Compensation Cafe

Being Hit in The Face with a P.I.E.

I remember a time early in my career where at one employer we had an unusual employee working in our department, a Business Analyst who was considered quite a character.  A long way from being a stylish dresser, he didn't have much in the way of social skills (was a bit of a loner, in fact), wasn't what anyone would call "attractive" and as a result, always seemed to be the odd man out in our group.

Once when I commented about yet another display of public eccentricity my boss chided me with "Bob is brilliant, and a top performer.  Just deal with it."  The point being made was, this is an exceptional talent that the organization values.  Ours is not a social club, so ignore the surface veneer as simply not being that important to the business.

I learned a lesson that day.

But that was then, quite a while ago.  Today, eccentric Bob might find himself in a less friendly environment, and might even be pushed out the door, simply because management wouldn't want to "deal with it."

In many organizations today if Bob doesn't fit in, he's gone.  Focusing on performance and results don’t seem to be enough anymore.  Or perhaps that’s not considered as important by elements of senior leadership.  Not as important as "fit."

Defining What "Fits"

Each employee can measure themselves and can be measured by others, in accordance with three elements of successful employment experience.  The Organization & Development folks call this P.I.E.

• Performance: Doing the job. Simple enough.  Doing what you’re paid to do and doing it as well as you can.  Bob excelled here.
• Image: What others think of you. When your name is mentioned, what imagery emerges in the mind?  What do they know about you, what have they heard and sometimes it’s what do they presume?  Call it a reputation index.  Bob suffered here because his "rep" included both performance and irritating personal eccentricities.
• Exposure: Who do you know and who knows you. What’s the composition of your internal network of personal connections, and how many are in leadership roles?  As a loner, Bob didn't score well here either.  He couldn't "work a room," and usually preferred to stay in his cubicle, working.

These elements haven't changed over the years and are just as much in play today as when I was told that I would have to deal with Bob.  However, the importance and relative weight of each element have evolved.

Shifting landscape

In many organizations today, especially amongst the leadership, the combination of an employee's image and exposure (network) is often more important to their future in that organization than whether they're doing a good job.  That bears repeating, as at first glance it seems like the world has turned upside down.

Time and again we see that "fit" trumps performance.  Those employees who have likes, hobbies and personalities that are like the "group think" are increasingly viewed as more successful in their organizations than other employees who lack a similar persona and who can only offer high performance.

No, you say, that can't be right.  And maybe in your experience - well, you've been more fortunate.  But what I'm describing does happen.  And it happens a lot.

For example, a colleague of mine doesn’t play golf and doesn’t gamble.  And while he claims no value judgment about either interest neither are they his "thing.”  He has other “things.”  However, for one employer those personal preferences formed a negative combination that ultimately steered him toward the exit door.  He didn’t fit in.  Senior management loved to play golf, and they'd schedule conferences where gambling was readily available.  My colleague went to the shows instead.

Now if you're thinking "there must be more to this," one week prior to hearing that he didn't fit in he had received a "high performer" rating on his annual performance review.   Regardless, he was encouraged to look elsewhere. 

Now some might not think that that sample experience was so bad.  Following that vein of thought, in order to form a collaborative environment, companies need people who have a degree of “simpatico” with each other.  Thus, if your persona isn't perceived as "in sync" with the leadership group your Image and Exposure will suffer to the point of damaging your career prospects - at least with this employer.

And doing a great job may not be enough to make up for your other personal failings.

What Can You Do?

Shoveling sand against the tide is never an effective strategy.  Nor is thinking that an individual can unilaterally change the culture of an organization.  So you either quit or you put up with your status - just as they put up with you.

For now.

So have a care.  Think about your own working environment in terms of Performance, Image, and Exposure.  If you're comfortable being in a high-performance role, perhaps you shouldn't be quite so relaxed.  It may not be enough.  You just might get surprised with a P.I.E. in the face.

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, "Pie Throwing," by Seth Lemmons

Cafe Classic: Putting on Your Explorer Cap via Appreciative Inquiry for the Compensation Pro

Editor's Note:  More than a few of us number nerds populating the field of compensation have a Classic deficit in the soft skills required to constructively explore and understand the territory and circumstances surrounding employee and organizational performance.    

