Compensation Cafe

Cafe Classic: Compensation Communication Professionals? Who Are Those Guys, Anyway?

Editor's Note: "They don't get it." It's the eternal worry when you ask professional communicators to write compensation communications. The same could be said for many compensation specialists according to our founding writer, Margaret O'Hanlon, who wrote this article to help us work together more effectively. It's the time of year when many of us find ourselves on end-of-year implementation teams. Check out what you can learn about the communicator sitting next to you in all those meetings -- and make your own work easier this year.

I got thinking this week, with all of the hoopla I make about compensation communication, have I ever talked about the profession with you? You may or may not work with communication professionals regularly. It's been my specialty for over 20 years. Maybe I can help you learn how to partner more effectively with communicators in your organization.

I think it would help to look at what "communication professional" means, because people with that title have all sorts of backgrounds. We are not interchangeable.

At different points in your work, one type of communicator may be more helpful to you than another. Knowing the distinctions between us might also help you avoid the kinds of frustrations that compensation practitioners often talk about when it comes to communications and communicators.

Communication Professionals Have Many Specialities

People come to the profession with all sorts of degrees, and those degrees plus a person's experience teach them to be good at different things.

Public relations is a specialty that addresses the relationships between the organization and their public. People with this specialty understand how to address public opinion, attitudes and issues with people who have no automatic allegiance to the organization. Crisis communications is a subspecialty of PR. These practitioners protect and defend the reputations of organizations and individuals.

Marketing prepares communicators to encourage sales through advertising, branding and promotion. Journalism prepares communicators to investigate and report events, issues and trends to broad audiences without injecting opinion. Plus there are other, less specialized career routes like communications, literature and fine arts.

Growing from Writer to Communicator

All practitioners share one thing. We are trained to be clear, acute writers who can help you put your point across. And, just like you, we acquire more diverse skills as we move up in our careers.

Compensation analysts may eventually acquire insights into executive compensation and benefits. Writers may learn how to market and promote ideas and programs. Marketers may learn how to help build a consistent culture within an organization by applying their understanding of branding methodologies.

Change Starts with Communications

Not all communicators can help you change employee's behaviors and habits. That's where communicators with change management background come in.

Through their training and/or experience, these communicators learn how to apply psychological models and research to plan how to help people relinquish views, thoughts and behaviors (that get in the way of achieving business strategies) and accept replacements. These communicators will work with you to develop not just campaigns but strategies that help transform employees' and managers' resistance or confusion about things like performance measures and ongoing feedback into "the way we do things around here."

Be Realistic about Collaborating with Communicators

Words are powerful. They help us see things differently and understand how things work. But words alone do not shift people's opinions or influence their actions. It takes a certain kind of experience to understand how to achieve the change that compensation involves and make it stick.

Don't just assume your communicators are experienced in achieving organizational change. If they are new to transforming behaviors, realize that your working relationship will need to be far more collaborative than usual.

Take the lead and guide them away from overemphasis on words. Instead of belaboring drafts of emails or intranet features, work together on a strategy that involves building manager skills, maintaining executive visibility and getting employees talking about how their work influences business results.

Margaret O'Hanlon, CCP 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 compensation, communications and leadership to topics like the CEO Pay Ratio, performance management and compensation implementation discussions at the Café. Margaret is a Board member of the Bay Area Compensation Association (BACA). Before founding re:Think Consulting, she was a Principal at Willis Towers Watson. 

The Real Cost of Mismanaged Incentives: Wells Fargo

Well, so much for the warm-hearted caffeinated, pick-me-up from the Comp Café. Today is a steaming jolt of quadruple espresso in response to the Wells Fargo incentive pay mess. Let me start with the fact that I have been interviewed a few times about this story and even I was surprised by my response to the question, “What companies in the financial world are considered to have good incentive programs?” I answered that if I had been asked a few weeks ago, Wells Fargo would have been on the list. I guess it’s hard to know what you don't know.

If you have been under a log for a couple of weeks, please start by reading a couple of earlier Compensation Café Articles (my own When Incentive Pay Goes Rogue! and Jim Brennan’s Excessively Successful Incentives). That foundation will help you understand the following summary.

