Compensation Cafe

The Forgotten Employee

Have you ever walked out of a store because of poor customer service?  Or felt frustrated because the employee at the other end of the phone didn't seem to care?  Or after enduring a bad experience with an employee at an establishment you said, “never again"?

Customers react first and foremost to the employee that they're dealing with, the one they're facing, whether the transaction is financially significant or not.  To the customer, that employee is your company, and these decision-makers will consider the treatment they receive as a reflection on your company, for good or ill.

The Forgotten Employee

It's worth noting that the person who just caused you to take your business elsewhere may be one of the lowest paid employees in that organization.   Does that reward/impact relationship make sense to you?  Perhaps the organization doesn't recognize/reward (value) the impact that their employees can have on customer relations.

Many companies have long ignored the importance of the customer-facing job (non-direct sales) in determining a position’s value to their organization.  They consider education (what you know), experience (how long you've been doing something) and competitive survey data (what others are paid) in setting their pay scales.  The fact that the position also has the power of gaining or losing customers is often lost on them as “just part of the job description.”

Some job evaluation systems may give a nod for those who face customers on a regular basis, but such recognition is not often viewed as a critical factor – nor does it usually help determine where in the salary range the incumbent is paid.

Oftentimes it's the position with the least amount of “cachet” that presents the jobholder with the opportunity to influence customer action and reaction.  As an example, the employees most commonly approached by guests at Walt Disney World are the Custodial Workers (e.g.; when does the 3:00 parade start?).

Is it not surprising then that these employees can have as great an impact on customer goodwill and retention as the leaders of the organization?  Studies have shown that having a pleasant experience when dealing with a company often outweighs price considerations and marketing glitz, as people tend to shop where they’re most comfortable and feel valued.

What You Can Do

However, that doesn't mean that you must pay more to these employees than the marketplace suggests, but it's in your best interest to ensure that, at a minimum, they're fairly treated:

• Ensure that your actual pay practices center on the middle of the salary range or higher.  Don't risk having minimum pay scale workers interact with your customers (outside of fast-food [that’s a #2, right?] outlets).
• Hire well into the salary range for qualified candidates.  This isn't a time to be cheap.  That dollar you saved today could cause you to lose a great deal more later.  
• Modify your performance appraisal process to recognize the customer facing role; attitude is just as critical here as know-how and experience.  Does the employee smile at customers, or at least give them their full attention?
• Avoid structuring these as “dead end” jobs.   Wherever possible offer upward opportunities for higher performing employees.
• Listen to these customer-facing employees; they're talking to your customers and their suggestions for process improvements – even new products and services - should be considered.

How do you know whether your company is vulnerable?  1) Ensure that these positions are regularly surveyed for competitive pay practices, and then 2) Create a metric that segments the actual pay of your customer-facing employees to determine the average compa-ratio and spotlight the presence of low paid workers.   Then you'll know how well you're paying those closest to your customers.

Remember that each scenario of customer vs. employee reinforces the financial and long-term impact of those who represent you in the marketplace.  Because it’s much more expensive is gain a new customer than it is to retain an existing one.

Your reputation and business success hang in the balance.

So, don't be "penny-wise and pound foolish."

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, "Waiting for Customers," by Peter Rowley

Cafe Classic: An Innovative "Win-Win" in Japan

Editor's Note:  Who do you reward - and how - when an organization is successful?  In this first of two Classic posts on that question, Jacque Vilet shares the story of how a Japanese based operation of a U.S. company opted for an end run around corporate management to do what they believed to be the right thing.

If you know how different countries view annual bonuses or commission plans, you know that the Japanese don't feel comfortable with plans based on individual performance.  Their culture is "collectivist" which means that they view themselves as a "team" and prefer group harmony over individual self-interest.  In other words, satisfying the group is more important than satisfying the individual.

Although this is a deeply engrained value, the Japanese have grown used to the American penchant for “individualism” and the fact that American multinationals design compensation programs with this in mind.  Therefore, pay-for-performance, bonuses, incentives, performance ratings, salary increases are all geared to the individual employee. This does not mean the Japanese like it, but they accept it.   In reality, however, in Japan you will typically find that employee performance ratings, salary increases, bonus/incentive awards, etc. are clustered very closely together so that, for all practical purposes, every employee gets about the same amount of money, rating, etc.

