Faith, Trust and Your Pay Program

I've had the chance to work with many organizations that have decent, even quite good, compensation programs and practices in place, but where employees are simply not buying it. They resist "corporate" messages about the pay plans and they invent and spread all manner of rumors about them.

In circumstances where trust issues are focused primarily on compensation (rather than being part and parcel of a larger issue of faith in leadership) and after taking the necessary steps to ensure that the pay program itself isn't necessarily at fault, I find that information - clear, detailed, credible and truthful - can be the compensation or HR professional's best weapon. 

There is often a common thread running through situations like this.  In my experience, communication about the compensation program in these organizations tends to be broad and relatively flavorless.  Buzzwords and platitudes abound; descriptive specifics not so much.  Compensation communication comes off like a sales pitch, and that is the way employees perceive it.  Messages are completely lacking in any of the descriptive detail that might make them believable.

And by descriptive detail, I am not suggesting things like "Jack Brown just got a 10% salary increase, raising his base to $95,000, despite the fact that he was only 'meets' at his last appraisal."

What I am suggesting is that:

Instead of just saying the program is "competitive", tell employees about the market strategy you use in benchmarking, show them the list of surveys you use and explain why each is a good fit, then walk them through how market data is gathered for a sample job.  (This is also a good opportunity to explain to them why you don't use free stuff from the internet.)

Instead of just saying jobs are assigned to salary ranges based on "market and internal equity considerations", walk them through an example of how the market pricing and/or job evaluation process works for a particular job.  Perhaps use this as an opportunity to explain the purpose and use of salary ranges (and hopefully your practice matches the intent here.)

Instead of just saying that every job has a "bonus opportunity", remind them of the objectives of the bonus plan, how it was designed and why, and the purpose of the different mechanics.  Make sure the calculations are clear by going through a couple of "what if" scenarios.

You get the picture.  Specifics.  Truth.  Clarity.

Death by detail?  Perhaps.  Not every employee group wants, needs or will even sit still for this level of detail -- I'll grant you that.  But I have found that spending an hour, or even more, doing this kind of information sharing and straight talking in front of employees who have lost their faith in the program can make a real impact.

That's my experience.  What has yours taught you?

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 economicnoise.com

Comments

[E. James (Jim) Brennan]

Timely reminder, Ann. As the notoriously close-mouthed National Security Agency demonstrated a few years ago at the Total Rewards global conference, simply announcing your willingness to open your books and show your procedures deflects criticism. Folks know that you can defend anything you are willing to explain. That is ALSO the precise reason they instinctively suspect anything you keep secret. Just offering to expose facts frequently extinguishes misleading gossip.

[Ann Bares]

Jim:

Ah yes, "lifting the cone of silence"!

Agree that even demonstrating willingness to open the books and explain procedures can deflect criticism ... because it suggests good faith and confidence in the rightness of your practices. And, to your point, secrecy or hiding behind weasel words suggests the opposite.

Thanks!

[Jacque Vilet]

Need to keep any explanation very simple. If not people get confused and more frustrated.

[Ann Bares]

Jacque:

Good point - confusing people will not get us across the goal line. But my experience leads me to believe that most employees are able to grasp the fundamentals of their base and bonus/incentive compensation programs, if they are designed well and explained in a basic and straightforward manner.

Having said that, though, I have also run into compensation plans that even I can't figure out after spending a couple of hours reading through the materials and exhibits. This takes me back to my baseline assumption that we are talking about a clear, well-designed program to begin with. If not, well, all bets are off!

[John A Bushfield]

It appears that you are separating compensation program credibility from the larger issue of organizational credibility. In my experience, you don't have one without the other.

This does not diminish the importance of frequent communication regarding rewards and recognition programs, starting with the philosophy surrounding them. Even in organizations where trust is high, not everybody understands the details of how and why they are paid.

Of course, in those organizations the reason trust is high is because of good communications regarding all aspects of the business, including comp.

[Ann Bares]

John:

Your point is an important one. Without broader organizational credibility it is unlikely that you'll be able to achieve much in the way of pay program credibility. Two thoughts back: (1) The length of a blog post is a limiting factor to this being a truly encompassing discussion of broader trust and credibility in relation to pay, and (2) I do encounter situations where trust in the pay program is decidedly lower than trust in other areas of the organization. I have had employees tell me: "Great company, great manager, love my job and the work I do BUT I don't believe that our pay program is competitive/effective/doing what it is supposed to. My intent was to offer some more pinpointed, admittedly narrow advice relative to angst that is more specific to pay for that reason.

This isn't to disagree with your thoughts though - appreciate your sharing them and making an important contextual point.