Compensation Cafe

Dealing with the Hated Job Description

Managers don't like to write job descriptions; which means they won't do them, will procrastinate endlessly or will delegate the responsibility to almost anyone else.  If pushed into a corner many will simply throw together a half-hearted effort that is quickly flagged by its poor quality.  

And that's for new descriptions.   Showing similar distaste managers won't be interested in recommendations to periodically update whatever they already have on file.

When faced with a compulsion from HR, a typical response of passive resistance would be to take a minimalist approach, providing only the least acceptable product, so they could check this onerous duty off their to-do list and get back to more important work.

Why is that?  Why is the lowly job description document considered as popular as a mafia lawyer or a used car salesman?  Why do so many managers consider preparing a job description a thankless task, one they often delegate to the less informed and those even less interested?

The Manager's Favorite Kicking-Boy

How many reasons can you identify with?

• HR formatting: A common criticism is that the "forms control staff" has designed an either complex or lengthy (often both) document that demands answers to questions that go well beyond "what does the job do?"
• It takes too long: Managers can more easily verbalize a job's tasks or accountabilities than they can put pen to paper.  Description preparation is considered a laborious process.
• Better writers get a better deal:  A belief that those more comfortable with writing (can turn a better phrase) will receive better/higher salary grades and pay.  The fear is that prose will trump content.
• No time:  Managers will tell you that they always have better things to do; namely activities that more directly relate to advancing the needs of the business.

So why do we need the darn things in the first place?  Why do we periodically turn our managers into administrators?   Because, contrary to populist sarcasm outside of HR, those descriptions do perform several important functions.

• Job description: (duh!)  A description of the role and responsibilities of the job holder, to explain what activities should be taking place.
• Job evaluation:  To assist in determining which job is more important.  Evaluators use the descriptions to help measure the internal value of each job, one to another.
• Market pricing:  Ensures that when the Analyst is reviewing competitive pay practices, like jobs are matched.
• Performance appraisal:  Helps both the employee and the manager know with specificity what activities (and results) are expected from those performing a job.
• Organization structure:  The description aids a manager in establishing why a job is needed and how it differentiates from other jobs.  It provides the justification to create a position or hire a new employee.

Thus, we see that the simple fact of describing the job generates several ongoing benefits to the company.  Let the debate continue about formats, word count and other compensable factors, but most would agree - you really need to describe what performance you're prepared to pay for.

The Cost of Getting it Wrong

What happens when the balance of importance vs. distaste is skewed, when descriptions are carelessly slapped together, left in a closet to go out of date or simply ignored as new/revised jobs are established?  How bad can it get?

It can get to be an expensive dilemma.

• Incorrect job evaluation:  You get the grade wrong.  Typically erring on the high side when descriptions are vague, outdated or filled with puffery results in artificially higher grades.  That action pushes up fixed costs (pay), without a corresponding increase in value received (performance).
• Mismatch in market pricing:  Like the above, incorrect matching could hand the job a higher price tag than warranted by actual responsibilities.  Again, costs go up.
• Title inflation:   When definitions are vague or too like other jobs the environment becomes ripe for "throwaway titles", meaningless designations meant to placate employees.  The trouble is, this insidious practice worsens employee discomfort over time, while also raising compensation costs.

Personally, I don't like job descriptions either and hate to write them.  But I recognize that they're good for me and for the business.  So, here are a few tips 'n tricks to help you swallow a sometimes bitter pill.

• Keep it simple and keep it short.  Focus on major tasks or accountabilities.  More than two pages can be overkill.
• Write the "Basic Purpose" last.  Don't start with it.  Trust me, the task is easier that way.
• Get yourself a resource library that carries a host of pre-written benchmark descriptions.  Either in book form or better - go online.  Now the task is editing, not creation. 
• Don't have the employee write the description.  Too much chance for bias creep and unintended influences.  It's a manager's responsibility.
• Consider an annual review to keep content current.  Such is a small project if maintained, but eventually a large one if ignored.

The bottom line?  It's ok to hate job descriptions (a salve to my conscience) if they are given the proper attention and respect.  The benefits do outweigh the hassle.

