Compensation Cafe

Cafe Classic: The Perks of Having a CEO Who's a Wallflower

Editor's Note:  Many of us struggle, especially during times of upheaval when communication can be critical, with senior executives who aren't fans of communication.  Margaret O'Hanlon's Classic post provides some excellent pointers for those who find ourselves in this predicament.

I compared notes on how to handle compensation communications at last week's local compensation association meeting. One of the questions that came up is, "How can you make any inroads with a CEO who doesn't believe in communication?"

I'd bet money that there were many others in the room facing the same limitations with their execs. It's a far too common dilemma; especially worrisome when you know that employees are hungry for insight. Even though she is in a tough spot, I believe my questioner will be able to make inroads. I've seen it happen. When you are determined, you can make headway even though CEO reticence is a sensitive issue.

Generalization alert: Many executives who are against communications are poor communicators or inexperienced communicators themselves. As a result, they have a strong conviction that any communication effort will have dismal results. They don't realize that there are ways to plan for outcomes, and they surely don't understand the limits they are placing on business results. They are speaking from real experience, though -- their own.

But you know better. That's why this tough situation can offer perks. You know, from experience, how much can be accomplished by listening and responding. That's why there is a great opportunity here for Human Resources to build a deep and important relationship with the executive, if you have patience, determination and a strategy with goals that can deliver slow but steady progress.

The strategy should have all the hallmarks of a communication strategy. First, analyze your audience. What type of information does your CEO find most influential -- research, case studies, competitor practices? All of those are easy to find.

Because you want to try to change a deeply held opinion, make sure you combine your data into a clear, crisp set of key points. Willy-nilly data sharing, no matter how potent the data is, is not going to change anyone's mind. You need to fashion a "message platform" of three to six key points that you can reinforce with solid data that you can inject during conversations about business priorities.

What milestones do you want to use to measure progress? Because we're talking about a sensitive process, you'll want  goals that you know will be successful and will be counted as accomplishments by the CEO. The better you get to know the CEO, the more insight you'll have into where success can come. For example, a video may be an effective medium for an executive who is not a confident public speaker. It can be edited, and audience reaction is more muted and more constructive for someone who is building her/his abilities. You may want to start with interview on the executive's favorite business issues rather than Human Resource topics, if you think that will help.

What about working with other executives, perhaps one of those who has the most influence on the bottom line? How open -- or eager -- would she or he be for increased employee communications? Division heads may be more open to "beta tests" of your communication ideas than you think. If you start to make progress, the division head may be willing to verbalize her/his support for communications in closed leadership meetings.

If the word, "communication," causes a knee jerk reaction don't use it. Instead of presenting design and communications plans separately, integrate the two. Discuss "implementation," "project steps" or "work processes" -- whatever the correct terminology would be for your organization.

Odds are progress that has real impact on employees will take a year or two. But if you start with a formal strategy to build the CEO's insight, confidence, awareness and support -- and you, too, refuse to live the life of a wallflower -- you will make progress.

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.

 

5 Urgent Equity Compensation Considerations

The last quarter of every year is when people start paying closer attention to equity compensation. Budgets for annual planning are in play. Stock price projections (or guesses) from the prior year are proving to be far too conservative or lofty (they are seldom on the nose.) Burn rates are being discussed. For many companies, ESPP purchases may be on the horizon. And all of this happening while merit cycles and initial annual bonus calculations are being addressed. Given this tumultuous landscape, what can you do to make things better next year?

1. Is your equity still aligned with its intent (or vice versa)?

I have written about the criticality of “intent” in the past. Your equity plans should exist to do a few specific things. This first step is reevaluating that list of intentions and making sure there is still agreement from key stakeholders. The next step is reviewing whether your plan, given changes in the market, your company, etc. is still designed to properly deliver on those intentions. If your plan is meant to make your total reward value ultra-competitive, is that proving to be true? If your plan is meant to be a sweetener on top of very competitive cash compensation, are the values higher than need be? Can you use fewer shares to accomplish your goals? Is it time to move from sizing grants based on numbers of shares to an approach that converts the current or potential future value into grant sizes? If you do only one thing for equity plans before year-end, this analysis is it.