In the wake of my recent post about the law of the instrument and the ensuing discussion about embracing an explorer's mentality in our work, I had a conversation with a colleague that brought Appreciative Inquiry back to mind.

I first encountered Appreciative Inquiry a number of years ago when I was on a personal development quest, trying to supplement my technical compensation background with the soft skills necessary to deploy it most effectively.  Several people recommended AI and I decided to give it a try, to the tune of an all-day workshop, several articles and a book purchase.

A non-expert overview for the uninitiated:  Appreciative Inquiry was introduced by David Cooperrider and his associates at Case Western Reserve University in the 1990's.  At its essence, AI is an approach that focuses on discovering what an organization does well and then looking for ways to do more of that.  AI presents itself as an alternative, even a mirror image, of traditional problem solving approaches which seek to find what doesn't work and then figure out ways to do less of or fix it.

A similar philosophy of inquiry is touted in Dan and Chip Heath's Switch, my favorite change management book.  The Heath Brothers advocate a discovery process centered on finding "bright spots", a search for examples of success which has its foundation in the question "what is working and how can we do more of it?"

In Switch, this approach is illustrated with a powerful story about Jerry Sternin, an employee of Save the Children, the international organization that helps children in need.  In 1990, Jerry was asked to open a new office in Vietnam, invited in by the government to fight malnutrition.  He arrived with his family, minimal staff and almost no money, to face an overwhelming and complex set of problems and a deadline of six months to make a difference. 

Rather than taking on the enormous and intertwined set of problems - from poverty to sanitation - which contributed to malnutrition, Sternin tried a different approach.  He traveled to rural villages, enlisted teams of local mothers and sent them out to weigh and measure every child in each village.  He asked them to identify any very, very poor children who were bigger and healthier than average - the bright spots.  Then Sternin and his team of moms went into the homes of the bright-spot kids and observed the way these homes were run.  Their observations yielded insights.  There were unexpected differences in the style, frequency and content with which bright-spot mothers fed their children.

Armed with these insights, Sternin helped community members organize cooking groups where malnourished families would meet at a hut in their village each day and prepare food together, following the basic but specific practices modeled by the bright-spot mothers.  Six months after Sternin had come to Vietnam, 65% of the kids in the affected villages were better nourished - and later research shows that the practices (and the improvements) stuck.

The point of the story is the power of the positive, which is what distinguishes Appreciative Inquiry as an organizational tool. 

How does this relate to our discussion of the law of the instrument and exploration?  While those of us in the comment stream acknowledged the importance of truly understanding organizational challenges before putting a compensation fix in place, we all encounter resistance to the exploration that this demands.  Here's where a shift in mindset and approach may help us.  Leaders and line managers may be more open to our exploratory conversations and information gathering efforts if they believe we are coming from a (genuine) place of appreciation and positive regard for the good things they are doing rather than simply trying to sniff out their mistakes.

Interested in learning more?  Great information on Appreciative Inquiry can be found in The Thin Book of Appreciative Inquiry and the AI Commons at Case Western Reserve University.

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 "Steampunk Explorer Hat" by holysmokinkitty

Mid-Career Hires Are Tricky

There's a lot to be said for hiring a highly experienced new employee for your team. S/he brings valuable qualities that are in short supply. You can: Count on early productivity with limited or no supervision. Make the most of tested solutions that an experienced employee can bring for inevitable project challenges. Enjoy the new hire's confidence in the face of pressing deadlines.

Not to mention, you can make the most of their fresh excitement for your goals.

At the same time, mid-career hires are tricky. Let's face it, the job switch is a life event for most of your candidates, involving substantial change and readjustment as well as career promise. Most candidates are available for a reason -- and it's not always just because they can't stand working for their current boss any longer. Often, they have become available because there's been a big shift in their family situations where they need a different work/life balance or, at least, a different attitude towards their work.

Here are a few things to think about when you find a great new candidate who has had 15 years experience not to mention extended time in two major cutting-edge corporations, or multinational firms, or, or, or.

Salary. Expect to pay a premium.The candidate knows you want or need her/him specifically, and negotiates from that strength. In addition, if the candidate comes from a much bigger company than yours, they are used to higher competitive pay levels. You can howl that they have you over a barrel, or you can get your mind around how unusually short the learning curve will be. In fact, you are expecting them to just about hit the ground running, so be sure to discuss this quid pro quo with them.