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 "Abandoned Cats," by Stefan Tell

Cafe Classic: Implementation ... and Why Action Must Follow Ideas If You Actually Want Something to Happen

Editor's Note:  Today we feature Margaret O'Hanlon's introductory post to her Classic series on effective implementation.

Each year we step back to adjust to an updated business strategy that addresses new challenges. We plan alignment of objectives, behaviors and performance with that strategy. And then we try for effective implementation of the strategy so we can achieve the planned-for results . . . results that fund financial success and compensation.

This is the virtuous cycle in which you invest your hard work and the company's money.

As we all know, HR plays a critical role as facilitator of alignment and educator of effective implementation. Many of you are in the midst of the objective setting process right now, where you are responsible for training and facilitating the cascade of objectives within your organization.

Objectives that employees should be developing to link with corporate performance. Otherwise, their work will have only a glancingly positive impact on financial and operational results -- or could misguidedly create obstacles that have negative impact on those results.

There is no doubt that your employees' ability to adapt to each new strategy impacts the success of your company. Look at this result from the World's Most Admired Company research conducted by the Hay Group in partnership with Fortune Magazine. It makes it clear that "Most Admired Companies" do a far better job of implementing their strategies (and achieve significantly higher Total Shareholder Returns).  

And their HR organizations do a better job of implementation, too. Implementation of new programs and existing programs like compensation that can truly play a role in the business strategy when employees see strong linkages and understand how they can impact success. 

Over my next few blog postings, I'm going to cover what effective implementation means, how it can help you and what you can think about doing differently. I thought it would be a great time of year for this discussion since you'll be turning new ideas into plans over the next few months.

Turning great intentions into business results is really where the rubber meets the road. Great ideas become actual business opportunities only when people understand clearly and then are willing and able to do the tough work of changing to a new focus and new practices.

I'll be talking about communications and I'll be talking about change management, too. After all, compensation is a form of change management. Every paycheck sends the message that we expect employees to assess a changing environment and profit from changing opportunities.

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.

The Compensation Philosophy Conversation

There is nothing quite like getting leaders around a table (literally, if you can manage, virtually if not) to debate what they intend the organization to accomplish with its compensation dollars - and then documenting the points of their agreement in writing - to bring clarity to reward design and administration. 

Beyond the trick of actually pulling the right people together (What? Spend an entire hour to talk about priorities for what is likely our single largest expense item?), there is the question of what the content of this discussion should be.  Below are examples of questions I have found helpful.  You may have better ones; please chime in with your own favorites.

Business Priorities, Objectives and Values

For me, these are the most important, highest payoff questions. because they help define critical organizational priorities and illuminate opportunities for alignment between reward spend and business success.  Of course, teasing them out is not always as straightforward as it should be.  According to one survey, many executives (49% of those surveyed) say their companies don't often have a defined list of strategic priorities.  Push hard here; you could be doing your executive team a favor. (More on reward SWOT analysis here.)

• What are the organization's most important business and operating objectives right now?  How might those change going into the future?
• What do you see as the biggest challenges the organization will face in achieving these?
• What major threats and opportunities might lie on the horizon for the organization?
• What unique organizational values and cultural norms must play an important role in how employees are rewarded and pay dollars allocated?
• Given the priorities suggested from the above, what should our top objectives for compensation - and/or total rewards - be?

Reward Elements and Their Purpose

I also find it helpful to parse out the different pieces of the overall reward package and to define their purpose and role in the overall "portfolio".  This helps us identify gaps or "double dipping" that might exist among current offerings.  Don't overlook items outside cash rewards (such as work environment) that might be important differentiators for your organization.

• What different elements or programs are part of your overall reward program?
• What is the purpose of each?  What role do they - should they - play in accomplishing your objectives?

Competitiveness

I believe it is important to define what competitiveness means for your organization.  And, increasingly, it may be important to consider a move away from "one size fits all" competitive positioning.