There is one company I know where the clash between “collectivism” and “individualism” resolved itself in a very clever way.   The company was U.S. based and had a sales operation in Japan.   The sales commission was geared to achievement of individual quotas and paid quarterly --- a very traditional plan.   One year a new Managing Director of the Japanese operation petitioned top management to allow the sales team to have a group commission plan.   In other words the entire sales team would be assigned one quota as a group that would match the sum of all the individual quotas.  At the end of each quarter, the bonus would be awarded to the team, not to individuals.   The team would then decide how to allocate the award.

Top management vetoed the proposal.   Score one for corporate and zero for Japan.  Later I asked the Managing Director how he felt about what had transpired.  After a few minutes of silence, he smiled and told me he had turned the decision into a win-win for both parties.

He said that each salesperson was given his quota (no saleswomen here!) and at the end of each quarter was awarded his commission.   All the salesmen then took their awards, decided as a team how to divide the money up and paid every person in the office ----- customer service reps, inside sales reps, administrative assistants, IT people, field techs, accountants -- even HR!    Everyone received something.   The rationale was that the salespeople could not succeed without the help of everyone.  So this was not just about the sales team ---- the “team” was the entire office.

The Managing Director said, “Now we have a win-win for corporate and our sales team”.

I never did tell corporate, and frankly hoped they would never find out.   Some things are better left alone.   But I couldn’t help but think that the subterfuge could have been avoided if top management had been a little more flexible.  Quotas would still have been met --- and that's the most important thing in management's mind don't you think?

Jacque Vilet, President of Vilet International, has over 20 years’ experience in Global Human Resources with major multinationals such as Intel, Texas Instruments and Seagate Technology. She has managed both local/ in-country national and expatriate programs and has been an expatriate twice during her career. Jacque has the following certifications: CCP, GPHR, HCS and SWP as well as a B.S. and M.S in Psychology plus an MBA. She belongs to SHRM, Human Capital Institute and World at Work. Jacque has been a speaker in the U.S., Asia and Europe, and is a regular contributor to various HR and talent management publications.

Growing a Healthy Compensation Program -- Part Two

This is the second article in a series.

"If you can learn from what others have done who were in your shoes, your program design decisions could be favorably influenced . . .  and you can go home many more weekends feeling confident that you're an effective HR leader." A great motto for the day after Memorial Day, as well as for this series!

So let's look at what can be learned from the case study of a start-up that quickly grows into a thriving mid-sized company. We'll identify some of their missteps -- common to companies their size -- then discuss what they can do to achieve healthy compensation habits.

Case background: In the first article, we looked at the compensation habits of a company called Healthy Gadgets, a new medical device company that began with fewer than 100 employees. In today's article, it's about eighteen months later and they have a new product that's taking off in the cardiac care market. They have close to 400 employees today, and staffing goals for the year will bring the company up to 473 employees.

HR operating context: Compared to when the company was fewer than 100 employees, the CEO no longer has the bandwidth to make everyday decisions. In turn, the Human Resource Manager has become more visible to employees and more involved in day-to-day operations. However, employees are barely satisfied with Human Resources' current service level because the Manager, in her HR Dept. of one, has little time to pay attention to much more than hiring. She's is using a contract recruiter for certain key jobs and is currently recruiting for an HR Specialist because at a certain point, enough is enough. She's thinking she should have started campaigning for the HR Specialist at around 250 employees -- and experience shows that she's correct.

Common compensation practices when a company is growing quickly to at least 500 employees. Here's what today holds for HR. Let's take a look at how "healthy" these habits are turning out to be and the alternatives they may not realize that they have:

Salary administration practices are still quite patchwork since most of the energy goes in to enticing new talent, but managers are more involved in compensation decisions than they have been in the past. Since the company still doesn't have access to compensation surveys due to their purchase cost, managers often bring HR salary data that they've scrounged from the web and Salary.com. If the manager or the recruit is a "squeaky wheel" about the salary, HR may contact the outside recruiter for compensation insights. BTW, annual merit increases have been paid in the past two years.