A couple weeks ago, Wells Fargo was fined about $185 million for fraudulently opening millions of accounts. They also fired 5,300 employees and were the media poster-child for why incentive plans are terrible. At the very least, the plans in question ended up costing more than they delivered. In the past few days, the real costs of these programs are starting to reveal themselves. Recent developments are listed below.

• John Stumpf, the CEO of Wells Fargo stepped down from his role at the Fed (Federal Advisory Council).
• He was raked over the coals by members of the US Senate, which included this exchange with Senator Elizabeth Warren.
• The underlying motivation for the goals of the offending incentive plans were mocked (the goal was eight account per person, since “eight rhymes with great”.)
• Wells Fargo’s Board of Directors has announced that Stumpf will forfeit much of his 2016 pay, including $41 million in unvested stock awards.
• The Board has also clawed back $19 million from Carrie Tolstedt, the former head of the business unit where the fraud took place.
• California will stop using Wells Fargo to underwrite bonds and purchase state investments and other states have said they follow this approach.
• The stock price has dropped about 10% since the fines were initially announced. This is equal to about $22 billion in lost market cap.

Please note, that for all of the talk about pay clawbacks, it appears that both Mr. Stumpf and Ms. Tolstedt each still have over $100 million in potential retirement payments that remain outstanding. So, more may still be pulled back. It is also possible that Wells Fargo may reinstate their pay after the investigations have been completed.

Mr. Stumpf will testify again Thursday, September 29 (perhaps while you are reading this) in front of the House of Representatives. It is not expected to be any more pleasant than the time spent in front of the Senate.

All told, we may be talking about losses to the company, employees and executives of more than $23 billion at current stock prices (they closed at $45.31 on 9/28/2016). Much of company value will recover over time, but the reputational issues will linger for a while. Even worse, rather than adapting the incentive plan over time. The company allowed the plan to run wild and is now going to have to find an entirely new approach to pay, rather than adapting a flawed program over time.

In the end, pay will be blamed and to some extent this is correct. The incentive plan was critically flawed, even while it helped produce great results. On the other hand, pay programs cannot manage anything…ever. The leaders of those in the incentive plan did not perform at least some of the duties that were in their job descriptions. We may never know how the fraud started and which person with accountability turned a blind (or willfully ignorant) eye to the problems. But I bet anyone reading this is happy that they are not the people in the compensation department trying to create and communicate the solution. The real costs will never be fully known, but there is no doubt that the costs were far more than the rewards. By definition, that is an inefficient approach to incentive compensation.

Dan Walter, CECP, CEP is the President and CEO of Performensation. He is passionately committed to aligning pay with company strategy and culture and has been deeply involved in equity compensation for a long, long time. Dan has written several industry resources including the recent Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and a few other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @Performensation and @SayOnPay.

The Media Explains the New Overtime Rule, But Not Really

Way back in May when we started talking about the impact of the new overtime rule, a reader wrote in to say that the change was going to be no big deal. After all, those affected could be making more money, so why worry how you tell them -- they'll just get it. Analysis had indicated that the biggest impact, based on number of employees affected, would be in the South and some thought that in the rest of the country it would be a "no brainer."

But as time went on, it has become clear that many organizations are struggling with the shift. Many nonprofits who believe deeply in the legislation have had to strategize financially. And many public and private organizations are unsure of what to say to employees who are not affected by the change and may become restive because of it, let alone to those who are affected.

Here's why I'm bringing the topic up again. I think we in HR should see this as a beta test for future compensation communication efforts. This is one of the first times that the media is out in front of corporation communications on a compensation issue that affects your employees. With more wage legislation under discussion and the CEO Pay Ratio announcement looming, employees are going to be influenced by what the media has to say as much as what you and their company eventually tells them. Let's learn from what the media is up to this time around. As you can imagine, they could use some improvement . . .

Many people are briefed by their local newspapers and television station about these kind of issues, because these sources often offer a quick segment with summarized details and explanations of how a legislated change applies to their regular audience. However, when it comes to employment issues, the quality of the information can be variable.

