Compensation Cafe

Can You Believe What the CEO Pay Ratio Is Teaching Us?

Well, the Compensation Cafe's predictions have come true. Both the CEO pay ratio and median employee have become topics of conversation in the Finance media world. Not to worry, though. There are no calls for rebellion against the "fat cats." The reporting has been balanced and well-informed.

Take this recent video from Yahoo Finance, which focuses on the median employee. Examples are presented for a range of companies, showing how and why median pay differs from industry to industry. They also take the time to explain the impact of part-time workers on the median pay number.

Bloomberg does a great job with a case study about Coke. It turns out that Coke paid its median worker $16,440 in 2018 compared to $47,312 in 2017. This steep change is due to organizational restructuring. In 2017, their median worker was a full-time North American worker. Then Coke sold its North American bottling operations and took a controlling stake in African bottling operations. The omission of the North American workers and addition of 17,000 new African employees led to the change.

What a great way to educate readers on how the median employee works. By the way, the article goes on to show how Coke's CEO pay ratio was calculated, and provides access to pay ratios for hundreds of companies in 10 industries.

Academics call the pay ratio, "lacking in accuracy, difficult to interpret and incomplete." Yes, it is flawed, but it still inspires interesting and valuable conversations.

This is why the Bloomberg article wouldn't be a bad thing to circulate among the individuals you work with on the calculations. You could add the topic, "What does this tell us about pay transparency?" since the two years of CEO pay ratio data seems to have led to deeper understanding of how pay works rather than any emotional high jinx (which executives were afraid of when this whole thing started).

Also check out WillisTowersWatson's sample shareholder letter for an example of "best practices" and thoughtful communications. Their guidelines suggest that you take the time to educate shareholders about how the CEO pay ratio and median employee data are linked to your company's business and talent strategies -- educating not only your shareholders, but also the financial media (which has turned out to be a great idea so far, given the examples cited above).

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. A former Board member for the Bay Area Compensation Association (BACA), 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.

Red Flag Warning

I was recently asked by a client to sit in on a demonstration conducted for the new HRIS product that their organization had recently purchased.  The installation project was scheduled to take nine months and the client was interested in my comments regarding the Compensation module.

Strange though, that they hadn’t asked for an outside perspective before the purchase was made.

As I watched the demonstration, I couldn’t help but notice the glassy-eyed look of awe that seemed to transfix the client team.  They were mesmerized with all the bells, whistles and do-dads that the presenters were promising to deliver.  They seemed almost giddy with excitement; nirvana had been reached.

A Dose of Reality

Upon conclusion, the obvious presumption was that I was going to be as excited as they were. “So, isn’t this terrific?” one analyst gushed, while another with a broad smile said, “This is going to make all the difference in the world.”  I glanced over at the CHRO and saw a look of such smug self-satisfaction, as in “Look what I approved” that I almost cringed.  What to say?

You see, I’ve been down this road before.  I’ve been in the chair where the client project team was sitting now.  And in my experience, the promised smooth pavement we had started with soon became pitted and cracked, then curvy instead of straight, then gradually narrowed and finally, that glorious pathway to HR Transformation had transitioned from asphalt to rutted dirt and backcountry lane before tapering off into murky swamplands.  And the process had cost a fortune.

But of course, it’s possible that my experiences were a one-off, and that my client today wouldn’t face the same challenges that had troubled my former employer.

The uncomfortable situation I was in was that, while I didn’t want to rain on the client’s parade – and remember that the purchase had already been made – I needed to caution them. The tendency during these marketing presentations is for the purchaser to come away with stars in their eyes.  On the other hand, my role is to be that voice in the back of the room waving their hand and saying “Wait a minute!

Unforeseen consequences

Let’s presume for a minute that everything the HRIS presenters have said is true and that the product does, in fact, have the capabilities described.  Should you relax with a sigh of relief, or acknowledge the need to roll up your sleeves and get cracking on all the work ahead of you?  Because the more data manipulation you desire in a product, the more data you’re going to have to provide – accurately, timely and in a consistent manner.  Maintenance will become an essential requirement.  Do you have the staff and processes in place to undertake these new responsibilities?