2. Is your equity is helping attract the right people?

How often do you need to adjust your equity offering to “get” the talent you want? This should be a rare event, not a common practice. When your equity is properly designed and scoped, it should help close the right candidates without modification. Misses in this area may be due to design or grant sizing, but often are a result of subpar communications or a lack of understanding by your talent acquisition professionals.

3. Is your equity is retaining the right people?

Replacing valued people is far too expensive. Keeping bad people can be even more expensive. Turn-over must be evaluated in light of equity holdings. Are there patterns that indicate your program is weak? Equity is a long-term device that should align closely with your retention strategy. If your good people are leaving valuable equity on the table, or if your worst performers won’t leave voluntarily even after a couple of years of not receiving raises or bonuses, you may have an issue to address.

4. Is your equity motivating and engaging the right people?

This will be tough in 2020. In fact, it may be a good year to shelve this topic. A bifurcated market recovery that has driven the values of a smaller percentage of companies while decimating so many others, may not be the best indicator of plan success (positive or negative.)

5. Do your employees properly value their equity?

Whether your stock price has soared or crashed this year, much of your equity still has value. Recent studies have shown that more than 85% of individuals do not understand their equity. It’s pretty easy to infer that if someone does not understand their equity, they cannot properly perceive its current or future value. This is low-hanging fruit. Communication programs do not require shareholder approval or huge budget requests. They mostly require time and effort. The value of better communications cannot be overestimated.

Addressing these five topics over the next 12 weeks will provide a foundation for the new year. They will also provide the foundation for information to include in communications to shareholders as your company discusses successes and needs in the future. Most importantly, you will be ensuring your very limited equity compensation budget is being used as efficiently as possible.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He has convinced himself he is a “Compensation Futurist” and works as Managing Consultant for FutureSense. Dan is also a leading expert on incentive plans 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: Are Your Sales Compensation Plans Just Experiments?

Editor's Note:  It's that time of year when many of us are working to finalize next year's sales compensation plan; no easy task even in "ordinary" times, but a particular challenge in the wake of what 2020 has wrought.  A good time for Jacque Vilet's Classic cautionary post on sales compensation, commission caps and how much "experimentation" is appropriate in this arena.

Recently I saw a question on a forum from a CEO:

"One of our sales reps is blowing out his sales numbers - and is set to earn commissions that far exceed any other rep and puts his pay higher than mine.  Is it ever wise to put a cap on commissions?" 

In my opinion it’s a big NO. Capping commissions when salespeople are hot may keep their pay lower than the CEO, but it also encourages superstars to quit selling.

If the commission plan is well designed and a salesperson hits it out of the ballpark, what's the problem?  Pay him/her what you promised and hope s/he'll just keep on doing it.  If the CEO has a problem then s/he needs to get over it. (I fully understand no one would actually tell him/her this!).

A recent study examined the impact of capping salespeople’s pay.  It looked at the compensation plan of a large U.S. contact-lens manufacturer. This company capped  commissions at quota. As a result, the salespeople weren’t motivated to exceed them. By eliminating the cap the company increased motivation and revenue increased by 9%.

One way to address a CEO’s concern is by including a “ramp rate”.  A ramp rate is used in many different ways, but in this case it can be used to pay commissions at a higher rate once quota is achieved.  For example, a salesperson may earn at 1X rate until quota is reached, but earn at 1.5X rate on all sales above that.  Quotas can be set as high as possible.  By doing so, typically only the superstars will exceed them and get commission at the higher rate. Even though most of the salespeople won’t exceed quota, the fact that a ramp rate exists still makes the plan motivating.

There are other issues with quota-setting.  Sometimes companies overpay salespeople with good territories and/or underpay salespeople with poor territories.  In other words, quotas are set for every territory as if they all have the same potential. 

Example 1:  If a salesperson selling office furniture has five big companies move into new facilities in his/her territory, quota may be reached very easily.  Success in this case may be more a matter of luck than sale’s talent.

Example 2: On the other hand, if a salesperson has some companies in his/her territory that are in bad shape financially, no amount of sales talent may be enough to enable a salesperson to reach quota.  

Setting appropriate quotas requires a fair amount of analysis.  It isn’t about automatically ratcheting everyone’s quota up a notch over last year.  And it’s not about force-fitting them based on needed revenue.  Sales must get a clear understanding of each territory’s potential.