• Who do you see as the organization's key labor competitors - from where do you recruit people and against whom should pay practices be set?
• At what level should salaries, cash compensation and total rewards be set relative to this competition?  At median/average levels? Higher or lower?
• Are there situations (e.g., functional areas, skill/experience sets, etc.) where a different competitive strategy should be considered (such as mission-critical roles or in response to labor market supply/demand challenges)?

Work Valuation

I think it is important to be clear about the primary method used to establish the value of work and jobs, whether that be external market pay practices or some internal (e.g., factor-based) evaluation approach.

• Which of the following should play the primary role in determining relative value of work and/or jobs within the organization -- external market practices or internal job relationships?

Pay for Performance

I often find that pay for performance objectives and intent may be articulated in the first two question areas are.  Nevertheless, this is usually important enough to warrant its own distinct focus.  It may be helpful to ask these questions both at the level of each reward element (i.e., salary, annual incentive, etc.) and for the overall package.

• To what extent should compensation reflect performance?  Dramatically? To a slight degree?  Not at all?
• Should this be the same for all employee groups?  If not, where and why should it differ?
• What level of performance should be considered?  Individual? Work team/group/department? Business unit?  Organization wide?
• Should this be the same for all employee groups?  If not, where and why should it differ?

Communication

A BIG topic that ultimately deserves its own conversation, but the philosophy conversation can be a good place to at least set a few ground rules and overarching objectives.  

• How much compensation information, of what type and in what manner should compensation information be shared with employees? 
• What messages do you think your employees receive from your compensation program and practices?  Are these the messages you want to be sending?  If not, what?

Your turn!  What would you add to - or change in - the above list of compensation philosophy questions?

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: "A New Perspective on Chess" by sottenbr

HR and the Gig Economy: Speed Bump or Blind Curve?

In the next few years we'll begin slicing and dicing jobs to create a gig economy, all because of the impact of Artificial Intelligence -- at least, that's today's hot topic when it comes to HR futures. Do you believe it?

We've been giving the topic a bit of a reality check at the Cafe in the last few weeks.

• The Truth about Gig Workers covered today's job classification issues.
• Even More about Gig Workers discussed today's facts on the gig economy.
• Tomorrow's Gig Workers Today predicted what's to come, with emphasis on what the employee's experience will be.

Plus, the Cafe had an earlier look at the lingering warnings of the "death" of the job.

Before we finish our survey of the gig economy topic, I thought we'd take a look at what it may mean for compensation and other Human Resource practices. There are a couple of surprises. And for readers who want to go further into each topic, you'll see a link to a more detailed Compensation Cafe article.

Job Evaluation - If Artificial Intelligence pares jobs down to short-term project work, job responsibilities will need to be described in a very different way. In this world, HR will select competing internal candidates for internal gigs and recruit external candidates for these outcome-driven assignments. If you think that through, you'll realize that we won't be able to select talent well if we use today's descriptors:  job responsibilities and previous experience. After all, the project manager will want to know what the candidate can do. Skills and competencies provide more practical, job-specific insight. While this new scenario won't turn job evaluation on its head, it will require a substantial rework. (Check out this Cafe article for some examples.)

Career Levels - While competencies describe how you go about your work, they are of limited use if they don't describe the career level you have reached in the competency. For example, are you a supervisor who receives assignments with predetermined work plans and staff? Or have you achieved the level where you are given only the objectives for the assignment, and it's up to you to develop the work plan and staff? Distinctions of that type are crucial when selecting candidates for projects. Career competency levels will need to find their way into performance evaluation and career planning in a gig-based company. (To learn more about competencies, here's a place to start.)

Job Architecture - Job evaluation and career levels may get you halfway to a job architecture, but you won't be able to stop there if you find yourself in an active gig economy. Another challenge will be to keep internal employees from getting stuck or forgotten after they complete a successful project. These employees will need a line-of-sight to his/her next gig, and to understand how his/her capabilities and career are developing. HR and managers will use the architecture as well when recruiting and supervising external talent. (This Cafe article gives a detailed look at job architecture.)

Broadbands - Yes broadbands may be back! Think about it. In a project-based organization, market rates won't communicate the level of reward an employee would have earned as clearly as his/her competency and skill levels.