Speaking of processes, is the new system going to automate your existing processes, alter your current methods or create entirely new processes?  Or a combination of all three?  Most users would be more comfortable automating what they’re doing today, while most HRIS systems have a new/better/different way of doing things.  What is the organization’s appetite for procedural or policy change?  Might there be unintended consequences?

A surprising development that I faced in an earlier lifetime was that line managers resented the new system, in that they felt (accurately) that some of the work HR used to perform was now the manager’s responsibility.  HR’s reputation took a hit as a perception built of “passing the buck,” and no amount of positive communication ever bridged that gap.  Managers felt that HR was helping themselves (“HR takes and never gives”) under the guise of giving managers more “control.”

And when managers are given a degree of control, what happens when they don’t want to fully exercise that new empowerment? Perhaps they’ll take short cuts, get sloppy with their data input, let deadlines slip away or otherwise fail to use the system the way HR and the product marketers had intended?  Remember the critical nature of system maintenance?

To further stir the pot, many software vendors announce quarterly software updates, which could mean that HR and managers will need to be updated on a regular basis as to the changed workings of the system. Changes could be incidental, or a big deal.  Better be ready to handle whatever comes at you.

And your training had better be ongoing, as a crop of new managers is always on the horizon.

-------------------

Am I against HRIS systems?  No, of course not.  They can and do perform essential services within an organization.  But I am against becoming all dewy-eyed when listening to promises of new bells and whistles.  You need to be fully aware of what it is going to take to install and properly maintain the system you have just purchased. And you need to recognize that HR alone cannot pull it off.

If your managers don’t fall in love post-installation you’re going to be in big trouble.

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, "Red Flag," by rightee

Cafe Classic: A Lack of Company Enthusiasm Doesn't Mean a Lack of Job Passion

Editor's Note:  Classic wisdom on the reality of people's passion and enthusiasm for their work via Dan Walter - and why sometimes our most important responsibility is simply to not mess it up.

I was at a sold-out sporting event recently. The sport, as it turns out, doesn’t matter. Neither does the team. Heck, even the players are unimportant. I learned something great from a woman selling burgers and beer. I was reminded that you don’t need to love your company or its mission to be an incredibly valuable employee. I was also reminded, once again, that our lowest paid staff members are not simply interchangeable parts. Every one of them can make just as big an impact as our highest paid “stars”.

I left my seat during the action to grab a quick bite to eat. All the lines at the closest food stand were about the same length accept one, which was about 50% longer. I jumped into one of the short lines and watched as the longer line moved faster while every person walked away smiling or laughing. I had to change lines.

When I got to the counter a cheerful woman, with smile so genuine it made me smile back, asked what I would like. I ordered my beer and burger and she said something like, “Honey, you’ve gotta get the garlic fries with that.” She then turned around, sang out my order, complimented the person in the next line while she grabbed a drink for the counterperson on her other side.

I asked her if she was tired and she responded that as long as people were in line she didn’t have time for being tired.  As it turned out, they were shutting down in ten minutes, as the game would end in about twenty. As we waited for my order, I asked if they got seats for the end of the game. She laughed and told me that she had never watched even part of a game. She didn’t like the sport, didn’t know the players and always left before finding out whether the team won or lost.

Yet, she loved the organization and valued the job she held for the past fifteen years. She looked forward to work every day and made sure that, “those people who pay so much for tickets got their money’s worth when they ordered their food from her.” She meant it.  I believed it. Then I walked away with a smile and watched my team win the game.

I am sure away from the game you would have little idea who she worked for. It’s unlikely she comes across as a fan or wears any team clothing other than her work uniform. Here’s the amazing thing. I can’t remember what team was visiting, but I do remember that wonderful employee at the food counter. I am certain there are tons of people like her in jobs everywhere. I know I have met many over the years. It’s unlikely that any compensation program I can design or communicate will ever create another version of her. I can only work to make sure that I never screw up and ruin an attitude like that.

Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture. Dan is also a leading expert on equity compensation issues and has written several industry resources including the one-of-a-kind 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 @DanFutureSense.

