Compensation Cafe

Cafe Classic: Want Results? Prove It!

Editor's Note:  Do we objectively test the results of our reward plans and programs to see whether they delivered what we planned (or assumed) they would?  Dan Walter explains why that should be part of our annual cycle and, frankly, our jobs as professionals in this Classic post.  

Most compensation professionals I know are very earnest in their desire to pay people as well as possible. They attend presentations, watch webinars, and review the latest article and the smart ones even read the Compensation Café. But, many of these same professionals admit a critical flaw that often makes all of their efforts useless. This problem is so common that it no longer surprises me when people cop to it. In fact, I am really only surprised by the small number of individuals or teams don't have it.

Getting compensation right is hard. You have to get a good handle on the company and individual objectives. You need to know the rules. You should probably understand what the market has to say about pay levels and the best pay elements for specific purposes. Then you have to put all of this together into something that reflects the complexity of the company and staff, while still being simple enough for everyone to approve and understand. Once you are through all of that, it is time to rollout the program and make sure it is managed effectively.

Then you take two or three days off and spend a week fixing minor problems and before you know it you are back at the beginning, getting ready for another year. This is what it feels like for many people in our industry. You are special, but you are not alone. This process is missing something so critical that if you were an educator you'd be laughed at for missing it. It is so essential that if you manufactured goods or software you would be deemed a failure without. Even people as diverse as scientists and artists can’t skip the step that an overwhelming majority of compensation professionals never ever take.

In virtually any profession, you are expected to prove that the work you are doing is achieving the desired results. Imagine a doctor who said, “trust me” rather than “here are the studies that show you’re getting better”. Would you go to a restaurant where you were only allowed to look at the food, but no one ever took the time to taste it? Who cares if it looks great, it might as well be made out of wax like the restaurant displays in Japan.

We ask other people to make decisions, or trust the ones we made for them. But, many of us haven't objectively measured the results for the last set of decisions and communications. We may be making adjustments on “trends” or on things that “feel” good or bad. With the exception of evaluating survey data, we almost never test our prior decisions by linking what actually happened to what was planned (or hoped for.)

Without this step, it is difficult to make the case that others should take your work seriously. With this step you move quickly from a tactical “wonk” to a strategic partner. It isn’t always easy. How do you prove results are linked to a specific program? How do you make the time when you only get two or three free days a year? Those are questions for another article. For now, I will leave you with the following questions. I look forward to your responses.

Do you objectively test your compensation decisions? What percentage of your compensation programs do you fully test each year? How has this testing led to specific decisions? Has it resulted in better support from executives or employees?

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He is a “Compensation Futurist” who 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.

Compensation Air Traffic Control

In the past three months, must of our businesses have experienced an upheaval of historic proportions. During that period, you may have been challenged with an array of uncomfortable tasks. You may have been involved in laying friends off, furloughing colleagues, cutting pay for executives, putting holds on merit increases, temporarily modifying incentive plans, marketing pricing for newly remote positions, all while working from a dining room table, teaching math, and cooking more food than an average holiday season. And now, just as summer is raising its beautiful head, many of us are planning to return our staff to some version of our past practices. The swirl of tasks and requests can make a compensation professional feel more like they work in air traffic control.

Each action taken in the past three months is like an airplane that was sent into the sky. Fuel is now running low and the planes need to land. You are probably sitting at your desk (or sofa) trying to determine which thing s needs to be brought home first. You only have a few runways, and each task requires new processes, rules, and ongoing communications. You may need to choose between finding the best solution to fix executive pay and finding a smooth transition to paying people who are returning to work. There is no rule book.

Every task may not be able to get the same attention and careful corrections. Some may need to simply be allowed to land on their own, while others may need you to put foam on the runway to soften their landing. Every person at the other end of these transitions is likely to feel that their personal situation is a priority. They aren’t wrong. Some may feel like they are the most important. And in today’s world several of them may also be correct. Similar to when we sat down a few months ago and figured out a new definition for “essential employee”, we must now determine who to handle first when there are several equally important tasks.

The key to success is to schedule things to come in for a landing in a sequence. No matter how much someone insists, two planes cannot land on the same runway at the same time. Hold your ground if you see this happening. The things that are running out of fuel must be landed first. This may be adjusting pay for a job family that has become more critical during this period. It may mean waiting to communicate an important executive plan until your broad-based program has been brought back to speed. The important thing to remember is that you may be the only person at your company who has the expertise to make these decisions.