• There are a couple of practices here that need to be highlighted. HR and managers are collaborating, which is a good thing, but their collaboration is laying a foundation for future difficulties. HR has not yet briefed managers about industry-standard compensation practices, so managers are unaware how much bubble gum and paper clips go into making these important decisions currently. This vagueness will lead inevitably to manager resistance when industry-standard compensation practices are finally introduced, let alone embarrassment at being party to the less-than-standard practices. Not that managers won't be happy that there is finally a real process, but they will likely question current salaries vociferously when they've found out that they could have been making better compensation decisions.
• Managers are also noticing that their "founding" employees are getting a bit antsy about their pay since they still don't have any real evidence that they are being paid competitively  -- even if Healthy Gadgets' compensation strategy has been to overpay.
• None of the practices described in these two bullets above will serve you well in the medium-run. In fact, they could weaken Human Resources' reputation because of the depth of the compromises being made. So look cost/benefit straight in the eye and stand up to your executives about the $3,000 cost of a good salary survey. You need salary survey data to make real business decisions in HR.
• Be sure you are hiring a Human Resource Specialist who can deliver compensation analyst skills. Not just because he or she has received a generalist degree; but also because he or she has completed compensation assignments during recent employment, adding up to at  least 40% of work time.

The annual bonus was affected by production outlays for the new product. Employees were informed of the effect of the one-time operating cost--no bonus for them this year. In spite of the historically broad-based nature of the bonus though, executives did receive awards.

• Well Healthy Gadgets may have to do this to keep executive compensation competitive, but a company this size has a pretty flat organization, with execs working closely with professionals. If the company wants a healthy culture, the bonus decision of "haves" and "have nots" should be closely scrutinized.
• A strategic move for HR would be to a) facilitate a candid discussion of the bonus payment before the decision goes into effect, and b) bring an alternative or two on employee bonus options or Total Rewards redesign to the meeting. Unless Healthy Gadgets' financial situation is dire, it's hard to imagine why something shouldn't be done for employees, especially since they are helping to build the company.

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 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: Managers Can't Use Salary Surveys Wisely, and Other Urban Myths

Editor's Note:  One of the things we try to do here at the Cafe is uncover and challenge basic assumptions - our own and yours - about paying people.  In today's Classic, Margaret O'Hanlon digs into our beliefs about what we can and cannot trust our managers to handle on their own, using the example of a particular company that does things differently.

Salary ranges are built by compensation specialists. Managers are, frankly, too self serving to be trusted. When hiring people, managers just want to grab them with money. When giving them increases, managers want to ignore what's going on in the marketplace (especially during a recession) and give "their people" the highest increase they can get away with.

These are common beliefs in our profession, don't you think? And pretty reliable, too. I have seen them proven time and time again in clients small to huge. At least until now.

I just began working with a client -- global, successful in the recession -- that gives market data to all its managers so they can make their own decisions. That's right, they give them survey results. Not only for salary offers, but also for the annual assessment of how the market has affected salary levels and, as a result, increases.

This company doesn't use a salary structure and they don't give managers salary ranges or even pay maximums. The company has always done it this way, and it works for them. 

How do they make it work? Well, one important detail is that their cash compensation is higher than most other in the marketplace.  So this one time, managers don't feel they need to ratchet up pay to contend with competitors -- or to contend with barely satisfied employees.

Another important detail is that all employees are eligible for incentives. Again, their targets are on the high end of the market, but the company is not afraid to reduce the pool considerably when the company's annual results warrant it. 

The crucial detail is their culture. They are unique, in my experience, in telling the cold, hard truth. Here are a few examples of what I mean. The company tells employees and managers alike that base pay is part of the company's operating expenses and thus affects the share price. They state that base pay is a fixed cost that shareholders want them to manage conservatively.

Would this work in every company? Hardly.The company is making the most of a very unique culture where bottomline business issues are talked about on all levels, and understood. Plus,they are unique in their continuing financial growth. But boy, is this exception broadening my understanding of what is possible -- in terms of both communications and manager competency -- and also how powerful a strong culture can be.

The naturalist Stephen Jay Gould said, "The most erroneous stories are those we think we know the best -- and therefore never scrutinize or question." This challenge to my status quo actually feels good. I have just begun to scrutinize my "insights" and question some of my deeply held beliefs. I think there's a lot to learn here, don't you?

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 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 5th Leading Cause of Death in the U.S. May Surprise You

I’ve been following the work of Jeffrey Pfeffer, professor of organizational behavior at Stanford University’s Graduate School of Business, for more than a decade. His research into the impacts and failures of traditional management practices, including pay as the primary means of motivation, has influenced how numerous organizations have rethought compensation practices.