Cafe Classic: What Does the World Reward?

Editor's Note:  A Classic rewind of my take - having raised a couple of young (now young-ish) adults and had opportunity for a LOT of one-on-one conversations with people about their pay - on this question.  I'd love to hear yours, too.

I had the opportunity to speak with a group of college students (not HR majors) recently about compensation.  Sometimes there's no better way to get clarity about what you practice and believe in your profession than to have somebody completely outside of it quiz you.  I thought I'd share a couple of highlights from our conversation -- the questions and my responses -- presented here for commentary and reaction from my fellow reward and HR professionals.

Our session kicked off with a great starting question, and flowed from there.

First Question:  What does the world reward?

My response - The world rewards work that the people of the world need done, according to the relationship between:

-The demand for a skill or contribution, and

-The available supply of people who are able and willing to provide that skill or contribution.

Follow Up Question:  What does this mean for someone in the process of choosing a career?

 

It means that there is a fundamental tension in the relationship between work and pay, as illustrated in the image below.  To understand this tension, it can help to consider the extremes.  At one extreme, you have work and interests that are important to you, regardless of whether the world particularly needs or values them.  At the other extreme, you have work and interests that are needed and valued by the world, regardless of whether they are important to you. 

 

We often hear the phrase: Follow your passion and the money will come.  Maybe or maybe not.  What if my passion is making the world a more beautiful place through creating oil paintings of Yorkshire Terriers?  This might mean a lot to me, and reflect my values and interests, but if the world decides it doesn't want or need to buy many of my dog paintings, no matter how fabulous they are, it isn't likely that I will earn much.  That is reality.

And maybe I'm OK with that, living my life on the "small dollar" end of the work-pay continuum. Maybe I'm happy living in a smaller home and spending my vacations camping up north -- as long as I have my little painting studio and the chance to do work that holds meaning for me.

But if I'm not OK with that, if I've always dreamed of driving an expensive car and traveling the world, then maybe I'd better look a little more closely at the kinds of skills and capabilities that are in demand in today's world, and for which the world is willing to reward me.  Maybe I need to move myself toward the other end of the work-pay continuum by adding a second major in software engineering to my first major in canine artistry, which would allow me to pursue higher paying work while churning out my Yorkie oils as a side hobby.

I don't mean to suggest that this is a zero sum game.  It certainly doesn't have to be. The point here is about understanding the trade-offs that come along with different career choices and the need for each of us to find our own personal "sweet spot" along the work-pay continuum, guided by our own aspirations, values and gifts.

We spent a lot of time - the group of students and me - talking about this continuum and the tension between work and pay choices.  Perhaps there is a helpful parallel to this that would support conversations with employees about career and professional development choices, and the relationship between those choices and pay.  (I know I've had a few conversations with people who want to be paid like the engineers or technology specialists in their companies, but don't want to do that work, where we've ended up in somewhat similar territory...)

Your thoughts?

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.

Creative Commons image "Blue Marble (Planet Earth) by woodleywonderworks

Is the Current IPO Market a Red Giant?

A Red Giant is a small or medium star at the end of its life. The star grows in size even as it loses energy, finally transforming into a White Dwarf when it sheds its outer layers and leaves only its dense core. This process takes time and is visually impressive, but much of the splendor disappears once the fuel for the star has been exhausted.

IPO markets often work in much the same way. When markets are truly hot everyone is waiting for the perfect time to go public. After a while, it seems like everyone is going public at the same time. Values soar. This usually results in fantastic headlines, but many of these companies struggle to become “core” components that will survive the transformation of the market.

This brings us to the impact on compensation. The biggest stars of the IPO universe are tech companies. The most leveraged piece of these companies compensation packages is equity compensation awards. Stock options and RSUs are the hydrogen that fuels tech startups. When the IPO market expands and transforms the best equity compensation become worth even more than imagined. Amazon, Google, and Apple are great examples of companies who have survived this cycle in the past. But if you’re anything other than one of the best companies, you should expect to be consumed or flung off into space. These companies may survive, but employees will find themselves holding equity worth little or nothing.