Development. Have you noticed? You tend to have a deeper personal connection, earlier, with mid-career hires than with candidates hired earlier in their careers. Possibly because you share some combat scars and often learn from each other. Also, family situations figure more prominently in these job negotiations, so a personal tone is involved earlier in your relationship.

Performance management creates a constricted atmosphere that just doesn't work in this situation. Frequent informal check-ins will fit more naturally into the relationship. Time-sensitive company insight and balanced feedback discussions will be especially valuable to this new employee who is under so much pressure to deliver. And whose performance is -- yes -- being watched closely by your team.

Incentives. Research shows that many employees see annual incentive payments as a gift that signifies their relationship with the company. Mid-career hires take this to the next level. To them incentive payments reflect, among other things, their relationships with their colleagues. If you "ding" them, recognize that part of their reaction will be a degree of paranoia about "fitting in." When incentives are awarded, be sure to talk over their teamwork including when things have gone well.

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: Why Secretaries Are Paid Differently

Contributor's Note:  Today is Administrative Professionals Day. The group originally named the National Secretaries Association, then Professional Secretaries International and now the International Association of Administrative Professionals is close to my heart.  About 40 years ago, their publication of my longer and more technical version of this Classic post began my very long if undistinguished writing career.  I also served as the Compensation consultant to their organization's HQ in all their different identities.  Their title has changed, but the facts underlying this article have not.  

Secretaries are paid quite differently from all other professions.  While most jobs are compensated according to their duties, secretaries are usually paid according to the title of their boss. It is confusing and can appear unfair; but it is reality.

Leaving aside the contentious issue of the distinctions between secretaries and administrative assistants (ranging from none to dramatic), both occupational categories share some extremely unique characteristics: 

• pay is attributed to "competitive practices";
• duties and responsibilities vary tremendously;
• the work is based on the wishes of the boss;
• priorities can change on a moment's notice;
• the worker has very little control over the work assignments;
• the job is not independent but is linked to the role and status of the boss.

The last point is cricial.  This is a tandem relationship.  The secretary has a unique function, performing whatever tasks the supervisor needs, frequently before he or she even thinks of it.  The secretary is a force-multiplier who leverages the effectiveness of the boss by handling details, following through, confirming that the proper directives are issued, actions are completed or further steps are scheduled.  Consistent with the origin of the word, the secretary is the keeper of secrets, the scheduler who keeps the boss on track and usually the gatekeeper for access to the manager.  Boss and secretary are typically a smoothly-meshing team.  The longer they have worked together, the more effectively they operate. 

The secretary does not "own" her work.  Yes, the gender-specific adjective is still relevant, almost fifty years after the passage of the Equal Rights Act and the Equal Pay Act, because the vast majority (99%) of all secretaries are still female. As many as 25% of Administrative Assistants are male, which tends to inflate pay, even though they may perform substantially the same duties as a secretary. 

Other jobs can tell their boss to "hold on, wait until I finish my assigned duties," but the primary duty of the secretary is to do whatever the boss needs.  Quite literally, every day the boss's wish is the secretary's command.  Similary, an administative assistant may be tasked to assist someone rather than to exercise direct personal authority over an activity area; but they frequently have some independent responsibilities unrelated to the kinds of personal service roles filled by secretaries.

Tradition says that the competitive market value of secretaries is defined by the title of the boss.  The secretary to the CEO may be called a Senior Executive Secretary while the secretary to the first level supervisor may be called Administative Secretary, but the real key is the rank of the boss.  The hierarchical status of the executive tends to determine the secretary's pay classification.  Most secretarial salary surveys ask for the level of the supervisor to assure that the Chairman's secretary is paid more than the supervisor's secretary.  In a very real sense, a secretary is treated like a perquisite, with her salary reflecting the importance of the person to whom she reports rather than the value of her work. 

Regardless of the skills, efforts, responsibilities or working conditions of the jobs, the secretary to a top executive will almost always earn more than the secretary to a low-level supervisor.  This is the product of the same culture that produced "rug-ranking," by which the quality of your office rug, office size, location and often the number and quality of chairs and windows were based on your relative rank in the enterprise.  When secretaries are seen and used like status symbols, it is no surprise that the pay of the secretary will be based on the status of the boss.  

