Compensation Cafe

Cafe Classic: What HR Wants to Do (Not Compensation & Benefits)

Editor's Note:  In today's Classic post, we take another look at some v-e-r-y interesting research that that HR Bartender Sharlyn Lauby served up and shared on what HR professionals enjoy most (and least) in their daily work.  (And if you aren't already reading what Sharlyn writes - check her blog out here.  We at the Cafe are big fans!)

Sharlyn Lauby, author of HR Bartender - one of my favorite HR blogs - conducted a couple of surveys asking her HR colleagues what they currently do and also what they want to do in their jobs.

The results of the surveys, discussed by Sharlyn in  in this post, are presented side by side below (click for a pop-up window showing the charts):

Interesting, is it not?

What's going on here?  A number of things, it would seem.  Currently HR pros are spending the lion's share of their time on employee relations.  This may not be surprising, as Sharlyn notes, given the level of employee frustration and disengagement today.  Far less time is currently being spent on compensation and benefits, staffing and recruitment, and training and development - the former, for many, probably continued investment in figuring how how to do more with less.

What would HR like to be working on?  Clearly, training and development.  And very, very clearly - not compensation and benefits.  I was struck by the contrast between the "does" and "wants to do" green bars.  I mean, few of my own generalist colleagues and clients love compensation and benefits work, but I wasn't prepared for it to make this poor a showing.

Sharlyn's take, in an exchange we had about the results: it isn't that pros dislike rewards, but they would rather just spend time on the essence of it.  This makes sense to me.  Most of the HR people I know will get engaged in a discussion about reward philosophy and the question of linking pay to performance.  For many, though, their eyes glaze over when conversation turns to the details of the pricing, modeling and analytical work that underlies the design and management of most reward programs.

What's your take on these findings?  What do they reveal about HR pros and their attitude about employee rewards?  Is there an issue here that should concern us - or not?  And, if there is, what do we do about it?

Thanks, Sharlyn, for stirring the pot!

Ann Bares is the Founder and Editor of Compensation Café,  Author of Compensation Force and Managing Partner of Altura Consulting Group LLC, where she provides compensation consulting and survey administration services to a wide range of client organizations.  She earned her M.B.A. at Northwestern University’s Kellogg School and enjoys reading in her spare time. Follow her on Twitter at @annbares.

Tell Me What You Want To Hear

Have you ever felt like asking your boss, "Just tell me what you want to hear?"  Of course, you have.  We all have.  But I'll wager that you never actually voiced that question, did you?

Sticking your neck up above the crowd to voice a different, contentious or even challenging viewpoint that goes against the popular choice, or the boss' choice, is rarely an action that you look forward to taking.  Sometimes though, just to avoid the headaches, the personal challenges and even cause of friction in the workplace you'll want for nothing more than for someone else to make the call.  For someone else to tell you what to do or say.

So you can escape the heat/blame/pointed finger/bad reputation, etc.

Let Me Pass This Cup

Excuse the biblical reference, but the time comes for all of us when we would like nothing better than for someone else to wave their arms in front of that proverbial freight train.  For someone else to face down the storm that might be brewing just outside the door.  For someone else to make the unpopular choice - and then to deal with the repercussions.

It's human nature.  Perhaps a bit of self-preservation to avoid what you fear might become a career-damaging moment.  We've all seen examples: pushing the call up the chain of command, having a subordinate "do it," delaying a decision for as long as possible, or even simply pretending that a decision doesn't have to be made at all.

Because we don't want to be punished.  We don't want to regret our actions.

The Manager's Role

But hopefully, most of the time you'll likely take a deep breath, suck in your gut, push back your nervous fears and make the call you feel you need to make.   Because you're a professional.  Because that's what you're being paid to do as a Compensation Director/Manager/Leader at your organization.

We live in a time where we're literally inundated with self-help posters, guides, seminars, workshops and a daily exposure to social media formats like LinkedIn, Facebook, et al.  Outsiders constantly painting a picture of a simple and uncomplicated life, using cute photos, catchy phrases, and other guilt-ridden inducements, admonishing you to "do the right thing."