It is not too soon to plan for this eventuality. Performing an equity compensation risk assessment is a good place to start. Review both your strategy and tactical processes for granting stock options and RSUs. Evaluate whether your award features, vesting schedules and exercisability are optimally situated to weather Red Giant transformation. Most importantly prepare now for the possibility of making an extreme course change in 2020 or 2021. Building a new approach, educating your board and getting approval from your shareholders takes more time than you may expect.

There are also ways to “recession-proof” your equity compensation programs. Most of these techniques are outside of common market data and boiler-plate plan documents. They also require a new understanding of the potentials and realities of stock-based compensation. Terms may need to change. Vesting may need a new look. Your entire program may need to be refitted and replaced. Regardless of the new approach, it will require some deep expertise.

It’s been a while since the last expansion and contraction. For many executives, HR professionals and compensation leaders this will be the first equity collapse of their careers. The least prepared will disappear into the blackness of space with little evidence that they ever existed. The best will emerge stronger and better positioned for years, or decades, of continued success.

One last note. Our own sun is in this stage right now. It is still warm enough to keep us alive. It is still so far from anything drastic that we have no need to panic (We’ve got about 5 Billion years). But, like the companies hoping for an IPO, we need to be aware and plan ahead. In the case of Earth, this effort is led by scientists and science-fiction writers. The IPO market will definitely contract in less than 5 Billion years. And when it comes to compensation strategy, you’re it!

Dan Walter is a CECP and CEP and works as Managing Consultant for FutureSense. He is passionately committed to aligning pay with company strategy and culture. Dan is also a leading expert on equity compensation issues and has written several industry resources including the one-of-a-kind 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 @DanFutureSense.

Cafe Classic: When They Want A Bit More

Editor's Note:  We are all acquainted with the off-cycle raise request. It's a challenge to handle appropriately for all involved - from the employee to the manager to YOU, dear Compensation/HR professional.  Chuck Csizmar shares some Classic thoughts and advice.

We’ve all seen the cartoon where an employee gets themselves pumped up to ask the boss for a raise.  It’s often good humor, and always at the expense of the bumbling employee.  They always seem to get it wrong, and we have a good chuckle as a result.

But how often do we look at that same scenario from the manager’s perspective?  Not much humor there, I’m afraid.  An awkward conversation with an employee rarely is.

Most companies of any size have a regularly scheduled performance review for their employees, where past performance would be assessed and a pay increase considered.  Usually the two are connected.

When an employee request for a pay raise comes between the review cycles, a common response is to tell the employee to wait until the scheduled review. That’s why a review is scheduled in the first place, to make sure an assessment of performance and pay does take place.  Everyone gets treated the same.  If that wasn't happening, everyone would be asking for the same special consideration and the company’s annual review cycle would be thrown out the window.

So much for the easy part.  The greater challenge is when such an off-cycle request comes in the form of a disgruntled employee who feels that they're being short-changed in some way, taken for granted or otherwise being (in their minds) underpaid.

Handling the angry employee

In this case telling them to wait won’t do; you have to deal with the anger, as well as the cynicism that the company has been talking advantage of them.

You can be certain other employees will have their eyes and ears out for what's happening - and the respect you show for the employee.

While each employee conversation can be a unique experience for both parties, consider several pointers that might help you and the unhappy worker.

• Remind the employee that there's a process.  Start with the reminder that the company does review performance and pay levels, that there is a process.  No one is being forgotten.

• Get them to talk about their qualifications.  You still need to let the employee have their say, but steer the conversation toward the employee's own capabilities, background and experience. 

• Don't address emotional issues like need.  That’s a slippery slope that pulls the conversation away from business and into the grey area of personalities, home life and pressures from outside the work environment.

• Keep the conversation about only the employee.  While you're willing to discuss how the employee facing you is being treated, you shouldn't open the conversation as to how other employees are treated.  There are too many variables at play here, but perhaps most important is that it isn't any of the employee's business.

• Show an open mind.  Never give the impression that you're only going through the motions, offering only a "courtesy" meeting.  You need to genuinely listen, ask questions and show the employee that you're prepared to listen and consider.