There is some logic for basing the value of the secretary on the boss's job value, but each executive tends to delegate different responsibilities and duties to their secretaries.  Furthermore, the differences between the market value of the lowest supervisor with a secretary and the market value of the Chairman of the Board are disproportionately wider than the market values of their respective secretaries. 

If that were not bad enough, the relative degrees of difficulty between various secretarial levels may confuse comparisons even more.  Secretaries are paid for different things.  Shorthand (to the extent it still exists) transcription and keyboarding skills would seem to be more challenging than politely escorting visiting executives into the inner sanctum and efficiently screening incoming calls; but executive secretaries are paid more for business acumen than for manual dexterity.  Knowing when to interrupt the CEO for an important call and assuring that the confidential report reaches the right place swiftly can be far more important to the bottom line than anything within the powers of an entry-level secretary. 

Nevertheless, paying secretaries according to the rank of the person they serve ignores the usual variables of skill, effort, responsibility and working conditions.  It makes compensation simply a matter of reflected status rather than earned merit.   

There is only one other job with even a similar emphasis on paired cooperative teamwork.  Do you know what it is?

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.

The Good and Bad of Broccoli and Chocolate

Broccoli is good. It can be a useful side dish for any of the three major daily meals. It can even be a useful side dish for all three meals on any given day. But broccoli every meal, every day would be a bit much. In the end, it will result in some unfortunate consequences for you and those around you.

Chocolate is good. It can be a useful addition to any of the three major daily meals. It can even be a useful side dish for all three meals on any given day. But chocolate every meal, every day would be a bit much. My four-year-old son will tell you that chocolate every meal is great. My much older self will tell you that there are some unfortunate consequences.

Companies love equity compensation. We often use it without understanding its cost. We also use it without understanding its tangential impact. As it turns out, there has been a ton of research over the past 20 years, much of it invisible to most compensation professionals. The types of equity, terms and conditions of awards, and communications supporting these programs all have greater weight than most people realize.

CFO.com published an article comparing restricted stock awards and stock options and their impact on income smoothing. The article was based on an academic research paper   “Managerial Equity Holdings and Income-Smoothing Behavior,” by Sydney Qing Shu of San Diego State University and Wayne B. Thomas of the University of Oklahoma. They looked into executive stock and stock options on decisions affecting company earnings.

Restricted stock is mainly used as a retention tool. It is low risk with limited reward. Stock options are mainly used as an incentive tool. Options are high risk with the potential for extraordinary rewards. The research shows that the characteristics of these two vehicles seep into decision making that drives company earnings in profound ways.

Shareholders generally appreciate predictability when it comes to projecting future company performance. The research shows “the results are consistent with stock holdings aligning the interests of managers and shareholders, and managers using discretionary accruals to smooth past earnings to reveal information to investors about future performance.” In other words, restricted stock makes it easier for investors to know what they are investing in.

On the other hand, stock options were linked with excessive risk-taking and the use of awards “to mask the volatility of less predictable future earnings.” In other words, stock options may turn investors into gamblers. This is where too much of a good thing can be a bad thing.

When a company leans too heavily on either equity tool they miss out on the potential for better success. All restricted stock may result in a boring company that cannot keep up with its peers. All stock options may result in a company where the risks simply do not justify the rewards or the attention of future investors. Whether its broccoli or chocolate, the key to success is in balance.

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: Are Employees "Costs" or "Assets"?

Editor's Note:  We often hear leaders cite the "employees are assets" but often do they walk that talk?  Jacque Vilet, channeling Josh Bersin, shares some Classic information and insights about the economic value an organization's people bring to the table.

“Our people are our most important asset”.  It has been said so many times now that it’s become a cliché.  Such statements are usually a prelude to large executive bonuses, layoffs or plant closings. 

Unfortunately employees are still viewed as a cost both on the balance sheet and, more importantly, in the minds of most executives.  Costs are something you want less of – not more of.

Josh Bersin, of Bersin by Deloitte, helps us see the economic value of employees over time.   He has outlined factors a business should consider in calculating the "real" cost of turnover.