1)     Who are the potential customers in each territory?

2)    What are their business needs?

3)    What is the estimated timeframe that they will be ready to buy?  

4)    What will it take to close the deal?  

• Is it better knowledge of their business?  
• Understanding the weakness of competitor products to capitalize on during sales pitches?
• Is technical support needed to provide demos?

5)    What will commissions total under various scenarios?

• How many salespeople will reach quota?
• How many will exceed quota and earn commission at the ramp rate?

Companies have gotten better at quota setting over the years partly because better data for measuring territory potential is available.  They’ve also improved commission plan design because they can use analytics to estimate the consequences of what will happen if certain variables change.

Quota setting is just one component of plan design.  But it can be the biggest motivator/de-motivator.   Design without analysis is guesswork.   Compensation professionals can and should have input. 

Is your company experimenting with its sales plan?  A little sulphur here --- a little ammonium nitrate there...     Watch out!  Your sales plans might just blow up!

What do you think?

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

A Sad State of Affairs

Are you surprised that when dealing with someone in Human Resources you are sometimes not treated with common courtesy and respect?  Have you ever been the victim of bureaucratic confusion, inadequate or careless responses to your need for assistance, or perhaps have been the recipient of an attitude that you’re bothering busy and important people?

Me too.  Isn’t it sad though, that many of us are no longer surprised when receiving such treatment from those whose role it is to represent us, the employees?  Those who should be looking out for our interests.  The ones who should be speaking up on our behalf.  Aren't they supposed to be the "people persons"?

All too often the behavioral element that seems to be missing is a professionalism that we had expected was our due.  Aren't they there to help us?

Today it seems that being a business “partner” is aligning yourself with management and not with employees.

Expect Too Much?

What does the word “professional” mean to you?  It seems such an easy designation to claim, many times assumed through the title being used.

To me the word means someone who stands a notch above, providing a raised standard of performance, coupled with a higher level of knowledge and experience, of having a greater sense of workplace ethics.  This is the “go-to” person when you’re in trouble and need help.  The professional is someone to put your faith in, someone to help get you out of a jam.

So, how do you feel when someone you have mentally elevated to that rank, or has claimed that designation, instead misrepresents themselves by not following through in an appropriate manner?

Makes you mad, doesn’t it?  If you're in a customer situation, it may well convince you never to return.  You might never do business with “them” again, as they have broken your trust.

In Human Resources the term “Professional” is a designation that is easy to claim, yet for some a rather difficult standard to live up to.  And once lost, that aura of “better than thou” is difficult to recoup.  For example, being suddenly anointed as a “manager” conveys to the outside world that you must be a “professional” – yet the knowledge and experience that brought you this far won’t be enough to maintain that veneer, unless you start to behave like one.

So why are some HR "professionals" perceived as acting as anything but?  Some examples:

• Overusing the "it's the policy" answer when turning away employee requests, without providing an explanation
• Treating employees with either rudeness (no time for you) or condescension (they are doing you a favor)
• Providing an answer that depends on who is asking
• Treating the core value of personal ethics as a moving target, subject to periodic and varying degrees of interpretation – like a politician without a moral compass
• Failure to treat employees with the courtesy and respect due to fellow team members; forgetting that the organization is composed of “we”, not “you vs. me”
• Simple missteps, like failing to respond to colleagues who have contacted you.  No one appreciates being ignored.

Likely you have your own examples.

Don’t Be a Fraud

Often I’ve heard it said that being a professional, aside from having letters after your name, means that you profess to stand for something.   If you don’t, or only do so when it’s convenient, then all the certifications and official papers “suitable for framing” won’t truly describe who and what you are.

So why do some HR professionals treat us this way?  Likely it’s a combination of internal and external pressures:

• Reduced staff levels force them to do more with less
• Lack of management training leaves them ill-prepared to deal with the growing number and diversity of employee problems
• There are bad apples in every bushel: Those who put ambition ahead of ethics and fair treatment, and those who curry favor with their boss, at any cost
• Those who use HR only as a career steppingstone can be suspected of not being fully engaged. Their actions are often calculated.
• Let's face it; some in HR are not "people persons" at all.