First of all, the media is talking to the person on the street -- not necessarily an employed person -- so their information is a summary of all the possibilities. Next, they are employees, too, and are not expert in any angle of Total Rewards practices. Their reporting can really confuse or mislead your employees, who have to guess how the information applies to them. It's impossible for them to guess correctly, because all they've been given is an overview. Next stop, your door, where they may arrive angry, frustrated and not trusting your explanation because it doesn't match their media source.

Thinking I'm overblowing it? Check out this news story. First of all, the online title of the broadcast piece is: "Changes for Salaried Employees Take Effect on December 1, 2016." It's a great come-on, but so general as to not be really accurate. That doesn't mean the title isn't going to be noticed by many of your salaried employees and confuse or distress the ones who aren't affected. Notice, it also misses the whole point of the legislation -- that more people are now eligible for overtime.

Now  look at this example of how a quote from a member of the U.S. Department of Labor was handled in the report:

'"There's that salary level, that salary basis and then there's the job duties," Coleman-Lovelace said. "Those are the exemptions that are required to be salary level. If they are making less than the $913 per week, they're not considered a salaried employee."'

I could guess why the quote seems so garbled, why they didn't explain how the word "exemptions" apply and why they don't explain why exemptions relate to how compensation works until three paragraphs later. But the most important thing to notice is, who wouldn't be confused and a bit worried about that statement if they're making anywhere from $800 to $1,250 a week?

My suggestion: Read the news story linked above to see how some of the media struggle with these issues. Check around to see what's been announced on your local channels and in local papers. Become up-to-date on your employees' information sources. They don't read the DOL notices and hardly read the Wall Street Journal, but they are eager to know where their next raise is coming from.

Then plan your communications.

Margaret O'Hanlon, CCP collaborated with Ann Bares and Dan Walter to create the DIY guide to compensation leadership, Everything You Do (in Compensation) Is Communications. Margaret is founder and Principal of re:Think Consulting. She brings deep expertise in compensation, communications and leadership to topics like the CEO Pay Ratio, performance management and compensation implementation discussions at the Café. Margaret is a Board member of the Bay Area Compensation Association (BACA). Before founding re:Think Consulting, she was a Principal at Willis Towers Watson. 

When Is Training A Bad Idea?

It's often viewed in the workplace that training employees is a critical requirement for upgrading skills, developing future leaders, and in general improving competencies and abilities.  The common format is usually classroom sessions, but the effort could also include seminars, workshops and professional conferences.

Developing employees is a concept hard to argue with.  I fear though, that in its application the goal is often missed, failing to provide behavior-based training programs that deliver as advertised.

My concern is not with technical knowledge, learning about Windows 10, HRIS Modules, or the latest social media applications for business, but the subjective side of employee development; i.e., leadership, motivational principles, improving competencies, etc.

Ask yourself, can I measure the effectiveness of our training programs?  Or do you simply equate effectiveness with the number of employees trained?  And do you count “trained” as having attended a training / education session?

Therein Lies The Rub

Recently I attended a self-improvement workshop and during the course of that experience found that my attention continually wandered off topic.  Does this sound familiar?

The presenter used several phrases that I didn’t understand (i.e., “resonant relationships”).  Such language bombs ("What did they just say?") disrupted my link with the presenter as I struggled to figure out what the term(s) meant.  Meanwhile the flow of the presentation moved on without me.

Another complaint is where the participant can’t connect the presenter's message to direct assistance on a practical level.  The dialogue sounds good, but doesn't move the practical knowledge meter very far.

Passing The Effectiveness Test

If your intent is to avoid a misleading measure of training success (we trained “x” employees this year), ask a few questions before setting up that next “opportunity.”

• Can you measure the impact?  Will you know upfront what employees will gain from the experience, and what practical applications will reward attendance?

• Are they speaking common sense? Understanding broad based concepts has its place in the employee education process, but unless the discussion of those concepts is connected to real world challenges, you should question the practical value of the session.

• Can you spread the learning?  Would a participant be able to explain to other employees what they learned and how practical applications might be forthcoming?

• New vs. rehash: How much of the presentation would be new information, vs. a rehash of what has been covered before? 

• Boring presentation: Being a subject matter expert is not the same as being able to engage an audience about that expertise.  A read-from-the-podium lecture style, when combined with a dry topic and a monotone voice can kill audience engagement within minutes.