• Cost of hiring a new person (advertising, interviewing, screening, hiring)
• Cost of onboarding a new person (training, management time)
• Lost productivity (a new person may take 1-2 years to reach the productivity of an existing person)
• Lost engagement (other employees who see high turnover disengage and lose productivity)
• Customer service and errors (new employees take longer and are often less adept at solving problems). 
• Training cost (over 2-3 years you likely invest 10-20% of an employee's salary or more in training, that is gone)
• Loss of tacit knowledge/corporate memory (this one is mine)

Consider the following chart from Bersin. It simply shows that initially most employees are a "cost” and that over time, with the right talent management, they become more and more valuable. They become an “appreciating asset”. 

Would companies be willing to invest more time and money in employees in an effort to increase their value to the company?

Company assets fall into two categories: tangible and intangible. Tangible assets are the ones you can touch: buildings, equipment, inventory, etc. Intangible assets are the ones that you can’t touch. They include intellectual property such as patents, trademarks, copyrights, company brand, market share, customer loyalty and employee talent/skill/ability.

Let’s take a look at the similarities between employee value and company brand.  Both are intangibles and both contribute to the value of the company.

Brand value can make up a sizeable portion of a company’s stock value.  And they are intangible, just like employee value.  Ask yourself what McDonalds would be without its brand – or Pepsi?

When a company offers itself for sale, the sale price is higher than the company's net tangible assets because the buyer is paying for intangible assets too. The difference between the sales price and the value of tangible assets is an intangible asset called “goodwill”.  A company brand is part of “goodwill”.  And if we could count employees as an intangible asset, they would be part of “goodwill” as well.

So are you convinced now that employees need to be viewed as investments? If so, then someone needs to change management’s mindset.  And who do you think can best make the case?  Compensation, of course.

"The main “sticking point” here is that HR in most companies doesn’t keep cost information.   So,  the real employee cost  is unknown: turnover, recruiting, interviewing, hiring, orientation,  training, lost productivity, potential customer dissatisfaction, reduced or lost business, administrative costs, lost expertise, corporate memory, etc.

First, Compensation has to gather all the cost information from the different parts of the company that track it.  Some data can be found in Recruiting and some in Learning/Development.  The rest of the actual costs can likely be found with Accounting's help.  They can also help estimate costs where data doesn't exist.

Second, Compensation needs to prepare for the monumental task of convincing management that employees are an asset.

Here are a few arguments that Compensation should expect to hear and some possible responses:

Argument:   If we don’t reduce costs we’ll reduce our competitive edge or go out of business.

Response:  Guess what?  People are your competitive edge.

Argument:  When unemployment increases, it’s easy to find people.

Response:  When unemployment increases, it’s easy to find bodies.  Real talent is always in short supply.

Argument:  Of course we want long-term success, but we have to survive in the short-term for there to be a long-term.

Response:  And if we don’t retain people short-term there won’t be a long-term.  We need to retain people for both short-term and long-term success.

The ball is in your court Compensation.   What are you going to do about it?

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.

Cafe Classic: For Want of a Nail

Editor's Note:  In compensation, in Human Resources and in life overall, we often ignore the little stuff and the routine "boring" items at our own peril.  Chuck Csizmar shines a light on this Classic challenge.

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.

This proverb has come down in many variations over the centuries, yet the principle it embodies remains as true today as when first recorded.  If you ignore the small stuff long enough it will eventually become the big stuff; big problems, big expenses, big challenges to fix.  And big headaches.

Examples are legion; forgetting that simple oil change for your car; not taking the time to brush your teeth or take your daily medicine; delaying the install of free virus protection for your computer; or simply procrastinating as a way of life.  The little things can get lost in the midst of our active lives, but we ignore them at our peril.

Lack of action, lack of attention will bite you in the butt, eventually.

For compensation practitioners the "little things" are often not so much the "I can do it later" catch-all busy work we all seem to have too much of, but the fundamental building blocks that anchor the foundation of your rewards philosophy, your programs and ultimately your cost structure.  Screw up the details here and the consequences can be serious.