The impact of this “treatment” problem can be serious and far-reaching; lower employee morale, disengaged workers (occupying the chair, but there’s no one home), increased turnover of key talent and high performers, company reputation suffering via word of mouth, etc.  Each of these symptoms, when left uncorrected can result in negative financial implications for the company.  This is serious stuff.

What can be done?  I have no call to action, no rallying cry for getting HR professionals to wake up tomorrow renewed and reinvigorated.  There's no “easy pill” that with a glass of water is guaranteed to change behavior.

But I do ask each of us to look ourselves in the mirror tomorrow morning and ask if we can identify those core behavioral traits that we do stand for, that are expected of us, and whether we've been walking the talk or skating along.

If you don’t like what you see, you can change it.  You can start by dealing with others as you would like others to deal with you.  It’s as simple as that.  The employees in your organization deserve better.  They deserve a professionalism that comes from the heart as well as the head.

Chuck Csizmar CCP is the 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 "Focus," by Ann Kakay

Cafe Classic: Redesigning Work to Create More Mutual Value

Editor's Note:  Prompted by conversation around my post on this topic a few days ago here, we bring you Jim Brennan's Classic on why work redesign should be a key competency for Human Resources and Rewards professionals.

For HR to become a valuable business partner clearly helping top management improve the bottom line, the total rewards function must take the initiative and act productively.  Reformatting talent into more mutually valuable combinations will solve many important issues. 

Here are the typical problems:

• HR feels left out from “the big table” where key decisions are made by top management.
• Supervisors (including all people-managers) see HR as unhelpful or an obstacle.
• Employees want higher pay but feel blocked by the compensation department.
• Scarce skilled talent and highly productive workers leave for better opportunities.
• Jobs remain substantially the same (although tools change) for decades.
• Public social pressure increases for higher minimum pay rates.   

At the same time, organizations want improvements:  i.e., to increase productivity, efficiency and profitability, while enhancing employee engagement and improving public support for their brand. 

Let’s look at all these various challenges as opportunities for an all-encompassing single solution.  Solving multiple negative problems while simultaneously satisfying numerous positive objectives is always an excellent idea. 

There is rarely any valid economic excuse to pay a lot more or less than necessary for any combination of work output expectations called "a job."  If you want to pay more, why not make the job worth more?  Rather than argue over excessive wages, change the economic formula to your advantage by redesigning work into jobs worth greater amounts.

Combining enough valuable output deliverable elements from two low-paying jobs to form one good-paying job can be smart, cost efficient and socially praiseworthy.  Simply paying more than the market requires for unskilled labor may win you praise from some, but any unnecessary economic cost passed on to the owners or shareholders will usually earn their displeasure.  Instead of even retaining a collection of extremely simple work tasks bundled into a job that pays too little to live on, why not instead upgrade the functions, blending the component parts until they support a living wage? 

That process is not very different from the result of many job reclassifications. When you confirm that an incumbent has "growed" her role from A to D, you often conclude it deserves a higher compensation level.  In that case, HR passively reacts after "suddenly discovering" that someone has enhanced his/her job into a new value category.  Instead, you can take the initiative to deliberately design a richer combination of tasks and responsibilities.  Finding a more powerful leverage point or a superior bottom-line context application for the KSAs already available in your talent pool is a great way to add value to the enterprise.

Another approach might be to eliminate minwage “jobs” by making those functions part of orientation, probationary periods and on-the-job training (OJT) for “living wage” jobs rather than stand-alone dead-end positions.  Or reserve them for developmentally disabled workers or employees temporarily on limited duty status, maybe.

Reshaping work content can meet many needs.  A proper, appropriate and aggressive use of total rewards tools can be much more cost-effective to the employer than arbitrary minimum wage increases.  It also should be less expensive and less organizationally traumatic than a re-engineering project conducted by outsiders, too.  I know many of you have "re-bundled" or "reconstructed" jobs, even if you called it something else, like “work transformation,” “job design” or “career enrichment.”  What did you call it when you tried this?  And how did it work?

Or has this process contributed to job elimination, outsourcing and off-shoring?  There seem to be more questions than answers, but these questions must be asked before they can be answered.