How do you know whether an audience is paying attention?  All it takes is watching how participants act during the session.

• Watching the clock:  When is this session going to end?  When's lunch?  Are we having a break?

• Checking email: Everyone’s smart phone has an email feature.  Some employees try to be subtle when checking in, while others are more blatant.  None are paying attention.

• Day dreaming: Fixing the eyes on a distant spot and letting the mind wander from the topic at hand.  The eyes glaze over, the head starts to nod and the ears close up shop.

• Planning this article:  Or conducting other mental activities, where the mind is engaged elsewhere.

The speaker should be aware of these tendencies and try to modify their presentation to keep engagement as high as possible.  Too often though, their prime goal is dispensing the material at hand.  The room could be empty.

When Is Training a Bad Idea?

So be careful.  No one would disagree that training employees is a worthwhile investment of company time and effort.  Likewise for attendance at workshops, seminars and conferences.  Affording employees the opportunity for personal and professional growth is a valuable part of your Total Rewards program.

However, not every offering sold under the guise of training or self-development is a worthwhile effort; worth the time and money.  Often times these external events are more boondoggle than learning exercise, offered more as rewards and networking exercises than actual learning experiences.  If that’s your intent, well and good.  Just don’t kid yourself that your employees are being “trained.”

As to internal training sessions, avoid the knee-jerk headcount metric of assessing the value of your training efforts by the number of employees exposed to the material.  That sort of assembly-line “training" is more about process than results.  Find a way to measure whether your training is effective, or isn't.

Bottom line?  Fluff training is a bad idea when your time and money is wasted in the process.  Know the difference.

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,"People Waiting for Olive's Talk," by Eduardo Habkost

STEM Candidate Shortage (non)Issues and Taxicab Queuing

Scientific, technological, engineering and mathematics (STEM) jobs have tangled root issues that complicate employment offers and pay budgeting for the future. Shortages or surpluses?  Conventional wisdom is that there are candidate shortages for thousands of critical STEM jobs that remain unfilled.  Academics project an insufficient supply of students entering the educational pipelines for those professions.  Managers request higher pay rates to attract worthwhile STEM professionals.  But reality is not that clear.  Here are some facts that might help settle the inevitable disputes that will arise.

An authoritative but complex federal report issued last summer by Bureau of Labor Statistics tackles and tangles the topic. It uses a “taxicab queuing model” as a framing metaphor, to examine the heterogeneous nature of STEM occupations. Huh?  Translation: "The demand and supply of STEM workers vary by market and location in much the same way that the demand and supply of taxicabs and passengers do".

If you don't like the BLS analogy about cabs, then pick another set of words like:

• yes and no
• more or less
• heterogeneity exists (there are both shortages and surpluses)
• a little of both but sometimes neither
• ambiguous, constantly changing situation

All those phrases describe the confusing array of factual findings about STEM jobs.  It is difficult to simply resolve all the various claims about shortages of qualified STEM candidates.  For every assertion about vast numbers of vacant slots, evidence also appears showing an absence of employment opportunities that fit candidate interests or skills.

The federal report concluded the United States has:

• an excess supply of academics with advanced STEM degrees vainly seeking positions that offer some prospect of tenure;
• regional mismatches between job openings and qualified applicants with specific technical skills;
• thousands of biomedical, pharmaceutical and chemistry graduates seeking positions in those currently politically incorrect fields where almost no one is hiring;
• a severe dearth of teaching posts attractive to the highly trained professionals who may consider themselves overqualified for the available openings;
• narrow shortfalls of qualified candidates for certain government STEM jobs that require U.S. citizenship and/or security clearances for employment;
• a general unmet demand for petroleum engineers (but the bust of the Bakken oil field in ND and the plunge in global energy prices may have reversed that 2015 situation); and
• some very geographically restricted shortages of private industry technical jobs like production operators and mobile software application developers, even as last year "the U.S. Census Bureau reported that 74 percent of those who have a bachelor’s degree in a STEM major are not employed in STEM occupations."