And they're right.  You should.  But sometimes it can be damn hard to take that step, to raise your hand or simply say NO!  I've been there, and I'd bet you have as well.

Don't Fall On Your Sword

In my experience, though, I've found a pathway forward that can take into account your professional needs without sawing off the branch you're sitting on.  You CAN stick to your guns (opinions, recommendations, viewpoint), just modify your personal approach a bit.  Don't be the bull in the china shop.

• Don't fall on your sword by making declarative statements that leave you little negotiating room.   "My way or the highway" is a foolish stratagem, no matter who is talking.
• Allow for the fact that there may be information out there not yet available to the decision-makers.  "Based on the current information available . . . ." is a reasonable preface.
• You will rarely see all the angles to an issue that senior management would be privy to.  So your compensation viewpoint, while objectively strong, might be trumped by other aspects of the business that you're not aware of. Be aware of that possibility.
• Surveys are not always right, so never start an argument with "Surveys say . . ."  In fact, numbers are neutral.  What you want to do about those numbers usually forms the core of your proposals.
• Know your audience, and where their thinking is going.  Then modify your approach to at least take their viewpoints into account. 
• You are not the "answer man," so be willing to compromise where half a loaf moves you in the right direction.  Playing the "resist" card in the workplace is a poor tactic.

So yes, you should be willing to stand up for what you believe and to say as much.  But be smart about it. 

When you pass the cup to someone else too often, the question can become, what do we need you for?

 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, "Kambi Unedited," by Jonathan Benson

Combating Monopsonies to Ensure a Living (and Livable) Wage

Worker pay in the U.S. has stagnated. Accounting for inflation, pay isn’t keeping up with cost of living and hasn’t for decades. Why? I learned about a new theory from an early stage research paper reported in Slate. What’s that theory – monopsonies have been growing quietly, especially in more rural areas.

That’s not a typo. To quote the Slate article:

“A recent study by a group of labor economists introduces an interesting theory into the mix: Workers’ pay may be lagging because the U.S. is suffering from a shortage of employers… Monopsony is essentially monopoly’s quieter, less appreciated twin sibling. A monopolist can fix prices because it’s the only seller in the market. The one hospital in a sprawling rural county can charge insurers whatever it likes for emergency room services, for instance, because patients can’t go elsewhere. A monopsonist, on the other hand, can pay whatever it likes for labor or supplies, because it’s the only company buying or hiring. That remote hospital I just mentioned? It can probably get away with lowballing its nurses on salary, because nobody is out there trying to poach them.”

People are grounded in their neighborhoods and their homes as much as they are in their work. When employment options are few in a monopsonist environment, employees have few options to improve their pay or career prospects. Thinking back 10 years to the recession, it was particularly difficult for people to sell their underwater homes to relocate for work opportunities, exacerbating the problem. Even in a strong economy, it’s hard to pull up roots and dislocate family for career advancement.

Think about the impacts on compensation. It’s easier to suppress local minimum wage when you’re the primary employer and options are limited. Sure, jobs are always a consideration during a merger and acquisition, too. It’s generally understood that duplicative roles will be eliminated, but less often considered is the possible creation of a monopsony.

I encourage you to read the full article, which acknowledges the early stage of the research. What role do compensation professionals play in understanding the possible impacts of monopsonies and ensuring employees have the opportunity to earn a living wage?

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 a leader in the WorkHuman movement and 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.

Cafe Classic: Competition Is Good, Except When It’s Not - The Difference between Incentives and Recognition

Editor's Note:  Incentives and Recognition are key elements of a total reward portfolio, but they work in different ways and are better suited to different purposes.  Who better to illuminate the differences between them with clear information and examples than our own Derek Irvine?

I’m often asked, “What’s the difference between incentives and recognition? Aren’t they the same thing?”

No, they are not. Incentives and recognition are two distinctly different mechanisms that can be used to boost employee productivity, but each has its proper place and time for use. Incentives in particular can cause unintended consequences if not thought through fully.