E. James (Jim) Brennan is an independent compensation advisor with extensive total rewards experience in most industries.  After corporate HR posts and consulting CEO roles, he was Senior Associate of pay surveyor ERI before returning to consulting in 2015. A prolific writer (author of the Performance Management Workbook), speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review.

Creative Commons image "Building Blocks" by Eran Sandler

Compensation Communication Tools for Managers

When it's time to get managers prepared for a new or challenging role, I have often suggested using tip sheets, discussion guides, and decision guides. FAQs, another suggestion, are familiar to everyone, but the other tools may not be familiar, so I thought I'd do a quick overview to help you develop your own manager tools.

TIP SHEETS -- These are written to highlight actions managers need to take. The introduction should be brief: three or four introductory sentences of rationale, in one or two paragraphs, to give a reason why the manager should take the steps you are highlighting. The wording should be as concise as possible.

Here is an illustrative excerpt from a manager tip sheet for a career development program:

Developing our people ensures we have the workforce we need to adapt to an ever-changing environment. Making development a priority is great for our employees and it’s great for our business. You are your employees' first resource for career discussions. Here are tips to support employee development in your department.

• Make development a priority -- Provide ongoing feedback and help employees find development opportunities that match their goals and interests. Commit to action plans.
• Mark your calendar -- Meet with your employees once per quarter to discuss their career development goals and progress. Build time to have these discussions and to serve as an overall career resource for your team.
  and so on . . .

DISCUSSION GUIDES -- Normally, a discussion guide gives managers the suggested spoken word to encourage consistent terminology and explanations. Provide these scripts to managers when you think they feel resistance to certain discussions. The script can help them prepare, which can put them at ease. Plus they can look down at the script while they are speaking if they freeze at any point. A discussion guide is also useful if you are asking managers to cover a lot of detail -- they can use it as a checklist.

Here's a Sales Comp excerpt:

• I’m glad we can all get together today because we have a number of important things to talk about. I’m sure you’re eager to find out how the new Sales Plan will work for you.
• We’re here to go over the Plan in detail, and give you some additional communications materials so you can continue to be briefed after this meeting.
• Your Manager has been involved with finalizing the plan and preparing for the rollout. S/he will act as your local expert after this meeting and s/he will be sure that, in this meeting, we are covering all the bases that are important to you and your market.
• Let’s kick this off by talking about your new base salary, your new two-tier commission rates and your target billing revenue number.
• The purpose of the meeting is to make sure you know how the new plan applies to you, so be sure to ask questions along the way, as they come to you.
  and so on . . .

Here's another style with a Sales Comp purpose. You can see that it doesn't provide exact wording, but it can be used to guide each detail of the conversation. Take a look:

• Reinforce that the compensation study has confirmed that our compensation is competitive, and the new compensation plan practices are common in companies of our size, client relationships and sales objectives.
• Explain how the new plan supports our Company's Vision to set the standard of excellence for our industry.
• Encourage salespeople to see the value of the new aspects of their compensation: having base salary, a Growth Commission and key sales targets.
  and so on . . .

Recognize that you are not emphasizing consistent terminology or even consistent definitions in this model. That can be a problem with compensation communications as people tend to make up their own, sometimes misguided, explanations for how compensation works. But you know best which version would be most likely adapted by your managers.

DECISION GUIDES -- We are often asking managers to stop, change gears, and make complex decisions in the midst of demanding business pressures. When we ask them to go "off-line," it can be helpful to give them a guide for thinking through the pros and cons of key employee decisions especially if you are introducing changes to your programs. Developing a decision guide is time consuming because you are gathering all the resources you can share.

The standard content for a decision guide either guides the manager through the ideas and scripting for issues like the following, or walks the manager through her/his own answers to them:

• Set the objectives for the discussion.
• Identify what success will look like when the discussion is complete.
• Identify what the person will feel positive about.
• Determine where you will meet resistance.
• Outline approach you will take in the meeting.

and so on . . .

Managers may actually thank you for these resources. I'm not promising, but it's happened to me.

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.

Essential Workers, Higher Wages, Value Creation and Work Design

The path to value creation, according to a number of private equity executives (like the one who wrote this Harvard Business Review article), is through return on invested capital (ROIC).  Indeed, the best way to create real value in a business -- this author says -- is by making smart capital investment decisions.  And yet, at least according to his data, few CEOs are skilled at capital allocation.