For instance, during the recession, Pfeffer was quoted in Workforce Management:

“Typical pay increases are not enough to motivate employees, but they are enough to irritate them. … Even when companies create seemingly significant pay differentiation between low and high performers, the actual cash increase is insufficient to sustain performance – or it drives the wrong behaviors. … Effective management is a system, not a pay plan. The mistake is that companies try to solve all their problems with pay.”

That’s as true today, in a relatively stable job market and economy, as it was during the recession. Now Pfeffer has come out with a new book on the fifth leading cause of death in the U.S. – the workplace. As cited in Strategy+Business, he notes:

"In total, workplace environments in the United States may be responsible for 120,000-excess deaths per year…accounting for about $180 billion in additional health-care expenses, approximately 8 percent of the total health-care spending."

So, what’s underlying all of this? Stress. Pfeffer and his colleagues conducted a massive literature review. In an interview with the Stanford Graduate School of Business Insights magazine, Pfeffer explains more, citing Robert Chapman, CEO of Berry-Wehmiller, who told 1,000 CEOs, “You are the cause of the healthcare crisis.”

How? Pfeffer breaks down Chapman’s three points:

1. Chronic diseases like diabetes and cardiovascular disease consume “an enormous percentage” of health care costs.
2. The causes of these diseases and underlying behaviors leading to these diseases is stress.
3. The biggest source of stress to individuals is the workplace.

This article dives into the drivers of stress in the workplace and the health impacts caused by them:

1. Unaffordable healthcare, which for many means not getting health coverage – or adequate coverage – through your job
2. Fear of layoffs and the health impact of actually losing your job
3. Long hours and irregular schedules
4. “Job strain,” which means having little say over the terms of your employment combined with demanding or unrealistic job expectations, often for low pay and limited career opportunities
5. Impacts of all of this on your home life

Just increasing pay won’t solve the problem. The title of Pfeffer’s book, Dying for a Paycheck, says it all. But according to comparisons Pfeffer and his collaborators did between American work environments and Europe, “just bringing the American workplace up to European standards could prevent as many as 60,000 annual deaths.”

The challenge lies in the willingness and fortitude to attack and solve the underlying problems, and not continue to treat the symptoms. A livable minimum wage. A fair and comprehensive healthcare system for all. And yes, overall pay and total rewards policies that put the employee – and not the shareholder – first.

The question is, are we as leaders in our organizations willing to fight to save lives in this way? Are you?

Photo by Nathan Dumlao on Unsplash

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: Motivation 101 (or, Pass the Motivation, please)

Editor's Note: Motivation is a key objective for many of the plans and programs we devise.  But how well do we really understand and work to appreciate the variations and complexities of motivation?  Jim Brennan share some insights and conclusions in this Classic post.

No one can motivate anyone else.  People already come with their own motivations. As an employer, you must deal with the actual people who do your work rather than artificial stereotypes stamped from an identical mold formed by the creative imagination of some speechwriter.  All you can do is offer reinforcements and consequences that hopefully align with the actual motivations of your employees.

Herzberg's refinements of Maslow's hierarchy of needs is a starting point, but individual motivations run the gamut. The starving poor need basic necessities and money; the prosperous rich have the luxury of pursuing other goals like affiliation, recognition or self-actualization. What works best with a particular group depends on what they need and want.  One cannot generalize that cash is always superior to other rewards nor that individual recognition will always create more productive output results than group awards.  In the immortal words of the ancients, it depends.  Motivation is a diagnostic process rather than a universal lever that can be quickly identified and easily pressed for instant results. You don’t inject motivation into your people like a serum; they already have their own, thank you.

The most effective managers are those who know the actual key motivations of each of their subordinates and therefore customize their contacts, output consequences and reinforcements to the actual motivations that drive each individual. Those who believe "everyone is just like me" are gambling on a broad oversimplification. They will find occasional success with their clones but will experience failure with the majority of people who have different circumstances, different priorities and different motivations.  Research has proven that the most effective supervisors are those with the best understanding of the motivations of their individual subordinates, not those whose direct reports have the exact same motivations as the supervisor. 

A boss motivated by status can’t safely expect a crew of workers desperate for money to want the same rewards he wants; their decisions are driven by different desires.  A supervisor who wants to Do Good For Mankind better not project her motivations onto her starving subordinates who are struggling to make ends meet; their enthusiasm is currently best excited by cash.  In academia, where the subjects studied are comfortable in regard to their hygiene factors, the forces that motivate behaviors are quite different than those operating among twenty-somethings with growing families to feed.  There is a wide disparity of motivations encountered in a typical work group, and the effective supervisor needs more than one tool in his or her kit.