A recent LA Times article provides an excellent example of incentives in the form of leaderboards gone awry.

“In the basements of the Disneyland and Paradise Pier hotels in Anaheim, big flat-screen monitors hang from the walls in rooms where uniformed crews do laundry. The monitors are like scoreboards, with employees' work speeds compared to one another. Workers are listed by name, so their colleagues can see who is quickest at loading pillow cases, sheets and other items into a laundry machine. …

“Isabel Barrera, a Disneyland Hotel laundry worker for eight years, began calling the new system the ‘electronic whip’ when it was installed last year. The name has stuck. … According to Barrera, the whip has led to a sort of competition among workers, some of whom have tried to race to the head of the pack. But that has led to dissension and made other employees worry that a reasonable pace won't be enough to keep the boss happy. Barrera and Beatriz Topete, an official with Unite Here Local 11, said employees have been known to skip bathroom breaks out of fear that their production will fall and managers will demand an explanation. They say they felt bad for a pregnant employee who had trouble keeping up.”

The Difference between Incentives and Recognition

The chart below illustrates the primary differences between incentives and recognition. (Click on it to view a full-size image in its own window.)

Most importantly, incentives are focused on the “What” while recognition is focused on the “How.” For example, the laundry scoreboards are purely an incentive focused on the “what” of employee deliverable of number of pillow cases loaded into a machine, etc. Recognition, on the other hand, would perhaps praise and reward Beatriz for chipping in to help her pregnant colleague keep up with the work but still take needed bathroom breaks. In this example, Beatriz is being recognized for “how” she is getting her work done.

Ensure Incentives Remain on Track

1. Set reasonable parameters and expectations. Competition can be an effective motivator as long as employees don’t believe their jobs are on the line based on the outcome. Overcome this challenge by setting clear goals at the outset and sticking to them.
2. Take into account individual employee situations. To be fair, incentives must take into account individual exceptions (such as the pregnant employee at Disney). No employee should ever feel as if they need to put their health or well-being in danger to meet incentive expectations. This is often the primary problem with safety incentive programs in which employees simply do not report safety issues to ensure they will meet safety goals.
3. Don’t rely solely on incentives. Incentives serve a purpose for motivating teams to meet or exceed short-term, highly visible goals. But necessarily only a few employees will benefit. Recognition, properly implemented, is designed to reach the vast majority of employees, acknowledging and praising employees frequently and in the moment for actions and behaviors to demonstrate core values and contribute to key objectives.

Do you use incentives or recognition in your workplace? Which do you find more effective?

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 a leader in the WorkHumanmovement and 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.

It Doesn't Take a Magic Wand for Your Magic Kingdom to Appear

The recent WorldatWork video interview, "Creating a Consistent Employee Experience at The Walt Disney Company" is a must see for those of you who are responsible for compensation and Total Rewards communications.

On the face of it, the interview tells the story of a successful global communication effort whose first proud achievement was to improve employee feedback on compensation. But I want to take a different angle, and help you read between the lines to identify actionable items that you can think about and apply, even if you are not living in the Magic Kingdom.

The Disney team's stated goal is to achieve a global consistency in employee experience.This a huge target as they have five media channels, eleven parks in four countries, eight studios (for films, music and theatre) and three consumer product companies. Given this scope, you could say that their work has nothing to do with yours, but I can assure you that's not true. I've worked on global communication projects (as well as small company projects) and, yes, the Fortune 100 projects are complex . . . but the project steps involved are pretty much the same for any company.

Also, the fundamental challenges Disney describes are similar to yours. The Disney team is trying to rectify a lack of communication strategy and overcome the turf wars between internal groups. In addition, while Disney guest experiences tend to be nonpareil, Disney employee experiences often are not, from what I hear. Anything in the last two sentences that doesn't fit comfortably into a description of your company?

You can watch the video here, and then I'll highlight a few things.

 

Here are a few takeaways that should be useful in your own annual compensation communication planning:

Disney gave themselves a framework to start with and plan from. They want to be able to explain the "value" of working for Disney. Not the work experience, attitudes toward Disney or details of the Disney Total Rewards package. None of those items connect with employees feelings about working for, choosing and caring for your company.