Meanwhile, the usual clamor is heard demanding much higher increase rates for STEM occupations than for other fields of work. Seems like engineers in particular typically win the strongest pay increases every year. Engineering professional societies are quite influential.  Much like a powerful union, they have loyal members who self-report pay figures to association-conducted surveys that support lock-step maturity curve patterns. Many of the assertions made by and for engineers continue to be highly questionable, particularly claims of a shortage crisis. Of course, all generalities are in some ways untrue, including this one.

Michael S. Teitelbaum, vice president of the Sloan Foundation, opined that there are no general shortages of scientists and engineers.  He went even further, to state that there is evidence suggesting surpluses: there are significantly more science and engineering graduates in the United States than attractive positions available in the workforce. Similarly, B. Lindsay Lowell and Harold Salzman have pointed to the disproportionate percentage of bachelor’s degree STEM holders not employed in STEM occupations.

Copious details abound in the BLS report. The cautious research results may be useful to counteract the frequently hysterical fearful concerns of senior managers.  Like most claims in life, some are valid and some are false, some will apply and some will be irrelevant.  As guardians over payroll budget allocations, compensation people have to decide which is which.

Have fun deciding which facts apply in your case!

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience. After corporate HR and consulting roles in most industries, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness, Jim testified in many reasonable executive compensation cases. He also serves on the Advisory Board of the Compensation and Benefits Review.

Image by Vik, courtesy of Creative Commons

Cafe Classic: Unions, Recognition and Employee Engagement

Editor's Note: Today's Classic features Derek Irvine with some data and insights about the importance of employee engagement - even (and some might argue especially) in a union environment.  The questions raised here are very relevant today, particularly as we consider today's organization efforts around some of the new work models, including those featuring independent contractors (think Uber and Lyft). 

Unions. That word alone sparks an emotional reaction in people. Before you read further, what was your reaction to that word? Appreciation, expectation, anger, loathing, indifference?

The reality of unions is they came into existence to protect employees where company leadership refused to. Regardless of industry or job role, unions rose up to defend employee interests, even the most basic such as the right to survive a day’s work. Literally.

In today’s workplace, unions still have power when they need to step in for employee rights. There are strong arguments that the union has run its course in some fields. Anger or just disbelief over union actions in France this week is making headlines around the world. Regardless of your position on unions, the bottom line in private-sector companies is that leadership would not have to be concerned about unionization in their workforce if they create a work environment in which employees do not see a need unionize, in which employees feel their interests are attended to, they have a safe and fair work environment, they are not just allowed but encouraged to work and achieve to their full potential.

Ann Bares, our editor here on Compensation Café, recently wrote on her Compensation Force blog about Union Employees & Variable Pay, citing recent Hewitt research showing that “13% of union employees working at the 130 organizations covered by the study are participating in a variable pay (incentive) plan."

What does this mean? To me, it implies that even in a unionized environment, where every detail of compensation is negotiated to be equal, people still crave acknowledgment when they go above and beyond, when they do the exceptional, when they put their best into helping the company achieve its objectives.

Research out of Gallup found, unsurprisingly:

“Whether unionized or not, world-class organizations have two crucial things in common: They recognize that talented managers are the core of an organization’s success, and they understand and leverage the fact that engagement predicts performance.”

Should you consider introducing variable pay or any other form of recognition into a unionized environment? Consider these statistics from the Gallup report reference above:

• 38% of union employees are engaged.
• 45% of non-union employees are engaged.
• Union workgroups are at the 39th percentile in Gallup's global employee engagement database and have, on average, 6% lower productivity compared to the median.
• Non-union workgroups are at the 45th percentile in Gallup's global employee engagement database and are on par with average productivity among all groups in the global database.
• 17% of union workgroups, compared to 22% of non-union workgroups, are in the top quartile of Gallup's global employee engagement database. Groups in the top quartile are considered best practice.
• 34% of union workgroups, compared to 26% of non-union workgroups, are in the bottom quartile of Gallup's global employee engagement database. Groups in the bottom quartile are considered low performing -- not only for engagement, but for business outcomes as well.

And now consider this from Gallup research released last month:

“If employee perceptions are the main cause of financial performance rather than the reverse, we know that managers can take action to improve employee perceptions and therefore have an impact on the bottom line.”