Air traffic control is not for the faint of heart. People’s lives are literally in your hands. Compensation can often seem pedestrian, but in times like this, your job may be similar. You may be the difference between your company or your staff successfully navigating this transition … or not.  It’s time to bring them in for a landing. Who else knows how to do that but you?

I have been collecting information on, and working with many, companies who are making this transition. The issues are similar, but below the surface, the solutions are often unique. Use the comment section to share your thoughts or questions. I am sure there are other professionals who are willing to provide helpful advice.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He is a “Compensation Futurist” who 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: Following the Leader

Editor's Note:  As we work to move forward from the pandemic and its impact on our workplaces, we all seek data in an effort to understand what others are doing, what trends are for compensation actions, plans and practices.  This provides helpful context as we consider different future paths and the reward scenarios to support them.  The economic impact of COVID-19, though, has been unequal, different across industries, different even within industries as some organizations fight for survival and others see new opportunities for growth and prosperity. With that, I bring you Chuck Csizmar's Classic advice about "best practice" and following the leaders.

"What does the survey say?"

This is a common question, and one that Human Resource practitioners hear all the time.  Whatever the issue might be in the office, the boss usually comes around to ask, "what's everyone else doing?"

It could be regarding the value of your jobs, through competitive market pricing, or wondering about common practice benefit provisions or even how other organizations handle various HR policies.  But the theme remains the same; the questioner wants to know about "common practice."   What's everyone else doing? 

Why do they ask that question?  Because they want to do the same thing?  Because they want to follow what everyone else is doing?

I guess we're all too accustomed to pushing that EASY button.

Why We Want To Know

There's a natural curiosity to discover what everyone else is doing when we face an issue that's important to our business.  I get that.  Maybe you don't need to reinvent the wheel, especially if others have already completed the work for you.  So the thinking goes, let's grab the benefit of someone else's research and tag along , going with the flow.   Common practice suggests the popular answer, and it's hard to offer criticism for doing what everyone else is doing.

It can also be considered a mistake if you don't know the common practice answer.  Because how can you make a decision without knowing?  Your analysis would be incomplete.

At the same time it's a natural defensive mechanism to point fingers at the "market" or a "most companies" comment and say, "see, others with the same challenges as we have are doing the following."  The reporting of survey results doesn't require creative thinking, risk taking or even sticking your neck out by recommending an original thought.  It's a silent recommendation that you can offer without comment.

Marching To The Beat Of A Different Drummer

But have you forgotten something important in the rush to follow along?  Have you considered what may be the unique (or perhaps merely uncommon) circumstances within your organization, the nature of your own employees, your own situation?  Are you a boiler plate organization with only the same challenges and circumstances as everyone else?  Is the answer to your particular challenge(s) to be found simply by recommending what everyone else is doing?  Wouldn't that tactic really become the absence of decision-making?  The abrogation of responsibility?  Passing the buck?

Is it your intent, or just happenstance that you decide to let someone else, someone from outside your organization make key decisions for you?  And make no mistake, tagging along is a decision, in the sense that even non-judgments eventually turn into a course of action.

And if you're challenged to explain your actions?  The lament of "I'm just doing what everyone else is ," doesn't sound like an effective rationale, does it?  Probably isn't what senior management is expecting from you.

What Do You Think?

Following another's footsteps  does seem to be the safe approach, though.  It's likely the path of least criticism, at least in the short term.  At least until that common practice answer that seems to works for everyone else ultimately doesn't work quite as well for you.

It's easy to deflect criticism of your recommendations by pointing to "common practice."  You're not sticking your neck out, you're not advocating something different.  You're reporting on the activities of other organizations, ones who seem to already know the answer.

So while it's always a useful strategy to know the common practice that covers  your particular challenge, have a care to look outside the box as well.  Sometimes that survey you relied on provided only anecdotal information, while a more viable solution lies in understanding your organization's particular dynamics;  the culture, the politics, management biases, what had been tried before and whether what everyone else is doing makes common sense for you as well.

So whatever your recommended course of action might be, make sure that your rationale includes more thought than simply following the leader.  That's a child's game, and may not be a career enhancing move for you.

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, "Follow the Leader," by The Old Brit

The Time is Now. Compensation Pros Must Rise to the Challenge.

Change is hard. While it is inevitable, we prefer if it happens while we aren’t paying attention. It’s kind of like your hair during a more than 2-month lockdown. On day 5 your hair looks like your hair. On day 30 your hair looks like a long version of your hair. On day 70 your hair looks like someone dropped a prop wig on your head and ran away. The change happened, but gradually. For at least a few decades, this has been the way of things in the world of compensation. But now is the time for something new.