In Disney's case, value is being analyzed from a marketing standpoint. Finding out how employees feel and how that influences their decisions. Do they find that their work allows them to express themselves or feel better about their life? Do employees experience the social value of connecting with their coworkers and customers? How is their work a solution to their personal needs and wants? And, in terms of both pay and work experience, is the "price" employees are paying for working at Disney appropriate to the perceived value of working there.

This can be a useful framework for you, too. It gives you a look at how your employees build their own, felt, engagement with your company. To paraphrase Wikipedia's piece on Marketing and value, the key to high perceived value is to help the individual see how you are, " . . . helping them to solve a problem, offering a solution, giving results, and making them happy." When you understand this story, you can communicate in a way that employees will connect with, instead of just (maybe) read.

Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.

Cafe Classic: Will Your Sales Plan Make It Through the 1st Q?

Editor's Note: Sales - and sales compensation - plans positioned to drive success?  What would Zig Ziglar do?  Margaret O'Hanlon channels the famous encourager and shares ideas about what we can learn from him.

Zig Ziglar was a good friend of salespeople. His unflagging optimism will be missed. While most people in sales adore their life work, they will admit that it is very tough emotionally. When losing is considered an opportunity, you know that it takes a very special person to love the work. When winning is based on your ability to build relationships, a truth that good salespeople know, the ups are affirming but the downs can feel like it's all about you.

hat's why Zig Ziglar's quotes are well loved. "If you dream it then you can achieve it." A real pro knows you've got to learn from each sales encounter. If you do it well, trust between you and your client will turn into mutual satisfaction, which is another way of describing a sale isn't it?

Effective sales are relationship-based and so are effective sales compensation plans. That's why the "transactional" communications that are so often used to explain sales compensation plans -- here's the formula, notice the threshold and multipliers, etc. -- will not leverage sales goals as successfully as you might hope.  

Human nature needs to be taken into account. Sales reps won't truly understand their quotas until their first incentive check. They'll nod their head at the sales meeting but muddle through until that check. Then the questions come. Questions that will be far be too late for those 1st Q numbers.

Look beyond your high performers to build sales. Fast forward to your payout dates, and think about what your core performers will need to get there. Most sales comp is based on complex measures. Salespeople are often faced with aggregate quotas achieved through a range of sub quotas or targets. Knowing the plan formula won't help sales reps identify interdependencies between targets or understand how to develop priorities that align with the overall sales strategy. Plan ahead to turn core performers into high performers by giving them tactical and strategic insights to increase their results.

Communication on your sales plan really matters, both to your relationships with your sales force and to your numbers. Don't assume your typical sales compensation explanations are building relationships or delivering the best results. Admit that your human nature makes it difficult to get beyond your own feelings about each of the sales people.

One of Zig Ziglar's most well-loved sales quotes is, "You will get all you want in life, if you help enough other people get what they want." A good description of sales compensation and sales management, don't you think?

Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.

The High Success Rate of Low Expectations

Congratulations, you read this sentence! Not impressed? You shouldn’t be. You probably would be looking at this article if you couldn’t read basic sentences. Celebrating a foregone conclusion is a spiraling path to mediocrity. Achieving the inevitable is not an accomplishment.

Imagine an archery target as tall as a garage door with bullseye covering 85%. No one would be impressed if you made a bullseye, not even you. But this is how many companies view targets for their incentive plans.

Sometimes plans are designed this way because goal setting is an inaccurate science. When this happens, the best solution is to correct things quickly and confidently

Sometimes plans are designed this way to make people “feel good” about their accomplishments. Stop it.  Just stop it. The people who will lead your company to success are not the same people who would celebrate beating a 3-year in a basketball game.

Sometimes plans are designed this way because someone set a prior target too high, perhaps unachievably high. Our natural response is to flinch and pull back on the next set of goals, leaving us in a position to look foolish or wipeout our budget with little to show for it.