This should interest us, as HR and reward professionals, for a few reasons.  First of all, the obvious one: that the biggest category of investment for most organizations is employee compensation.  Secondly, because proactively managing that investment to maximize return -- and create real value -- ought to be top of mind for any of us who fancy ourselves true "business partners."  Thirdly, because it bears directly on a category of compensation topics that has captured a lot of attention over the last several years and renewed interests more recently as a result of the COVID pandemic. In this topical category I would include the ideas of fair and just wages, living wages, the attention to minimum wage laws and (last but by no means least) the renewed appreciation for essential workers we all gained through the past many months.  As organizations and particularly essential service providers struggled to stay open during the early months of the pandemic, the criticality and vulnerability of front-line (often hourly) workers became obvious.  This prompted many immediate measures, including hazard and premium pay implementation.  It also raised longer term/bigger picture questions about the distribution of reward dollars and greater capital investment in this vital segment of the workforce.

Some perspective.  A number of organizations made press in the past 5 years or so for the decision to voluntarily raise the minimum wages of their employees.  In addition to Starbucks, Walmart and Gap, Aetna drew attention for the distinction among this group of being a financial services firm rather than a retail enterprise.  While there are a lot of things to like about these initiatives, one of the biggest positives from my point of view is that because these decisions were self-imposed and (presumably) a product of internal analysis and consideration they are more likely be sustainable over the longer term.  That isn't to say that there will be no unintended consequences to offset the positives, as these actions like these ripple through the labor market.  Our economic system is way too complex and has too many levers being jiggled to assume otherwise.  There seems a greater likelihood, though, that they can be successfully absorbed, managed and even turned to advantage by the "host" organizations.  Because ultimately, a move to disrupt the cost structure of an organization is more likely to succeed if it is to the advantage (or at minimum, not to the disadvantage) of all stakeholders.  This includes but is not limited to all members of the workforce, owners/investors and customers.  All these are seeking their own returns, intangible as well as tangible, and their expectations cannot easily be ignored.

Many will reference the efficiency wage theory -- the notion that simply paying workers a higher wage should lead to increased productivity -- as the rationale for these wage-boosting decisions.  Perhaps this can be banked on, but I would submit that the astute among this vanguard (and I suspect they are all astute) have actively considered and are pursuing steps to maximize the positive return of these enormous investments.  One of these is likely work design.

And that's where we come in.  (I know. You were beginning to wonder...)

Work and job design has long been an orphan, a second-class citizen largely ignored by the HR and reward professions.  As a discipline and especially in the cases of essential/hourly workers, it has been pursued with seriousness primarily by industrial engineers and their like.  There may be lessons to draw from their work but few of today's jobs -- even those at the very front lines of retail, financial and manufacturing/distribution industries -- are purely mechanical in their execution.

As those with responsibility for managing our organization's compensation spend and doing so to maximize the return on that investment, and given the disruptions to work and rewards that are reverberating through the world, we should be looking at this as a prime opportunity to embrace work design. And for us to provide leadership and expertise to initiatives like these.  Who better?

A number of organizations, many prompted by the pandemic, are already involved in work and job redesign efforts, particularly at the lower wage end of their organizations.  The redesigned jobs will pay more -- significantly so in some cases.  You won't see their names splashed across the pages of the Wall Street Journal.  They aren't doing it for the PR benefit but because it makes good business sense.  And I'll bet HR and the Rewards function have a leadership role in the effort.

If proactively lifting the wage floor is going to be a thing for enlightened organizations, it would be great to see us driving the train ... or at least sitting near the engine.

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.

Image "Dollar Growth" courtesy of hywards/FreeDigitalPhotos.net

Transformation is More than a Haircut

Not that long ago I got my haircut for the first time in more than six months. The result was eye-opening (literally, because my hair was always in my eyes.) I went with something that looked much like what “normal” was before March 2020. Around the same time, a friend had her hair cut as well. She had one side of her head shaved and went bleached blond for the rest. The difference was amazing, some would say transformational. But then I realized I had a third friend who had spent the past couple of years working out and eating right. She, after having two kids, was in better shape than she had been when she was in great shape in her twenties.