For example, if you ignore your salary structure ("oh, we looked at it a couple of years ago") you run the risk of it becoming irrelevant.  And an irrelevant structure becomes a recipe for inequitable treatment, special deals and increased payroll costs. As does ignoring the blinking danger signals from your dashboard metrics.

And while managing job descriptions is usually relegated to the junior staff, inaccurate or out-of-date documentation can be the bane of your existence, from cost control to employee morale issues to court action.

Little things aren't always unimportant things

How can a fundamental building block become a "little thing"?  It's all in the attitude.  Folks like to focus on the exciting projects, the sexy initiatives and those experiences that can help build and polish their resume.  Routine tasks are often given short shrift while we look elsewhere for the interesting, the challenging, the more visible aspects of our jobs.  Or the jobs we'd like to do.

Ask yourself, who would want to work on a merger or acquisition project?  The hands go up.  Who wants to work on an international project?  The line of those  who are interested quickly forms.  But if you would ask, who wants to work on maintaining the existing reward system?  That is, worrying about documentation, about record-keeping, about the fundamentals. 

Not so much interest there.  Boring!

But somebody has to do it.  Because if you don't, the wheels will come off the car, sooner or later.  And then senior management will be asking, "who's responsible"?

Perhaps the answer is to mix it up, to have a bit of the humdrum blended in there with the exciting stuff.  So maybe you're working on job descriptions and job evaluations part of the week, and then an HR Transformation initiative later on.  You can be market pricing surveys on Monday and Wednesday, but on Tuesday and Thursday you're re-designing the management incentive scheme.

Ahhh, but I know what you're going to say.  Who among us has the option of picking and choosing our projects, so that we'd be able to unilaterally design our work schedule, to blend the routine with the exciting?  That never worked for me when I was in Corporate America.

But isn't there something to be said about doing the job, any job, well?  Doing so says a great deal about you as a professional, and as a person.

Don't lose sight of what you might consider the "little things," the basics and routines that need to be completed "just because"  in your work.  Think of it like changing your oil.

You and your car will be better for 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 Jeffrey Beall

Three Guys Walk into a Bar

The other day I was at a popular eatery, chatting with a new college graduate, one who was expressing interest in Human Resources - specifically within the field of Compensation.  During the discussion, a question was raised whether I could describe the typical relationship and interactions between Line Managers, Compensation practitioners, and the Finance function.  This newbie had sensed from classroom lectures and textbooks that a tense if not contentious relationship was commonplace.

I Told This Little Story

One very hot and humid summer afternoon three guys walked into their neighborhood tavern; a front-line Manager, a Compensation practitioner and a Finance Analyst.  Tables were crowded so they grabbed seats at the bar, each ordered a cold one and they started a conversation with the bartender.

After commiserating over the weather for a bit the Manager glanced around the room, taking in the noisy din of those escaping the heat of the day and then turned to the barkeep and said, "I think it would be a great idea if you gave everyone here a cold beer, on the house.  They all look like they could use one, and it would be a nice gesture.  Make a lot of smiles."   

Hearing this the Compensation guy does his own look-see around the tavern, then scratches his chin and mutters, "Well now, perhaps not everyone here deserves a fresh beer.  Some folks have already had a few, while others have only just arrived, and a few tables are drinking wine or the upscale hard stuff.  Let's rethink the practicalities of your generous "beer on the house" idea.  We can do better." 

While this back-and-forth is going on the Finance guy is frowning at his colleagues.   Finally, he says, "Wait a minute.  Are you guys kidding me?  It's easy to spend someone's else's coin with your grand gestures, but did you stop to think how much this charitable idea of yours is going to cost the owner?  Did you consider whether he has enough available money to take that sort of hit?  This giveaway idea of yours will increase his fixed costs, shrink the inventory and only maybe will it gain him a few new customers.  Did you guys think of all that?  Or are you just so caught up with the idea of a grand gesture - a giveaway"?" 

The three companions break into a squabble, with each trying to talk over the other two, not really listening to each other but instead pushing their own point of view, with increasing enthusiasm.  "Nice gesture" argued with "Why everybody?" and "But the cost!"

Finally, the bartender raises his voice above the racket, "Hold on a second!" then slaps his hand down on the bar.  "I own this place.  Keep your voices down before someone hears you."  Then he leaned forward and with a harsh whisper snarled, "Do you guys know what you're talking about?"