Too often, plans are designed this way because of a misunderstanding of incentive pay. The basic premise of pay for performance is this: targets and quotas are meant to require effort. They should require people to stretch at least a little bit.

It’s nice to celebrate achieving goals. It’s always fun to pay people some extra money. But, this has a dark and difficult downside. If leaders aren’t paying close attention they can be lulled into thinking people are doing a great job, even when the results average, or worse. As your staff celebrates, the competitor down the street is striving for slightly higher goals each measurement cycle.

Before long you will be asking how the other company got ahead. You will look back and claim that you always hit your goals. You may be explaining this as you interview for your next job. If your company is to grow, your people have to grow as well.

One quick note: None of the above implies that targets should only be achieved occasionally. A perfectly designed incentive plan (good luck with that) will require people to stretch, while being 100% achievable, with a bit of effort and great execution. Model every possible scenario and fight hard for the plan you know will be difficult, yet possible. The celebrations will be that much sweeter and the payouts will that much more appreciated by those paying and receiving them.

Dan Walter, CECP, CEP is the President and CEO of Performensation. He is passionately committed to aligning pay with company strategy and culture and considered a leading expert on equity compensation issues. Dan has written several industry resources including an issue brief on 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 other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @Performensation.

Why Aren't I Paid A Fair Wage?

Do you think your pay is a fair reflection of your experience and job performance?  What about the person in the office/cubicle/workstation next to you?  Do you think their pay is fair?  If you asked 100 of your fellow employees that question, what percentage would say yes?

Would you be surprised to find out that, at any given moment most employees feel they're deserving of more than what they're receiving?

So if that’s a common employee perception, are the majority of companies intentionally underpaying their employees?  Or are these employees filling their heads with overly ambitious fantasies of their own self-worth and entitlement?

Perhaps we should first understand, what exactly is a fair wage?  Most would agree that it's being properly rewarded for an individual’s experience and effort.  Not in relation to the employee next to you, but as a reflection of one’s own value to the organization.

You may be nodding your head now, but what confuses the issue every time is – what do they mean by “properly”?

Many employees have a tendency to consider themselves underpaid.

• They hear stories about what their friends and relatives are being paid – and the stories are always about higher pay

• They learn of colleagues whom they consider as less valuable to the company being paid more than they consider “fair”

• They're exposed to a steady drumbeat of outside influences (recruiters, the media, those same friends and relatives) suggesting they could do better elsewhere

• In today’s business environment an employee’s natural skepticism allows that the company is offering only what it has to

Given the subjective and emotional nature of the above, even where the pay levels are high in relation to the competitive environment employees may well remain convinced that their lot is average at best.  Unless the company makes a serious effort to communicate the relative market value of their pay program(s), left to their own devices employees may not appreciate what they have.

So what’s an HR Manager to say when confronted by this most common employee gripe?

Focus on how the individual is being treated, because if you get caught up defending anyone else’s pay you’ll have lost the point from your opening breath.  Your questioner has only one employee in mind, and they won’t be all that interested in listening to generalities of how the company has everyone’s interest at heart, how they strive to provide opportunities for competitive pay, blah, blah.

Also, most pay-for-performance systems have a critical flaw, in that company reward practices don't keep pace with the increased value of employees – thus creating a risk of disengagement and eventual separation.

• Salary ranges are increased in relation to marketplace movement (usually), but individual pay is increased for different reasons.  Thus employee growth within the salary range can be painfully slow

• Over time it's likely that an average employee could stand still within their salary range, even as their experience and marketability improve

• Company budgetary policies often limit merit and promotional increases, restricting the pay growth of high performing employees

• Squeaky wheels do get greased, and more often than we’d like.  But those situations are exceptions and shouldn't be pointed to as benchmark practices.

Companies don't react directly to the Cost of Living, either in midpoint or salary movement, but employees, on the other hand, react to the COL as a barometer of whether their pay is fair.