While the changes for each person were immediately noticeable, only one result was a true transformation. Transformations require time, commitment, and tenacity. This past year has proven to be transformational for many people and many businesses, but I have yet to hear much about transformations happening in total rewards. If there was ever a time to transform, this is it.

Base pay has proven to be a challenge in many ways. Remote work has given rise to questions about Geographic Differentials. Pay levels have been stressed by furloughs, layoffs, essential worker status, and volatility in staff availability. Bonus programs have proven to be fragile. In some cases, companies are concerned about meeting cash obligations, or expectations, when cash is at a premium. Traditional equity compensation program designs have been shown, for the third or fourth time in the past twenty years, to have critical flaws that can wipe out value with no-fault, or magnify value with little effort.

If all of this was happening in some other aspect of your life, you would be compelled to make some big changes. In the world of compensation, most companies seem content to wait things out and hope everything “returns to normal.” This is the real opportunity. It far easier to win when your competition is complacent.

As in every extreme situation, a few will seize the chance to exploits their competitors' weaknesses. In 2022 and 2023 we will all read about the companies that rolled out expansive changes to their total rewards while the pandemic raged. We will attend presentations and webinars with case studies about companies who corrected their diversity equity and inclusion issues, or how base pay increases became a driver of success instead of a baseline marker. We will envy those companies who made changes and we will try and create programs “just like theirs” (but two years too late.)

Perhaps you will call me or some other consultant and ask how so-and-so built the award system that has proven to be the trend-setter for the next decade. Even better, perhaps you will be the person presenting the case study because you decided that this year was motivating enough to inspire more than a haircut. You will be at the front of the pack, healthy, strong, and leading the way, while others wonder how you did it. Haircuts are easy. Transformation is not. But transformation is achievable and there is literally no better time than the present to get started.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He has convinced himself he is a “Compensation Futurist” and works as Managing Consultant for FutureSense. Dan is also a leading expert on incentive plans 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.

A Practitioner's Recipe for Success

Whenever I come across self-help materials intended to assist Compensation practitioners with their professional growth, I often notice an overly large emphasis on the technical side.  Also, when reading internet blogs meant for the same audience there again seems a constant litany of how-to guidance on, again, technical issues.

That's all well and good, but . . ..

It seems to me that becoming a master technician in the compensation "science" is not by itself going to be an effective strategy for success in the corporate world.  In fact, sometimes that technical prowess can prove a bit of a hindrance, as it could limit upward opportunities.

True story: The President of a nationally known retail chain once interviewed me for the top Compensation job.  He later said to his CHRO, "Hire this guy. He has a personality."

Useful Competencies

If you rely solely on your technical capabilities, while remaining in your cubicle all day, and if you're saddled with the personality of a troll, you're going to have an uphill struggle toward success.  You're going to need more to work with, so tape this checklist to your office wall - where you can see it every day.  It could save your career.  You must:

• Be flexible: Be willing to listen and keep an open mind.  Become known as a problem solver. Do not quote policy except as a last result.  Have a reason for your actions that can be easily explained.
• Understand the business and how Compensation impacts it:  You're not on an island cut off from the rest of the business.  Learn how what you do interacts with and influences the business. What you do should relate to and support organizational objectives.  If not, know why not.
• Have a personality:  Basic stuff, but have a ready smile, greet people, shake hands and in general show a warm side to those you interact with. Become an engaging person.  Oh, and try to be sincere about it.
• Don't be a Nerd: Don't spend all your time spouting technical language and showing off charts & graphs.  As if all those figures are self-explanatory and you're merely the spokesperson.  That data should be the backdrop to your explanations, not the focus.  Don't be an analyst when you need to be a leader.
• Be able to work a room: Leave the introvert at home and develop the skill of being comfortable holding multiple conversations in a room of strangers, colleagues, or even senior leadership. That will build your image in a positive way.  If you're an introvert, work on it.
• Be persuasive:  You will not get too far by dictum, so work on your reasoning and communication skills.  You need to be able to influence others, to gain agreement on the strength of your rational arguments.  "My way or the highway" does not generate a warm response.
• Become the one who gets lots of Christmas cards: That's your goal for next season, to be someone that colleagues think of when preparing their lists.  That is usually a good sign, because they like and/or respect you.  PS - I'm not counting stamped signature cards from consultants and vendors.
• Play (a bit of) politics:  I don't like this one, but it's true.  Politics exists in every organization, so you need to be able to play the game at least a little.  Don't think that you can "stay above the fray," as you're a professional or some such rot.  The powers that be will eat you alive. But as best you can try to remain neutral and project yourself as someone that all sides can trust.
• Be technically proficient:  Of course you still have to know what you're talking about (the science of Compensation), but the higher up you climb the food chain the less reliance you'll need on your personal technical capabilities.  You will become valued and judged for what else you bring to the plate.

