effective leadership and business success.

So I ask myself, why doesn’t the same logic of pay-for-performance, with gains and losses based on the result of one’s efforts, only apply for those not charged with leading the organization?  Why does it seem that this “we need the talent” argument is only made for the top of the house?

This contradiction in accountability is often a sore point with employees, one that feeds a continuing mistrust of management.  The perception out there is that there’s a double standard - that the game is rigged, so to speak.

They can drop me like a ton of bricks if I screw-up, the comment goes, but for the leadership players in the Executive Suite their own performance-equals-reward formula is different than ours.  In their world it’s more important to pay a competitive rate, an attractive rate, no matter the performance.

Employees don’t accept that logic.  Would you?  It sounds too much like the practice of providing rewards is slanted against the average employee; they’re expendable for the barest of reasons, but for the top of the house it’s a different story.

So where is this line in the sand?  How far up the hierarchy does one need to reach before performance becomes a secondary consideration?

I'm just wondering - because I’d like to be treated like that.

Wouldn't you?

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 xlibber

Comments

[E. James (Jim) Brennan]

Lamentably true, but seen it happen both ways, Chuck.

Most frequently true in large corporations whose executives are well buffered by safe pet compensation consultants who specialize in delivering the desired testimonials. But CNBC http://www.cnbc.com/id/47723383 just cited a CitiBank survey showing the opposite syndrome. Searching under "23% of small business owners report no pay for a year" will produce a blog article about it with more metrics.