That’s right. Employee engagement leads to financial performance, not the other way around. Regardless of union or non-union, engaged employees deliver more to your bottom line. Now what do you think about adding programs that can influence employee engagement, even in a union environment?

As Globoforce’s Vice President of Client Strategy and 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. He is the co-author of "The Power of Thanks" and 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.

Applying Pixar’s “22 Rules of Storytelling” to Pay

What do ‘Up’, ‘Cars’, ‘Inside Out’, ‘Monsters, Inc’, ‘Ratatouille’, ‘Toy Story 3’, ‘The Incredibles’, ‘Finding Nemo’, ‘Toy Story’ and ‘WALL-E’ have in common? First, they are 10 of the best animated movies made by Pixar. Second, they all follow Pixar’s “22 Rules of Storytelling.” As it turns out, these rules adapt well to the world of compensation plans and philosophy.

1. You reward participants for performing well AND for achieving results.
2. You gotta keep in mind what's interesting to your participants as an audience, not what's fun to do as a as a compensation professional. They can be, and usually are, very different.
3. Aiming for a specific solution is important, but you won't see what the answer is actually about til you've modeled potential results. Now rewrite.
4. Once upon a time there was ______. One day ______. Because of that, ______. Because of that, ______. Until finally ______. (THIS RULE IS IMMEASURABLY IMPORTANT)
5. Focus. Combine ideas and plans. Hop over sticking points while you look for answers. You'll feel like you're losing valuable stuff but it sets you free.
6. What are your company and participants good at, comfortable with? Model the polar opposite. Challenge stakeholders during design and execution. How do they react?
7. Come up with your ending before you figure out your middle. Seriously. Endings are hard, get yours working up front. Know how much you are willing to pay and why. Don't be surprised when your approach works.
8. Finish your program and get it implemented even if it's not perfect. In an ideal world you have both, but move on. Implement and adapt as conditions change and you learn new things.
9. When you're stuck, make a list of what SHOULDN'T happen. Lots of times the approach to get you unstuck will show up.
10. Pull apart the pay philosophies and plans you like (yours and those from other companies). What you like in them is a part of you and your company culture; you've got to recognize it before you can use it.
11. Putting it on paper lets you start fixing it. Start documenting and modeling as ideas arise. If it stays in your head, a perfect idea, you'll never share it with anyone.
12. Discount the 1st thing that comes to mind. And the 2nd, 3rd, 4th, 5th — get the obvious out of the way. Surprise yourself.
13. Give your compensation an edge. Passive and “normal” might seem fine to you as you design, but it's poison to the program when competing for talent.
14. Why must you have THIS philosophy or plan? What's the belief burning within you or your stakeholders that your approach feeds off of? That's the heart of it.
15. If you were your participants, with this approach, how would you feel? Honesty lends credibility to unbelievable situations.
16. What are the stakes? Give a reason to root for the participants. What happens if they don't succeed? Model with the odds stacked against them. What do they get by surmounting real and potential challenges? Is it reasonable?
17. No work is ever wasted. If it's not working, let go and move on — it'll come back around to be useful later.
18. You have to know your company and its capabilities. Know the difference between creating a great program and designing the “best” program. Things move fast. Modeling is as much testing, as it is refining.
19. Coincidences that can get participants to the finish line will happen; but recognize them for what they are. Don't claim pay is successful unless it drives the behaviors, decisions and/or specific results in the way it is designed to.
20. Perform this exercise: Take the building blocks of a pay philosophy or plan you dislike. How would you rearrange them into what you DO like?
21. You’ve gotta identify with your stakeholders. You can’t just assume things will work. What would make YOU act that way?
22. What's the essence of your pay philosophy or plan? Most economical telling of it? If you know that, you can build out from there.

This list was derived from the fantastic list “The 22 Rules of Storytelling – by Pixar,” created Emma Coats.

Dan Walter, CECP, CEP is the President and CEO of Performensation. He is passionately committed to aligning pay with company strategy and culture and has been deeply involved in equity compensation for a long, long time. Dan has written several industry resources including the recent Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and a few other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @Performensation and @SayOnPay.