Bottom line: your employees will determine which consequences are more effective with them. Personal responses depend on the preferences of actual individual persons and cannot be reduced to a binary choice between A or B, cash or non-cash, personal or group, individual or team, intrinsic or extrinsic, etc.  Life is more complicated than that.  Actually, the ideal situation is to offer some of all:  the most effective total remuneration systems encompass both cash and non-cash elements in a tremendous variety of forms. 

Universal prescriptions tend to be specifically ineffective.  There is always more than one way to skin a cat.

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience in most industries.  After corporate HR posts and consulting CEO roles, 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 in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review.

Creative Commons Image "Should. Could. Would. Did." by SweetOnVeg

Harnessing the Power of Pay Comparisons to Drive Productivity?

I'm a long-time proponent of pay process transparency, but have been skeptical of publishing employee-level data. Some new research has me wondering whether I should reconsider my thoughts on the issue (I'm not yet convinced, as I discuss below).

The fact that our behavior is shaped by the constant comparisons we make between ourselves and those in our reference group has been well established in sociology, psychology and economics. With respect to differences in compensation, much of the research has focused on how these differences lead to feelings of discontent and envy.

In his paper "Relative Concerns at the Workplace: On the Design of the Firm as a Social Space," Walter Hyll argues that these 'relative concerns' can be transformed into a positive force for productivity and profitability. While his analysis presents a mathematical solution to optimizing the mix of low-skill and high-skill workers, he does reference some implications of pay differentials associated with skill differentials.

The central idea underlying Hyll's hypothesis is that workers derive satisfaction (deprivation) if they do better (worse) than members of their reference group. He makes the following two arguments:

1. If a worker experiences a sense of relative deprivation, he will respond by increasing his optimal level of effort to reduce the gap between his own earnings and the earnings of those within his reference group;
2. If a worker experiences a sense of relative satisfaction, he will respond by increasing his optimal level of effort to increase the gap between his own earnings and the earnings of those within his reference group.

In other words, if you're unhappy with being paid less than your reference group, you will work harder to catch up. If you're already earning more than others in your reference group, you will work harder to stay ahead. So, feelings of relative deprivation and relative satisfaction both lead to working harder. Working harder increases productivity, which ultimately leads to higher profits. 

In terms of the mathematics, Hyll's argument is correct. It is also correct from a theoretical perspective when we assume that individuals are rational utility maximizing agents, firms are profit maximizing agents, both workers and firms have perfect information, individuals have appropriately defined their reference group, etc. The biggest assumption, however, is that any differences in pay are attributable solely to differences in productivity.

I wish this assumption was consistent with reality, I really do. It would solve so many of the problems that practitioners face. Unfortunately, in most cases this assumption is unfounded. In all but the strictest performance pay schemes with easily quantifiable objective outputs, pay determinations are influenced by things other than pure productivity. Seniority pay, previous relevant experience (that may or may not relate to productivity), salary history, implicit bias, and intentional discrimination all influence decisions when setting a worker's pay. If the reason for differences in workers' pay includes any of these elements, I question whether the worker will respond with an increased level of effort.

From an academic perspective, I am happy to see that questions such as this are being examined. From a practical perspective, I think that a lot more work needs to be done. Starting from a purely theoretical framework is appropriate - that's how we understand the mechanisms at work. But the findings generated from this theoretical framework are, in my opinion, not yet ready for a real-life workplace. Many of these assumptions need to be relaxed, and the reality-based imperfections discussed above need to be incorporated.

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.

Cafe Classic: Why Self-Help Doesn't Help

Editor's Note:  In today's Classic, Chuck Csizmar looks at that quick fix the self-proclaimed expert is trying to sell you (or your senior management team).  

Doesn't it seem that everywhere you turn these days you face a bombardment of professional how-to advice from self-proclaimed “experts”?   Especially in Human Resources these people assure you that they understand your problems, and that they have the right solutions for you and your business.  All you need do is read a book, attend a webinar or better yet contract for their consulting services.

Sounds like a diet pill, doesn’t it?  Simple and quick.

Promises of such quick fixes and overnight solutions cover every aspect of our business and personal lives.  Pick an issue and the answer is out there.  Someone can help us, and that someone is our “answer man.”  We only have to listen, watch or read whatever it is that they’re offering.   For a fee, of course.