• Don’t get defensive.  Avoid being trapped into defending the company’s pay programs against the employee’s “research” into market pay.   Company pay programs are typically developed by professionals and it's likely that the employee is using biased and simplistic figures.

• Don't get into an argument.  No one wins here, but you'll likely lose more because the court of employee opinion likely gave you one or two strikes before you came to bat.

• Don't make promises, especially if you're not authorized.  Avoid using throw away phrases like "I'll look into it" or "let me talk to HR," unless you mean it.  Unless you're actually going to take up the employee's issue and run with it. 

Your prime goal should be to come away from the discussion where the employee has had an opportunity to have their say, you've had an opportunity to listen without pre-judgment and the points raised by both parties can be further considered.  It doesn't mean that you have to agree, but that effective communications has taken place.  Meanwhile the employee should come away with a better understanding of the company's pay programs, where they stand and how they can improve themselves.

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 DianeWorth

You've Got to Start Somewhere!

Have you just invented your company's first salary structure? Market tested your incentive rates?

If the answer is yes, odds are your company has 200 to 500 employees. There are two, or if you're lucky three, people in Human Resources, but there could be only one. You're thrilled that you just finished a great big project that will make employees and managers happy. After all, now they'll finally be confident that you are paying competitively -- right?

Ummm, not so fast. Experience tells us that no matter how competitive your new program is, that's not a bet you should place.

It's not that employees don't trust you, it's that they don't have any reason to, YET. Before you introduce the new, industry-standard compensation plan, how does compensation work in the company NOW? Truth is, employees have noticed that there were inconsistencies and it has tampered with their trust. They are bound to have misgivings going into the new program and may see problems where there really are none.

Founding employees were probably way above (or in a few situations, a good bit below) market rate. After all, when there were fewer than 100 employees, you were running as fast as you could to staff up. Your pay philosophy was pretty much, "Yes, you should work here." Not so sophisticated, and bound to cause problems in the medium-run when you aren't quite as desperate for live bodies.

By the time you have 100-200 employees, you've decided to check your offers with some market data. But odds are, it took a while before you were able or willing to pay for GOOD market data. So employees have been through the era of Human Resources talking about competitiveness while hoping no one will notice that their fingers are crossed behind their backs.

What have you been saying to employees about their compensation in the meantime? That your salaries were highly competitive, of course. You certainly couldn't have said that you really didn't have the data back that up.

Why am I bringing this up? To remind you that it's unwise to think that a good, or even great, compensation program speaks for itself. Instead, realize that employees in early stage companies are usually very willing to speak for themselves. As far as they can tell, their salary is good enough to get them in your door but not so good that it shouldn't be questioned. And they WILL question it, pointedly.

Belief in the new program will not come just because it is still pretty and shiny. The merits of the new salary structure may be obvious to you. Your job will be to get your employees to agree with you. And certainly not "just because you say so" in one presentation.

Research indicates the shift from announcement of an organizational initiative to adoption of the initiative by an individual employee will involve these stages:

• Awareness
• Understanding
• Buy-in

Notice that the first step, "Awareness," is defined as, "Knowledge of a situation or fact." In the "Awareness" phase, there is no meeting of the minds yet, just information sharing.

So don't be disappointed when your bold new program isn't met with cheers. Instead plan to get there in stages, realizing that awareness also doesn't equal encyclopedic knowledge. The first round of communications is no time to get fancy with transparency, which will just be overwhelming to many employees.

Instead, it IS time to raise consciousness by providing an overview (one that managers can appreciate, as well). At that point, people will be eager to hear more -- specifically, what the plan overview means for THEIR pay. That means you need to be ready to build understanding and buy-in via smaller groups, with the help of managers who will back you up, no matter what.

No matter how enthusiastic (or panicked) you are about introducing your new program, design a communication strategy that has stages. Then announce the stages at that first, all-hands meeting, so it's clear that you will work with employees until shared understanding is achieved.

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. A former Board member for the Bay Area Compensation Association (BACA), 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: Employee Retention and How to Combat Wandering Eyes

Editor's Note:  In a tight labor market, are you giving your employees reason to stay?  Derek Irvine on why engagement matters .... a lot!