Are We Dealing with Reality or Just Giving In to Bad Habits?

Take a look at most businesses of 100 employees or fewer and you typically find at least one employee who has reliably received good-sized increases throughout the Recession, up to this day. Do you know who I'm talking about?

The CEO is a great guess. The CFO is another. But I wonder if you realize who I'm talking about since these incumbents typically earn far less than the golden handcuffs gang. I'm talking about the CEO's assistant.

We know the string of possible titles -- Executive Assistant, Office Manager, Senior Secretary and so on. If you're in a start up, family run business or other small organization that runs lean, you know the immense value of these individuals through personal experience. Back in the day, a person in one of these positions would often be the first out of the office as the clock neared 5:00. But these days they typically earn a level of authority in the organization that comes from hard work, savvy politics and reliably sound judgment.

And they typically earn far more than what would be considered the maximum salary for their job title.

An HR Manager asked about this salary challenge (paying over the maximum) when I was giving a speech recently, and I gave the standard advice of sticking to the maximum, with subsequent compensation paid in lump sums. But then I got thinking. In 2016, is this still be best advice to offer? 

Are experienced Office Managers working from job profiles that reliably describe their skills and responsibilities? Or, in this increasingly complex work context, could some of them be more validly described as entry level professionals? After all, many in these jobs understand the basics of business strategy, know how to staff a decision-making session and communicate effectively to a wide range of team members.

I'll tell you the many things that got me thinking about this.

• One of my CEO clients recently mentioned that his Executive Assistant stepped in as a project manager, and taught his staff a thing or two. Is this a hybrid job that this company is overlooking because it's guaranteed that the Executive Assistant will receive a healthy increase anyway?
• Executive Assistant is a position that has traditionally been paid according to "the person in the job" rather than the job responsibilities, and HR then tries to overlook the practice. Do we, out of habit, just leave it at that -- as an artifact of office politics -- instead of looking more thoughtfully at the actual job profile to understand what really gets accomplished? I bet the company and the employee would both benefit from this insight.
• These jobs are typically staffed by women and, as we all know, we are still working to fix outdated pay practices for women. Should this be next in line?

Oh, on that last point, the other side of the coin matters, too. With awareness growing about how much people in administrative and similar job levels struggle financially, how much respect do you show other employees by ignoring compensation "rules" for one special person who then earns higher retirement and H&W benefits, too?

I'm not suggesting that there is a single best answer to these questions. I am encouraging you to notice the thought bubble over my head though, and decide whether it should be over yours, too.

Margaret O'Hanlon, CCP collaborated with Ann Bares and Dan Walter to create the DIY guide to compensation leadership, Everything You Do (in Compensation) Is Communications. Margaret is founder and Principal of re:Think Consulting. She brings deep expertise in compensation, communications and leadership to topics like the CEO Pay Ratio, performance management and compensation implementation discussions at the Café. Margaret is a Board member of the Bay Area Compensation Association (BACA). Before founding re:Think Consulting, she was a Principal at Willis Towers Watson. 

Reshaping the Organization

I’ve written previously about the transformation of performance reviews, specifically how we can effectively distinguish developmental conversations from pay discussions. Putting the practicalities of the transformation aside for the moment, these conversations speak to a much larger trend in the modern workplace.

Employees and employers alike now expect to be more actively involved and invested within the workplace. The result of those expectations is narrowing the space between the formal organization and the informal organization – introducing more dynamism to balance out perceived rigidity, and crowdsourced insight to balance out top-down influence.

The formal organization represents the side of the organization that comprises the structure and hierarchy, as well as policies and procedures. It is easily understood and observable, and as such, plays an important role in aligning employees to roles, but may have trouble adapting to changes.

The informal organization represents the side of the organization that is less observable, rooted in relationships and informal groups that people have developed. As such, it is much more fluid and capable of motivating and energizing employees.

Whereas the former is much more top-down, the latter is driven by bottom-up processes. In the Industrial Era, the formal organization reigned as the dominant force. As we have entered the Human Era, the informal organization has begun to play a much larger role, alongside the higher expectations that employees have for their ability to find a sense of purpose, achievement, and growth through their work and work relationships.