Also, as companies continue to “carry” some employees they leave limited resources for the reward of high performers – and who is it that tends to leave the company?  It’s the good workers, while the mediocre ones remain.  When a reward system is flawed the average level of performance tends to gradually decrease as good workers leave and other qualified staff realize they won’t be rewarded for their efforts.  Over time a broad leveling effect takes place, to the detriment of your business.

How can an employee test whether or not their pay is fair?

• If the salary range is known, learn how present pay compares to what the company considers the “going rate” (midpoint). Significant job experience and consistently good performance ratings would suggest an above average pay level.

• They should talk to HR or their first line management, in order to gain the company’s perspective on their individual value and what opportunities may be available

• Caution: several internet sites offer a distorted view and aren't reliable. If quoted by the employee, your best tactic is deferring market pay questions to internal professionals

• For most employees it’s an act of faith that the company is playing fair – and if they come to believe otherwise it'll be difficult to regain their trust

Do you consider yourself to be fairly paid?  Be honest now.  There’s a line of thought that suggests there is little to gain in saying yes.  Then the company will do nothing.  But if you said h*** no! then perhaps the company will do something.  Cynical?  Skeptical?  Yes on both counts, and that is exactly what your employees are thinking right now.

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, "Boba Fett Reward," pasukaru76

Cafe Classic: Don't Use Pay As A Babysitter

Editor's Note:  In this post, Chuck Csizmar addresses this Classic problem practice, a favorite of ineffective managers.  I'd wager that many of you have your own pay baby-sitting stories to share...

Have you ever used a babysitter?  This is when you have someone else assume your responsibilities while you take a break and focus on something else.  The babysitter stands in for you, is you during the period of your absence. 

Typically we think of babysitting when there’s a dependent child involved, but in the workplace it’s not uncommon for ineffective managers to use the same concept when dealing with their employees.  These managers seek to use the pay that their employees receive as a surrogate for leadership – for keeping those workers complacent, retained and generally “in line.”

The practice of manipulating rewards presumes that the employee will chase the money, and will be happy with their lot, while at the same time will not require much in the way of supervision, periodic direction or even meaningful conversation.  The thinking here is that, if I provide you with enough reward you will act as desired in order to not jeopardize those payments.  The goal is to place the employee’s attitude and performance on automatic pilot while the manager is engaged elsewhere.

So far, so good.  Not necessarily a problem.  The red flag goes up the pole when you consider whether these monies are warranted by either performance or business need, or are they simply bribes?

What are we talking about?

Scenarios where pay is used in lieu of actual management are easy to spot.

• The Grand Giveaway:  Where managers try to give away as much money as they can to as many as possible, not worrying overmuch with distinctions between individual performances.  The key is to build an employee's appreciation of their manager’s largesse.

• Title inflation: The promise of bloated and meaningless titles that distort organizational structures, for the prime purpose of rewarding employees in lieu of cash.

• Over rated performance:  Playing the good guy by over-rating performance during salary reviews.  Culprits are often seen rewarding activity over results.  So look busy!

• Assured compensation: Take the risk out of rewards and encourage an attitude of entitlement.  Everybody receives an annual merit raise, everyone earns a bonus. 

• Counter-offers: “Let’s make a deal” attitude to keep resigning employees from actually leaving; a dangerous practice that increases costs and lowers morale.

What’s the cause of this behavior?   Managers typically receive inadequate training (if any) on how to use their company’s pay programs, so many use pay as a crutch.  Spending the company’s money effectively and efficiently isn’t on the radar screen.  They use pay like a club to get an employee’s attention.  And once they have it the manager is off doing something else – with the presumption that pay will substitute as supervision and motivation while the manager is absent – kind of like a babysitter.

Weak and ineffectual managers don’t actually manage their employees, in the sense of performance direction, leadership, setting good examples and decision-making.  Instead, they want to be liked.  They want to avoid conflict and they don’t want anyone to quit.  They want employees to get along, and to help foster a friendly team atmosphere they try to manipulate pay in support of their efforts.

It’s really kind of a bribe.

So what is “managing” to these people?  It’s not about making hard decisions.  Too often it’s trying to get the most for their employees, deserved or otherwise, whether the organization gains in the process or not.  The manager is focused on their own interests, and is using someone else’s money to fund their behavior.