To the Manager, he said, "Cripes!  You're too free and easy with spending someone else's money."

To Compensation Guy he said:  "Good thinking, but not everything needs to be thoroughly analyzed.  You shouldn't overthink every idea to the point of analysis-paralysis and ultimate non-action.  And you didn't seem concerned about what this would cost me."

And finally, to the Finance guy:  "You make sense, so I'll listen to what you have to say.  You're the only one who seems to be looking out for me.  Want another beer?"

And the Moral Is . . ..

My new graduate friend slowly nodded his head, taking in the story and mulling over its apparent meaning.  "You're saying that Senior Management will listen first to Finance, no matter the strength of other proposals."

"Not always," I replied, "But that's why the Finance guy usually sits next to the CEO at meetings."  Which means that if you want to change this Front Line-HR-Finance dynamic, you'll need to partner with Line Managers and with Finance to ensure that you understand their issues and understand how their concerns, as well as your potential solutions, would impact the business.

If you can't get your act together and collaborate, working together toward common goals, you should understand that the default decision almost always goes to the bean counters.  Because they hold the purse strings and will be quick to criticize promised "soft" savings or estimated higher revenue (based on likely projections) when compared against "hard" costs (the reality of actually spending money).

Always remember that to senior management, the cost is king, or at least a royal prince when it comes to selling an idea.  And that cost should come balanced with a demonstrable benefit that makes the expense worthwhile.

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That being said, I toasted the graduate and then we ordered another beer.

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, "Railway," by ell brown

Product and Employee Loyalty Both Cut the Same Way

Editor's Note: Today's post comes to us courtesy of guest contributor Chris Dobyns.

When it comes to the target audience that the advertising industry hopes to influence with regard to product and brand loyalty, I’m confident that one of the pictures in their Rolodex includes a photo of my wife. 

And yes, I’m fully aware that I’m heading down a potentially rocky road by virtue of that first sentence ...

My wife is unequivocally, if less consciously, subscribed to this concept of product loyalty. This is to the exclusion of even contemplating testing any of the soft or hard innovations that are almost constantly being presented to consumers in the form of new and/or improved product offerings. I’ve halfway convinced myself that given the serendipity of bad timing (combined with a compelling advertising campaign), that she’d still be opting for a rough cloth and a mixture of salt and chalk to brush her teeth, instead of a stockpile of Gleem toothpaste and her beloved Oral-B toothbrush. It may sound absurd, but product loyalty prompts just this kind of seemingly irrational, albeit hugely predictable behavior in consumers. 

Marketing Research – It’s Not Just for Advertisers Any More

All of that apparent success in marketing and creating positive “impressions” with consumers that translate into product loyalty (and yes, I know that success certainly isn’t limited to just my wife), got me wondering.  Could some of those same principles could be adapted and applied with similar success to help with workforce retention, talent acquisition and management?

Customer and product loyalty are both fairly abstract concepts, but are generally defined as the intent or the action of consistently selecting a certain brand or product over a competing product.  Loyalty is typically measured individually or as a combination of:  inclination to repurchase; willingness to recommend the product to others; resistance to switching products based on price and cross-buying within the same brand. 

It’s not difficult to see that the same attitudes and behaviors being cultivated about consumers products are some of the same objectives of employers, in the acquisition and then retention of talent.  Coincidentally, when it comes to product and brand loyalty, marketers actually refer to the behavioral indicator of loyalty as retention. 

It’s Still Mostly About Money, Right?

Certainly pay and benefits (or a product price point) are important in influencing the decisions and behaviors in employees or consumers.  However, of the half-dozen principles regularly cited as the most effective in influencing product and brand loyalty in consumers, none of them seem to have a distinct monetary or extrinsic dimension:

• Changing products (or switching employers) can be a hassle.  As a producer (or an employer) you should do as much to position and bind yourself to the consumer (or your employees) as possible, to maximize the costs of “switching.”
• Keep processes and program design as simple as possible.  Reducing the effort required of consumers (or employees) improves their overall experience, drives positive behavior and establishes or increases loyalty.
• Make for an easy, repeatable consumer experience, whether that is buying and using a product or participating in or obtaining (an employer) process or service.  A familiar, positive experience reinforces habits and, again, makes it more difficult to switch.
• Take steps to provide predictable customer service and be prepared to take that over-the-top when things occasionally don’t go perfectly.
• Propagate and embrace shared values that strengthen emotional loyalty.  Consumers (and employees) are not loyal to companies, but to what the companies stand for.
• Loyalty programs and gamification have been found to positively influence product and brand loyalty with consumers.  Similar to the employer proposition offered, a product and the company core values must be functioning satisfactorily, as a loyalty program alone will not solve an already bad situation.