Integrating the two sides can help to power a more human-centered workplace and places much greater emphasis on systems that work efficiently and benefit all involved.

Performance management offers a great microcosm for observing some of these dynamics.

For their part, employees like to know where they stand and want to know how to improve, but rigid systems of annual ratings are typically viewed as unproductive and uninformative. In line with the informal organization, employees want to seek out information about their performance from all sides of their networks.

On the other hand, HR and company leadership expect to have reliable and accurate performance data to feed into a number of downstream systems, spanning compensation, talent management, and succession planning. Unfortunately, they too are facing a process that is ineffective and burdensome without delivering on results.

Any transformation of performance management, and other HR systems, will have to look closely into the blending of formal and informal organizational elements, to better address the ways in which today’s employees expect to interact with each other through work.

How is your organization managing the shrinking gap between formal and informal organizational components?

As Globoforce’s Vice President of Client Strategy and 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. He is the co-author of "The Power of Thanks" and 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.

Your New Total Rewards Element is an iPhone 7

It's that time of year again: #AppleEvent. Sleek. Sexy. Courageous. iPhone 7.

Apple's latest offering, sans headphone jack, has provoked anger from users everywhere. There's so much anger, in fact, that social media has commandeered a rather unflattering (and definitely NSFW) hashtag for cataloging complaints about the removal of the jack.

Explaining the decision to remove the analog headphone jack, CEO Tim Cook said:

When you decide on what the future is, you want to get there as soon as you can... Now why is that important for the consumer? Well, that plug, that jack takes up a lot of space in the phone, a lot of space. And there's a lot of more important things we can provide for the consumer than that jack.

More important things to who? Certainly not the consumers, based on their reactions. In hindsight, it seems that the analog headphone jack was pretty darned important to a lot of users...

Apple has long assumed that people don't know what they want until you show it to them. If you're planning to roll out a new element of your total rewards package without considering the tastes and preferences of your workforce, you're making this assumption too. And, like Apple, you may find yourself on the receiving end of some frustration and anger.

We're all trying to offer total rewards packages that are sexy (read: attractive to current and potential employees) and, because of the economic climate and talent markets we find ourselves in, may feel pushed to do something courageous. But courageousness without intelligence is dangerous.

Imagine your workforce consists mainly of Gen Xers. It's courageous to change your spot bonus program from cash to upgraded tech. It's dangerous to change your spot bonus program from cash to vouchers for yoga classes and smoothies. Now imagine you have a Boomer workforce. Offering smaller annual salary increases combined with reduced employee healthcare contributions is courageous. Offering smaller annual salary increases combined with "Team Building Tapas Tuesdays" is dangerous.

What may appear to be unimportant to you in the grand scheme of your total rewards program may be a key selling point of that program to certain demographic slices of your employees.

The truth is, your total rewards program will never satisfy 100% of the people 100% of the time. (After all, there are still some amongst us who prefer Android phones!) As I've said before, being flexible can help you satisfy more of the people more of the time. Steve Jobs's approach of telling people what they want doesn't work in this setting. Offer rewards elements that are likely to appeal to all of your employees, regardless of demographics. Provide flexibility and choice in those elements that you do offer, and be leery of replacing a tried-and-true program with something new simply because it's new. New does not always mean better.

Why is understanding and incorporating the preferences and motivations of your workforce important? Because you're not Apple. The likely worst-case scenario for Apple as a result of removing the audio jack is they'll initially miss some sales targets, take a beating on social media for a while, and eventually people will realize they really did want wireless headphones after all. But you're not Apple. If you unplug from the preferences and motivations of your workforce, you risk unpairing from them permanently, creating some serious problems in your ability to attract and retain top talent.    

Stephanie Thomas, Ph.D., is a Lecturer in the Department of Economics at Cornell University. She teaches undergraduate and graduate courses on economic theory and labor economics in the College of Arts and Sciences and in Cornell’s School of Industrial and Labor Relations. Throughout her career, Stephanie has completed research on a variety of topics including wage determination, pay gaps and inequality, and performance-based compensation systems. She frequently provides expert commentary in media outlets such as The New York Times, CBC, and NPR, and has published papers in a variety of journals.