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: Rewarding the Disruptors

Editor's Note: A good time for Derek Irvine's Classic post on the value and challenge of the disruptive employee.  

I recently read quite an interesting post by Mike Haberman on his Omega HR Solutions blog. In it, Mike ponders the value of a disruptive employee – the employee who “thinks different,” who pushes the boundaries, who steps outside of the culture.

Mike raises an important point. In today’s era of hiring for cultural fit or, more in my world, recognizing and rewarding employees who live your core values (which are the hallmarks of your culture), perhaps we exclude too quickly those who are not a culture fit. Referring to research by Stephen Millett, Mike discusses how a culture, over time, can become too closed to change, too focused on maintaining the status quo. And that can be harmful because the world itself and the needs of the customer are constantly changing. Hence, the need for the disruptor.

A disruptor in this sense is not someone who causes turmoil or is nasty. Rather this is person is there to question the status quo. They do not fit into the culture; they do question authority and assumptions. They do things differently. They think differently. There should be one in marketing. There should be one in Human Resources. There should be one that reports to the CEO.

Finding, identifying and attracting these people will take some extra work. They may not look like your typical employee, but then again they might, but they will think differently. Giving them the cultural profile will show they don’t fit, but that doesn’t mean you discard them as a candidate. If they have the smarts and the backbone needed to buck the status quo you may find them to be one of your most valuable employees. Your challenge will be keeping them interested in you.

There’s an angle I agree with here, in that we can all become wedded to “the way we do things around here” (the definition of culture), causing us to forgo innovation and miss opportunities along the way. Why, then, do we discount, disqualify or flat out fire (or refuse to hire) the disruptors?

There are many reasons, not least of which is the natural human response of fear to change or perceived change. Also, disruptors often couch their ideas in less than ideal terms, perhaps being perceived as bullies or worse. It’s easier to grease the wheel by removing the disruptor than it is to find out why the wheel was squeaking in the first place.

A Culture that Rewards the Disruptor

Clearly, a balance is needed. Fortunately this can be achieved by fostering a culture in which constant pushing of the boundaries is desired and expected. To create this culture, begin by ensuring disruptors are recognized and rewarded for bringing their creativity, perspective and insight.

A caution, however – while rewarding disruptors for ideas that change the game is needed, avoiding a culture that encourages the less savory antics of poor presentation of these ideas is a must. Rudeness is never a behavior to be encouraged, praised or rewarded.

This spotlights the delicate balance between recognizing and rewarding the “how” (the way in which results are achieved) as well as the “what” (the results). Focusing only on the “what” leads to ENRON, AIG and a whole host of other examples of the end outweighing the means. By making the “how” just as important in terms of what the organization recognizes and rewards, leadership gains much better control over a healthy, supportive, positive culture that still encourages innovation, questioning and – yes – disruption.

Are disruptors rewarded in your organization?

Are you a disruptor?

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.

Compensation Dentistry – The Tooth Fairy Years (part 2)

Baby Teeth, Why care? They fall out and are replaced with something better, so why worry about them? Dentists actually refer to them as your primary teeth, which already makes them sound more important. Thumb-sucking can change the angle of your teeth, impact your bite and make your mouth sensitive for life. Poor hygiene can damage the gums which are the foundation of your teeth for the rest of your life.  Doing things right early is important to better teeth later in life.

The way you pay people when your company is small can impact things for years after you have grown. Paying people far too much may carry forward for decades. Over-granting equity can leave you with nothing to use when you really need it down the road. These things are usually correctable, but it often requires hiring a trained specialist. Much like going to an orthodontist to get corrective braces, the correction process can be expensive and is not always pleasant. And those corrective braces seldom work as quickly as you’d like.

Poor hygiene is a far more serious issue. The results of simply not doing the basics to take care of primary teeth may cause irreversible problems. Just like your teeth impact your speech your pay can impact who you hire, the kind of people you keep and whether you will succeed at all. Pay is a foundational component of your future success. What you pay someone today sets an expectation for them and for every hire of a similar person. The only correction for really poor teeth may be pulling them and getting fake, but better, replacements. This process can be more difficult when you are pulling people to replace them with new people. Once you have let pay get out of hand, getting it back in control may be more effort than you are willing to make.