More than half a dozen clients I’m consulting with currently tell me retention is a top priority for them. Indeed, they feel like they are constantly trading employees among their competitors, usually over a few dollars extra in pay. Yet, when an employee’s decision to stay or go comes down to a small difference in the amount of money in their paycheck, you know you’re in trouble as an organization.

A Dale Carnegie survey showed (unsurprisingly) that disengaged employees are more likely to leave the company for a pay raise than engaged employees are – 26% of engaged employees said they would be willing to leave their current position for just a 5% pay raise vs. 46% of partially engaged employees and 69% of disengaged employees.

Engagement matters. And not just to retention, but to employee ability and willingness to contribute to the success of the company. In an interview with Jim Harter, Gallup’s Chief Scientist, Fast Company summarized the state of employee engagement in the United States as below.

“Over the past year, Gallup researchers interviewed nearly 150,000 workers--people in all states and industries--and discovered that a stunning number are miserable in their jobs. More specifically, only 30% of the nation’s working population today admits to being fully engaged at work. While Gallup encouragingly notes that there’s been a slight improvement to engagement since the Great Recession, it’s hard to cheer when you realize 52% of Americans admit to being disengaged in their jobs, and another 18% to being actively disengaged.

“To fully comprehend these grim stats, imagine a crew team out on the Potomac River where three people are rowing their hearts out, five are taking in the scenery, and two are trying to sink the boat. It’s hard to conceive how businesses can thrive when so few people are working to move it forward.”

I particularly appreciated that illustration of what this level of disengagement looks like. Employee disengagement is not just a statistic in your company. It’s a measure of how many employees are actively working to sink the ship. But it’s not this group of actively disengaged employees I think we should be most concerned about. This group is easy to solve – help them exit from your organization.

The middle group – the ones just “taking in the scenery” – should be where our attention as HR pros must be focused. This group of employees can be more easily swayed either way – into engagement or active disengagement. While increased compensation may be a short-term solution to increase their engagement, it won’t last. As soon as they become accustomed to that level of pay, the majority will be seeking yet more again.

That’s why engagement must be driven from a deeper source of intrinsic motivation. There are many factors of intrinsic motivation, the greatest being making progress in meaningful work (according to extensive research published in The Progress Principle). Take a look at your employee value proposition. In the vast majority, I’m sure contributing to a bigger picture is a key component. Employees deeply need this understanding that their efforts are advancing a greater vision.

The good news, this is relatively easy to do. Proactively notice and appreciate, in a specific and detailed way, when your employees or colleagues demonstrate your values in their work. Let them know regularly and frequently how their individual, daily efforts are helping you, the team, clients or the organization achieve the greater vision.

Give them a reason, beyond compensation, to engage deeply in your organization…and stay.

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.

Cafe Classic: The Stuff of Legends!

Editor's Note:  Every organization has its legends.  Are they true?  How do they, how should they impact our work?  Margaret O'Hanlon tackles this Classic topic.

I've been getting to know a few new clients recently. They've been introducing me to their culture and I've been helping them learn a bit from their demographics.  In writing a report for one client yesterday, I was repeating back to them a factoid they gave me. It went something like, "70% to 80% of new employees make it through the first year and tend to stay." I stopped typing.

It is exciting, but is it true? Do they have the data for it?

Every company has legends. Stories that they use to define the company as a hero. You have them in your company. You have them in HR. The thing is that, like all legends, things have been polished up a bit to build in drama. Or they may have been true once but over time the story has become more reassuring than accurate.

Or one day a few people wished upon a star.

Let legends automatically guide our decisions and over time our decisions will become dusty. This can be bad for the business, our employees and, frankly, our careers.

If people at your place of business toss around legends, especially if they involve a belief that things are just so, it's a good idea to check them out. ("We target the 75%ile" is a good one, if your market index is hovering around .6. Another is, "We pay for performance" when most employees are surprised by their performance ratings or the size of their incentives.)

Anybody out there have favorite legends to share?

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. A former Board member for the Bay Area Compensation Association (BACA), 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.