Are You In A State Of Denial?

Many a time I have consulted with clients who would confidently, and even smugly, brag to me that all was well with their core reward programs.  "Everything is working fine," they would say.  "We may just need to update a few things."  Their view is that if anything perhaps only a few mid-course adjustments might be necessary.  The source(s) of their company's largest single expense, their payroll, are working pretty much as intended.

Not much to look at here.

But in truth there often is, that there's a mass of program rot lying just beneath the shiny veneer of their brightly colored brochures and positive messaging.  If you're only looking at surface appearances (think of that traditional iceberg picture) you could be turning a blind eye to a powerful dose of reality. Because over time even the best-conceived reward plans will go off the tracks and cease delivering the type of results that they were intended for. If you ignore them.

How long would you dare driving your car without checking the oil?

Using Wallpaper

It's been said that you can wallpaper over the cracks in a wall, but that those fissures and imperfections would still remain - just no longer in plain sight.  So who are you kidding, when you paper over faulty reward programs that once upon a time worked well?  When you push that "Let's do this again" button to once again repeat exactly what you did last year, and the years before?

A few common examples.

• Pay for performance: This is the most popular kicking boy, the P4P program.  Yes, you may say that you reward for individual performance, but to be effective you should be doing more than going through the procedural motions.
• What percentage of employees receive a "merit" increase?  Would 90+% raise a flag of entitlement vs. earned reward?
• What is the quality of those performance appraisal forms?  Or are you simply processing paperwork by checking the box, "Received?"
• Have managers been trained to conduct proper reviews/interviews? Or are they left to their own devices, supposedly "Doing the best they can?"
• We provide competitive salaries: We hear this one all the time, to the point that this has become an almost meaningless phrase.
• Are you talking about your salary ranges or actual pay?  Are you walking the talk, or simply pontificating about what could happen?
• Is your compa-ratio competitive?  Are you even checking? Do you know the danger signs?
• Being "competitive" still means that 50% of the marketplace pays more than you. Can't pat yourself on the back over that, can you?
• Our incentive plans are pay-at-risk: Do you really cut back on variable payments to management when performance slips or is at least a portion of targeted payments already baked into the books?  I have seen the Finance folks "adjust" corporate results to ensure that key incentive payments weren't negatively impacted.

Some organizations hold back on base salaries, then tout their incentive program as delivering competitive total pay.  Which of course increases the pressure to deliver something in the form of additive "variable" pay.

• All employees are treated the same: It sounds good when you read phrases like this on the break room wall, but are non-managers really treated the same as managers when it comes to providing reward payments?  Is your leadership assessed in the same objective fashion, or is there a greater concern that some managers/leaders might quit if their rewards were negatively impacted - by even their performance?

I've seen organizations who have felt no compunction about freezing or delaying regular performance reviews and merit increases for the general workforce, while at the same time would always ensure that the management cadre received regular increases.

This is not to say that various reward strategies, even some of those listed above may not be appropriate under certain circumstances.  But don't kid yourself, or worse, kid your employees. They will know when your messages are in a state of denial when compared to actions taken.

And trust is a very hard thing to regain.

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, "See no evil," by Allyaubry

Comments

[E. James (Jim) Brennan]

"None of our employees ever leave. So why do we need a compensation consultant?" Those dismissive words preceded my quick ejection from an perfunctory initial meeting with the crusty Chairman/CEO and his COO. Pausing as I left the room, I asked over my shoulder, "Did it ever occur to you that no one WANTs your people? Or they might be so overpaid that no one is willing to touch them?" A deafening silence followed my departure. Then the CEO followed me out, asking, "Do you always have this much fun with your clients?" "I try to," was my answer. They became one of my best clients for about twenty years.