In the end, the most important lesson about caring for baby teeth is how to build good habits. If you learn to brush and floss every day as a child, it is far easier to continue that process as an adult. Talk to devoted thumb-suckers. They are out there, as adults, still struggling with the urge, and often still dealing with the pitched teeth that often come as a result. Learning how to create a basic compensation philosophy, applying a pay strategy and pricing approach consistently and thoughtfully considering the long-term ramifications of incentives given today are all pieces of building a good compensation habit.

Even after the last tooth is put under a pillow and purchased by a sneaky fairy, the lessons learned early on contribute to your future success. Getting pay “just right” early on is nearly impossible. Getting into the practice of making the effort to get it right is totally doable and will pay dividends for years.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. He has three metaphors for every occasion and is a leading expert on incentive plan and equity compensation issues. He has written several industry resources including the only resource dedicated to 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: Tragedy and the Merit Increase

Editor's Note:  Ever get the impression that your merit pay program has become a Greek tragedy?  You might be right!  Read on...

In a scene being played out at organizations nearly everywhere during this final quarter of the year, merit increase guidelines are being developed, modeled out against projected employee pay and performance data, reviewed, revised and run through the process again.

In many organizations, particularly those on focal point (common date) timing, real time data joins and begins influencing the process at some point.  For some, there is a need to shift the merit guidelines in order to stay on budget in the face of a performance rating distribution that takes a notably different form from what had been anticipated.  Hard choices must be made, which might include ratcheting back some of the extra increase opportunity that leaders had hoped to funnel to higher performers because the high performing population has now swelled (often inexplicably) to a size where such opportunities are no longer affordable.

Tragic.  In fact, it is a classic tragedy which dates as far back as Aristotle, a dilemma known as the Tragedy of the Commons.  Popularized in Garrett Hardin's 1968 Science essay by the same name, it describes the dilemma that occurs in complex systems when the short-term interests of individuals are at odds with the long-term interests of the group.  (Sound familiar?)

Wikipedia summarizes Hardin's article as follows:

This story describes a group of herders having open access to a common parcel of land on which they could let their cows graze. It is in each herder’s interest to put as many cows as possible onto the land, even if the commons is damaged as a result. The herder receives all the benefits from the additional cows but the damage to the commons is shared by the entire group. Yet if all herders make this individually rational decision, the commons is destroyed and all will suffer.

Hardin's particular interest in writing the article was to call attention to man's population problem.  He notes the importance of recognizing the commons as a resource - a resource that must ultimately be managed and even restricted in order to be used successfully.  He makes this point with population-related examples:

Perhaps the simplest summary of this analysis of man's population problems is this: the commons, if justifiable at all, is justifiable only under conditions of low-population density. As the human population has increased, the commons has had to be abandoned in one aspect after another.

First we abandoned the commons in food gathering, enclosing farm land and restricting pastures and hunting and fishing areas. These restrictions are still not complete throughout the world.

Somewhat later we saw that the commons as a place for waste disposal would also have to be abandoned. Restrictions on the disposal of domestic sewage are widely accepted in the Western world; we are still struggling to close the commons to pollution by automobiles, factories, insecticide sprayers, fertilizing operations, etc.

We encounter our own Rewards version of the Tragedy of the Commons when our organizationally-minded efforts to maximize the merit budget "commons" encounter the attempts by individual managers to pursue whatever steps are necessary to obtain the highest possible increases for their subordinates.  The more inclined individual managers are to prioritize their short-term wishes to be heroes and hand out the biggest possible raises, the less likely we are to achieve any real performance-based pay differentiation with our merit funds.

Can we, in today's environment, better influence managers' choices and hold them accountable for truly balancing the needs of their reports with the needs of the organization?  Do we follow Hardin's lead and place ever more stringent restrictions (think more zero increases and lump sums) on the process in order to protect and preserve the merit commons?

Maybe Aristotle's got some ideas for us...

