It’s that time again. The end of the business year, when managers everywhere turn their thoughts to – bonuses! The calculators are out and every eligible soul from Marketing to Manufacturing to Sales, IT, HR and the Executive Suite tries to figure out how fat that check will be. For many, it's the gift receiving season.
Thus the same bad script repeats itself for the annual management bonus process, year upon year upon year: objectives created at the last minute, embellished accomplishments sloppily recorded, problems and shortcomings diminished or forgotten and assessment forms viewed with disdain – as in, how do I fill out this thing to pump up my results?
More than the mechanics are at fault
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. Picture Santa Claus with a large bag of goodies.
Cynical? You bet. For many of us in the trenches true pay for performance is an elusive concept best remembered from 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 senior executives manipulate, excuse me, adjust financial results to ensure that their own bonus awards wouldn’t be reduced. Senior staff always deserve competitive bonus awards, don’t they? How can you not reward your senior leadership for their efforts? Once again entitlement trumps performance.
While studies suggest that the I-deserve-it mentality has weakened through the recession years I’m convinced that it’s still alive and well wherever rewards are viewed as payment due for time served, not for effort and results.
But we go on hoping, trying to persuade leadership that it's primarily good performance that should provide rewards; that tenure isn’t a compensable factor, that incentive payments should be deserved, not simply an automatic gift of delayed compensation. Lower level employees are expected to earn their rewards; shouldn’t the same case be made for management?
End of year expectation
Have you ever told an executive that their annual bonus might be reduced because of either corporate or – dare I suggest individual performance didn't meet expectations? They would look aghast at the possibility.
But will the situation be any different for the bonus cycle in 2014? I hope so, but bucking the trend of human nature is far from a sure bet.
To change those dynamics, as well as the effectiveness of your incentive plans 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 - even if it's only one step at a time.
- Performance appraisal shouldn’t be an activity list (I was very busy), but a focused statement of achievement against quantifiable and measureable 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 on 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 ("oh, just process the check. I'll get the form to you . . . tomorrow or the next day").
- For the new cycle, start by having objectives established early in the year, not in an after-the-fact crunch at the end.
Granted, you'll need more than a steely look and a waving flashlight to stop a speeding freight train, so you should educate management about these ineffective and wasteful practices before the cycle starts. Because afterward may be too late; discipline as a learning tool is best used to prevent problems, not when Santa is already reaching into his bag of checks.
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. 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 clowder of cats.
Creative Commons image, "Gifts," by Steven Depolo
Comments