Nowhere on this list will you find the ability to rattle off the overtime exemption criteria for the FLSA, or the salient rating descriptions in your point factor evaluation scheme.  And nobody is going to swoon when you describe linear regression, correlation coefficients or the difference between the Cost of Living and the Cost of Labor.  Your audience, your clients, your senior management will expect more.

But if they like you, if you have an engaging personality and can work well with others, well then, you're halfway there.

Do Not Limit Yourself

Unless you want to.  Unless you are someone who prefers the technical work, to the exclusion of the managerial side of the craft. 

Those employees are out there.  I have met them.  They are happy with what they do.

But if your repertoire of competencies leans too heavily toward excel spreadsheets and data analysis your ability to "pass through the curtain" from the hard side of Compensation (technical) to the soft side (managerial) will be limited.  Because Master Technicians tend to remain just that, both by competency and by interest.

Likely you have seen your own examples of individual contributors (technicians) who have been promoted beyond their capabilities - or their interests.  Those employees are rarely successful.

So pick and choose.  If you want to go through the beaded curtain be certain to bring more along with you than a calculator and a spreadsheet. 

Warm up that smile!

Chuck Csizmar CCP is the 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 "Friday Cat Photo," by jim_mcculloch

Managers are the Home Page of Your Pay Programs

Our approach to communicating pay needs an update. Luckily, we can emulate a model that has evolved and proven effective over the past 25 years. Web sites have tried to be many things over the past couple of decades. Some of those attempts have been difficult but effective, others were very cool but abject failures. During all of the innovation, the venerable home page has proven to have efficacy and staying power, within its purpose and limitations. Your managers are essentially your compensation home page, and we need to respect their power and limits.

First, I recognize that we can and must communicate pay often and through a wide variety of mediums. Compensation departments create the equivalents of research papers, opinion pieces, dramatic productions, mini-series, high-school presentations, and virtually any other method of communication available. Despite all of these amazing tools, the source most likely to be accessed by an individual is the person directly above them, their manager.

In a healthy company, people regularly talk to their managers (unhealthy companies are a topic for a different post). This is similar to people wanting to know more about your company. The first step is heading to your website. The place they land has headlines that your company thinks are important for people to know. Connected to that page are links to tons of other information, some very specific, some arcane, and some that needs to be updated. Your home page is not only your first impression, but it is the starting point for nearly every other impression. Your managers serve the same purpose.

Web site interfaces and functionality have continued to advance. Despite this, the home page remains the most important resource on your site, despite its obvious limitations. Home pages have limited space. Only the most important information can be included. This information should spark curiosity and easily lead people to more specific information that can satisfy most of their questions or needs. This is true when you click on the Facebook icon or when you go to my company’s home page. They look very different, but each is easy to navigate and provides an important snapshot. Each provides curious minds with access to more information.

We tend to spend most of our time educating individuals about their programs. This is important, but it may be even more important to make sure our managers are populated with the information they need to serve as our compensation home pages. As a home page, managers should be able to answer questions almost instantaneously. Their answers should satisfy immediate needs without getting bogged down in minutiae. They shouldn't need to dig into a bunch of documents and presentations to answer common questions. They should be confident, able to communicate both main themes and important points while knowing exactly where to direct people to get additional information.

Your marketing and communication department can adeptly help you in changing the face of your pay communications. If you explain to them your desire to make your managers your home page, they will quickly and expertly guide you to a new way to communicate pay that has proven to be effective over the years.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He has convinced himself he is a “Compensation Futurist” and works as Managing Consultant for FutureSense. Dan is also a leading expert on incentive plans 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.