You can’t escape the TV infomercials, the newspaper advertisements, magazine articles or even blogs and social media sites without an endless flow of subject matter gurus telling you that they have the answer you need.

• “Guaranteed to quadruple sales within twelve months”

• “Maximizes HR effectiveness and value through the use of . . .”

• “Keeping Leadership Talent Engaged"

• "Designing Employee Policies for an International Workforce"

• “The Five Causes of Low Morale – and how to avoid them”

• "Our products, services and advice are certified, hospital-tested, government sponsored"

• Etc, etc, etc

You get the point.

Now, here’s the but . . . .

If that’s the case, that the answer is out there – and for a price waiting for you - why do we continue to face the same problems over and over again?  Why are managers still making poor decisions, wasting money and creating employee morale screw-ups from dawn to dusk?  Why are the business headlines constantly reporting litigation over wrongful or illegal management behavior, or dubious business decisions that send companies spiraling into financial trouble?

Isn’t anyone paying attention to the answer man?  Or is the advice simply a load of horse manure?  Are these experts really just spouting head-game theories and viewing business problems from an academic vs. practical viewpoint?  Are they rehashing old methodologies with new language and passing off their solutions as "new" thinking?

Whichever it is, these “I have the solution” messages never seem to stop.   Like a constant propaganda campaign radio-beamed across the border – the broadcast light is always on.  The buzz phrases may change from time to time, but our appetite for quick fixes doesn’t seem to ever diminish.

My theory or yours?

If the “experts” do have the answers - color me skeptical - we need to ask why their message is so often ignored.  Several scenarios are possible:

• Subject matter authorities often speak over our heads, using buzz phrases and $100 words

• Reading or listening to this stuff is hard work; the text is dry, boring and not often engaging

• Too much of the advice is contradictory to what you read / heard already – so who is right?

• Academics often lack credibility in the real world; they “just don’t get it”

• Folks aren't paying attention, on account of their own ingrained biases and personal agendas

Whatever the reason, the drumbeat of advice, whether new or traditional,  is not being absorbed and acted upon – because the problems are still there.

Therefore . . . .

I’m struck by the merry-go-round aspect of constant advice without real solutions.  We see a continuous need to enlighten people and businesses on how to be effective, but it’s a need that never seems to end.

Maybe the analogy to a diet holds some truth; consider how many books are out there on that subject – yet up to 30% of the population remains obese.

There’s an old saying, that if you build a better mousetrap, the world will make a path to your door.   If common sense and up-to-date technical knowledge point the way to a better tomorrow, why do so many companies and their leaders stay in the dumb zone?

If the cure is out there, why is the patient still sick?

I’m thinking that the message is wrong, the audience isn’t listening, or perhaps we’re all being scammed by re-packaged “new” thinking.

Which is it?

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 courtesy of Fontourist

The Pebble In Your Shoe

For as long as I've worked in Human Resources the common solution most often suggested by all ranks and segments of the population for a host of employee issues was to simply . . . pay more.

Yep, just push that EASY button of simplistic, no-thought, one-size-fits-all logic, and like a snake oil concoction sold by con artists the promise was that you'd start feeling better tomorrow.  Or as it turned out with the magic elixir salesmen, soon after those making the promise could get out of town.

Why is it that some people always think that the reason behind almost every employee issue is that the pay is wrong?  Simple and uncomplicated reasoning, I suppose.  Just the way we like to solve our problems.  Therefore, the logical and easy-to-understand solution is to pay more.

Like a pebble caught in your shoe, all you have to do is flick your problem(s) away.

Life is More Than A + B = C

Sometimes though, you really need to look beyond the simplistic to find the REAL problem.  Placing band-aids on symptoms will not be a cure-all for what ails you.  Instead, by masking the "hurt" you might be making things worse by focusing in the wrong direction.  Really harmful problems need time to fester before they erupt into crisis, so band-aids often become misguided placebos to make one think that things are getting better.  Or will soon improve.

When managers complain about a sales incentive system, the answer could be the compensation.  It could also be territory size, unreasonable targets, poor product/service quality, administrative errors, inadequate training, etc.  It isn't always about pay.

When turnover statistics worsen the organization's supposed low pay becomes the "kicking boy" for why employees have left.  However, studies have consistently shown that to be a false logic, which if left unchallenged could direct attention away from the real problem.