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 "Tragedy and Comedy" by Tim Green aka atoach

Tomorrow's Gig Workers Today

Don't believe your own publicity. That was the theme of my recent Cafe article on today's gig economy practices which reported only small shifts in gig employment habits -- certainly nothing that could be called a "gig economy."

But hold on to your hats. Yes, there's a lot of talk about jobs changing to adapt to the introduction of Artificial Intelligence (AI) in the workplace. But it's not just the jobs that will change, it's also who does the work.

It is reported that those with "hot" transferable skills are already starting to see a growing trend in gig work. For example, the prediction is that those working in project management and user experience may find a growing proportion of contract job deals available to them (and a shrinking number of full-time jobs).

For these two professions, the intensity of the workers' involvement in a company waxes and wanes. So why not keep a core group in house, enhanced at any time by the supplemental workers you find that you need? You can see how easily this model can expand quickly to other professional areas. Look around and you'll find that companies are already laying the groundwork for this shift through relationships with contingent talent agencies and with companies whose services are based on algorithms developed solely to onboard and evaluate a new employee.

And if CEOs worldwide have anything to do with it, most of us will be gig workers in the near future. A whopping 79% of executives worldwide expect contingent and freelance workers will substantially replace full-time employees in coming years. This prediction does vary by industry with automotives, consumer goods and life sciences at the top of the list, and healthcare and retail at the bottom.

Executives worldwide believe that the highest return on talent investment will come from redesigning jobs to better deliver value (although only 43% are currently doing it!). If you want country-specific data on future gig practices and other upcoming trends, contact Mercer to see if there is a U.S.-specific version of their great report, "Global Talent Trends in 2019," with more details on the above statistics -- and don't skip filling out the well-designed self-assessment at the end of the report.

And in case you missed recent Compensation Cafe discussions of the gig economy, check out "The Truth About Gig Workers" and "Even More about Gig Workers."

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.

Compensation Dentistry (part 1)

We all love going to the dentist when we know our teeth are doing great. The free toothbrush, that just-cleaned feeling, and those slippery teeth. When we brush and floss every day, we leave with an even brighter smile than when we walked in. But none of us love leaving with the early warning of a new "almost" cavity, or the heads up that our wisdom will need to be addressed in the next year or two. Knowing that something is difficult is up ahead, often makes us avoid the next visit.

The funny thing is getting that little cavity or other problem fixed quickly usually doesn’t hurt and lets you focus on better things down the road. Compensation programs can often be the same.

Most of us do our regular maintenance and keep our base pay in line with our philosophy and relevant data. We make small adjustments all year when new information becomes available. About once each year we go through and clean everything and get it back in order. While the process is seldom as fun as going to an amusement park, it isn’t that big a deal.

Annual and long-term incentive plans are often not as well cared for. We don’t adjust them on the fly. We don’t re-communicate them regularly. They just exist and perform as designed and we may not dig back into them more than every couple or three years. Because we do not give them the attention they deserve, we often dread learning how much work it will take to update them.

Then there are the real issues. Sometimes we just have a gut feeling or a sneaking suspicion that something isn’t right. Other times we have been warned by managers or staff that a program is ineffective, or worse. It is the rare compensation professional who gets excited about these impending issues. Just like the fact that most kids don’t grow up wishing to be a dentist, few compensation professionals aspire to be mavens of incentive plans.

Yes, incentive plans can be harder than base pay. This is largely because they have more moving parts. They also play vastly different roles in each companies compensation philosophy and in each individual’s total rewards package. It is this customizability that gives incentives their power and makes some avoid them.

Over the next few weeks, I will be writing articles that discuss the brushing, flossing, and problem avoidance issues that can ensure more effective plans and more enjoyable visits from your friendly incentive compensation professional. In the meantime, start putting some notes together. When is the last time you reviewed the metrics used for each plan? When is the last time you analyzed the goal levels and their association to payout leverage? When was the last time you provided an effective communication for each plan? The scorecard you create over the next few weeks will allow you happier compensation dentistry visits in the future.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. He is a leading expert on incentive plan and equity compensation issues and has written several industry resources including the only resource dedicated to 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.