Everyone’s Doing It, Or Are They?

No shortage of studies point to the huge return on investment that can result from cultivating greater customer loyalty.  Strangely, marketers devote few resources to establishing and increasing product and brand loyalty.  At least intuitively, then, it would appear highly possible for employers to enhance their brand identity, talent acquisition and retention by the broad application of these same principles that seem to be so effective in influencing product and brand loyalty in consumers.

Everyone probably has a different perspective.  What’s yours?

Chris Dobyns, CCP, CBP is currently employed as a Human Capital Strategic Consultant for the Office of Human Resource Strategy and Program Design for one of the largest U.S. intelligence agencies. The Office of Human Resource Strategy and Program Design is responsible for organizational effectiveness, personnel assessment, compensation and incentives, occupational structure, recognition and rewards, HR policy, human capital program design, implementation, evaluation and assessment and internal consulting. Chris has worked in the area of compensation for more than 35 years, and has been employed in various compensation-related positions by a number of large, private sector companies including, Sears, Roebuck, Arizona Public Service and Westinghouse Savannah River Company.

Original image "Employee Loyalty" courtesy of Chris Dobyns.

Yes, You Can Improve Performance Management

Planning to renovate your performance management program? You need to read The Feedback Fallacy in the recent Harvard Business Review. It will not only update your understanding of performance improvement methods, but it will also upend the beliefs that drive your current program.

Performance management is one of the hottest topics in Human Resources today, but boy do we have a lot to learn about the underlying behavioral science of our practices. Try this one on for size. Research shows " . . . more than half of your rating of someone else reflects your characteristics, not hers . . . and no training can lessen [this powerful tendency]." To be blunt, " . . . the research shows that feedback [emphasizing problems and weaknesses] is more distortion than truth" because it is far from objective. In fact, it only takes the rater's filters into account.

While rater rectitude is central to traditional performance management practices, research indicates that it is a fundamental weakness. Rater bias is systemic and occurs at a statistically reliable rate. As the authors write:

" . . .  in the business world we assume we're clear-eyed. Deep down we don't think we make very many errors at all. We think we're reliable raters of others. We think we're a source of truth. We aren't. We're a source of error."

Another challenge to our current practices: Research indicates that when we tell an employee where s/he stands with us and how we think s/he should improve, we are actually hindering learning. That's because adult learning is an act of reinforcing and refining what is already in the individual, rather than adding something that isn't there yet. Emphasizing behavioral problems causes employees to clam up in a "flight or fight" mode. These negative feedback patterns hinder improvement. "If you [cause the employee to] study failure, you'll learn a lot about failure but nothing about how to achieve excellence. Excellence has it's own pattern."

Solutions? There are some solid recommendations here that can be turned into an up-to-date approach to performance management. The most direct is to focus on outcomes (the behavior's impact) in employee discussions, rather than errors. For example, instead of saying, "You lack strategic thinking," talk about the outcome, "I'm struggling to understand your plan." This will set the stage for open-minded discussion and increased mutual understanding leading the learning.

Also spend more time building than dissecting or correcting. Is this just about warm and fuzzies? Not at all. "According to brain science, people grow far more neurons and synaptic connections [in other words, learn] where they already have the most neurons and synaptic connections. In other words, each brain grows where it already strongest." A person's strengths are idiosyncratic to the individual and should be cultivated. Improvements can't and won't be effectively directed by a rater's preference list.

Even if this all just riles you up, read the article. To take the author's point, learning involves building on the unique patterns in you. I bet there's enough here that will strike a chord with you. The insights will help you eliminate conjecture and can lead to validated, cutting-edge performance management practices.

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.