As a practicing compensation consultant, many of my clients have assumed that their root problem was pay; they should be improving pay in some fashion.  But that isn't always the case.  In fact, more often than not the problem isn't pay.  However, using pay as an easy target of a complaint is simple to explain, offers the chance of "more for me" and often succeeds in getting employees and even senior management to mindlessly nod their heads.  Perhaps they don't want to dig a little bit deeper.  Perhaps they just want the problem to go away - and they think that more pay would do just that.  No fuss, no muss.

Wrong.

The Ease of Chasing a Distraction

Many times, pointing the finger at pay is serving up a distraction for those whose primary interest is in dealing with a quick fix.  It's similar to a dictator who risks war with a neighboring country simply to hide the fact that their own economy is near collapse.  Illusionists call it a sleight of hand.  Those using this practice will have you looking at everything and everywhere but where the real culprit is - or should be.

So, when your foot hurts, don't rush to throw out your shoes.  Think about it.  Maybe it’s only a pebble that could easily be removed.  So maybe the problem isn't what you think it is; isn't what you want it to be.  Maybe the problem is more ingrained in the organization, more complex and doesn't offer a quick fix solution.  

To make things right perhaps you'll have to conduct some research, spend a little time considering possible ramifications, unintended consequences and roll-on effects.   So, talk to affected employees, gather a wider perspective from those closest to the sore points, delve into the weeds, get behind the symptoms and face the root causes. 

Offering a greater incentive dollars to the sales force when quotas are unreasonable isn't going to get you anywhere.

So, don't simply kick the can of problems down the road, because that can will soon enough roll to a stop and you’ll be facing the same challenges again and again and again. Problems will not go away by themselves.  Instead, if left ignored they will worsen.  And if your quick-fix solution addresses a symptom instead of the real problem, you're wasting time and money while what really ails you will steadily worsen and become ever more difficult to resolve.

You may think that your problem is like a pesky little pebble in your shoe.  Have a care that you could be seriously wrong.

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, "Stoney Lonely Shoe," by Mike Michaels

Cafe Classic: Diamonds and Data Mining

Editor's Note: Our data collection capabilities and the technology supporting them continues to advance, but the questions and steps necessary to draw knowledge and insights from them remain constant.  Here with Classic advice and an analogy on how to create gems from the rock we mine is Stephanie Thomas.

In a recent post, Margaret O'Hanlon told you how to get rich quick using the goldmine of information just sitting there, waiting for you. Mo is absolutely right - data can be immensely valuable in daily conversations, and having fresh information about the distribution of employees by key characteristics - and how those distributions vary across the organization - can ultimately lead to improved decision-making.

If you're mining your data, or are thinking about starting, there is one essential point to keep in mind: data has no value on its own.

It doesn't matter how many data points you collect, how frequently you update them, or how many cool dashboards you build with them if they don't lead to more knowledge about your processes and performance. Data in-and-of-itself cannot really inform decision-making; it's the knowledge we gain from that data.

Think of it in terms of diamond mining. You're out working a particular piece of land (your HRIS database). You come across a vein of diamond ore, and you break off a chunk (the data). Let's say you manage to find an actual diamond in the ore. Relatively speaking, it's pretty ugly and not really usable in its current form: the diamond is probably embedded in other minerals, may contain impurities, and almost certainly is covered in earth.

Before you can do anything with it, it needs to be separated from the ore, cleaned, and cut. But it's not a gem yet. It still needs to be polished. Diamond cutting and polishing can take anywhere from several hours to several months. During this process, the typical diamond will lose half of its original weight.

We now have a gem, but we're still not done. Sure, it's beautiful to look at, but you can't really do anything with a loose stone. It has to be set into a ring or other piece of jewelry. Only then does it really attain its ultimate purpose.

Data mining is a lot like diamond mining. Assuming you know what you're looking for and where to look (not always an easy task), mining really is only the first step in the process.

Who cares about the percentage of bonus-eligible employees who did not receive a bonus! The interesting questions - the knowledge - are related to why did X% not receive bonuses. Did productivity change dramatically? Did we experience higher/lower turnover? Did our goals and expectations change dramatically? Are our goals and expectations reasonable? 

It's the answers to these why questions that inform strategic decision-making. Data itself is nothing more than the raw material. We have to transform that raw material into information by looking at the patterns, associations and relationships among the data. Only after we've cleaned, cut and polished our raw materials can the insights they contain dazzle brilliantly in the sunlight of informed strategic decision-making.

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.