Why it doesn’t work

Relying on pay as a replacement for management has a short effective life cycle.

• Employees see arbitrary same-same pay treatment as de-motivating to high performers.  Why bother extending yourself if you’re going to receive the same reward as the guy doing crossword puzzles?

• Employees resent favored-son treatment and those who benefit for non-performance reasons will always become known.  There goes your morale.

• No amount of money replaces the value of honest performance direction and feedback.  Those with an interest in learning and growing appreciate the help.

• Absentee managers lose the respect of their employees, who know what’s going on.  Remember that employees leave managers, not companies.

For managers who need a crutch to help motivate and retain their employees, to help them do their jobs, the above cautions likely won’t make a difference.  Their goal is not to manage, but to get-by, to be liked by their employees and to avoid disruptions to their routine.  This is not leadership, but administration.

But for those managers who wish to make a difference, who understand that managing employees is a challenging and rewarding role, abrogating responsibility through babysitting is not an option.  They recognize it as the opposite of management, a damaging practice that will not enhance anyone’s long term career prospects.

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.

Good to Great Housekeeping

It's time to cement your project plans for the coming year, so I thought I'd pass along some items to consider before you submit for approval. But first, I want to share a thought I heard recently. It got my complete attention, and I think it should get yours, too, as the new year dawns:
               "All companies should accept that they are technology companies from now on"

When I read it, the penny dropped, the light went on over my head, and I (finally) put two and two together. I can see the validity in this, as I think about talent conversations with clients in the past year, even though they are from wildly different industries.

I don't need to tell you how much your business relies on technology, and that the appetite for tech solutions in most industries is insatiable. It's rarely the IT staff that's changing, though. It's typically other talent areas where higher tech operations are edging, or shoving, their way in, so new hires should be as savvy and experienced as possible, and should be paid comparably.

Think about how your company will operate in the next three years, and consider whether the idea that yours is -- or is becoming -- a technology company holds any water. If so, it would be a valuable discussion point (and possibly a new strategic organizing position) before you complete your planning for next year.

The rest of my suggestions are practical and time-tested. They come from successful problem-solving strategies in many, many companies. Few places make them regular practices, but I bet your department would benefit from adding a few to this year's goals.

• Revisit your last survey findings -- I can't tell you how many organizations put employee survey results in the drawer once they have been announced. Yes, survey results do have a shelf life, but you conducted that survey in part to build your relationship with employees. Keep it in the mix by mentioning how your work is responsive to the input they provided.
• Generate data -- You and your team should be able to respond immediately to up to 20 demographic questions about your employee population. A few basic examples are: Age distribution, age distribution within departments, LOS, LOS by department, gender distribution by department, average length of  time in a job before promotion and so on, and so on. Information like this should be considered in every decision, and you should think up demographics that would be most appropriate to your business -- merit percentage by LOS might open a few eyes, for example.
• Grab a glass of wine and review your plan documents -- Most of the time when I get handed plan documents, I'm warned against believing them as written. Talk about cognitive dissonance. Your plan documents are the master description, and can be referred to for legal purposes. Think about handing a cop your driver's license and telling him or her not to take it seriously.
• Create a master HR calendar and see what it shows you -- Especially if HR has multiple functions in your company, collaboration on timing and communication is critical. Wonder why HR emails don't get read? Lack of planning could be the major reason.
• Three years is the charm -- If you haven't updated your salary structure for three years or more, why are you putting it off? Odds are you're spending more on hiring bonuses (because you're not sure about your salaries) than you would spend on compensation surveys. Really.

Margaret O'Hanlon, CCP brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm, re:Think Consulting, provides market pay information and designs base salary structures, incentive plans, career paths and their implementation plans. Earlier, she was a Principal at Willis Towers Watson. Margaret is a Board member of the Bay Area Compensation Association (BACA). She coauthored the popular eBook, Everything You Do (in Compensation) Is Communications, a toolkit that all practitioners can find at https://gumroad.com/l/everythingiscommunication.