Our biggest changes are often those that are forced on us. Few of us thought that our coworkers would see the inside of each other’s houses every day, but here we are, living the video-conference dream. Most of us thought summer vacation would be a long three-months, but here we are experiencing some weird version of a six-month vacation, and we're mostly surviving it pretty well. When change is thrust upon us, we can accomplish amazing things, things that seemed impossible only moments before. Now is just such a time for compensation professionals.

The current crisis has exposed the dusty corners of compensation practices.

When professionals cannot survive for even a few weeks without a paycheck, we have created a system that is hard to defend when things return to whatever we will call normal in the future.

When the vast majority of companies have incentive programs that look very similar, but prospects that look far different, we must consider whether “market data” truly reflects our markets.

Our pay practices have leaned heavily on history, and next year’s history will be now. Will we truly want to base our pay decisions on what we had to do to navigate this period? What will we say when challenged by those making the decisions and those whose lives are inextricably tied to those decisions?

We seldom see the impact of change as quickly as we see the motivation for it. We must start figuring out what that change will look like, even before we have a clear picture of the road ahead. Take a good hard look at your pay programs. (Go ahead, I’ll wait. I’m just sitting in my home office.) Did your approach to compensation properly differentiate those who were essential to either your day-to-day existence or your long-term future? Do your incentive plans promote the decisions, behaviors, and actions that truly define your success? Have you noticed if your recognition program was well suited for recognizing people?

While we may not know exactly what the world beyond the horizon holds, we can be certain it will not be exactly like the past. Our compensation planning must start today if we are going to be ready for whatever is ahead. Now is the time to ask yourself what you will do if your budget is 20% less. Now is the time to make your argument for where it should be 20% more. Now is the time to determine where your adherence to market practices has made your company better, and where it may have hobbled your ability to move forward.

We are not presented with many truly transformative opportunities moments in our careers. I can think of only two or three in my own career. But proactivity is the key to success. Those who leaped ahead of the pack were always those who saw the opportunity and drove the change. Your time is now if you are motivated to make it happen.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He is a “Compensation Futurist” who 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: All Decisions Are B.A.D. Decisions

Editor's Note: During this time of crisis and challenge, we are mining our archives to bring you Classic advice and ideas from previous tough times (because we've been around for awhile!). And as we all strive to do our jobs in circumstances that change daily, even moment-to-moment, it's an excellent time to revisit Jim Brennan's guidelines on B.A.D. decisions.

All decisions are B.A.D. decisions, relying on the Best Available Data known at the time.

Even compensation experts, supposedly the most analytical of HR types, have difficulties with data.  Makes sense to me, because all human decisions are B.A.D. decisions, made according to the “best available data” when action was required.   

When there is no good data, you must rely on the Best Available Data.  The resulting acronym (B.A.D.) is quite meaningful as well as memorable.  The process of making decisions without access to complete and perfect information occurs every day.  The best professional survey analyses involving “counts”, for example, report their reliability statistics.  And guess what they define?  The estimated rate of error contained in their statistical results.  Standard error is a vital measure because it predicts how much of a miss is likely when relying on the normative results derived from a particular observation sample.  It is much like the spread in the shot pattern you get from pellets dispersed by a shotgun; or from sand thrown by hand, where wet sand will be more densely clustered than loose sand. 

Every measurement, even the best, comes with a certain risk of error.  Tight standards of precision offer more hope of being “right” and strengthen the ability to make inferences from studies, but that is not always possible or useful.  The real world is filled with bad information, inadequate facts and missing data points.  And the opposite situation occurs, too, where you are flooded with contradictory information.  In this Internet world, it seems like anyone can find support for almost any contention somewhere.  Too Much Information (TMI) has become a catchphrase acronym. 

Relevance counts, as well.  Despite access to all the information in the world, you can never be sure that one particular answer will prove to be valid in your particular unique situation. 

Sooner or later, you may reach a point where you can only speculate before acting without perfect confidence.  Even in the numbers-oriented world of compensation management, Scientific Wild-Ass Guesses (SWAGs) still are required sometimes.  Operating in circumstances where useful facts may be missing  is a normal part of the total rewards profession.  The more often you enter uncharted waters, the more frequently you will find an absence of robust benchmark studies with relevant useful facts that can guide your choices, suggest options or demonstrate context.  Then, it is time to get B.A.D.!

The best approach when dealing with ambiguity generally is to define your assumptions, explain the risk level and give it your best shot.  For instance, if no one complains over an admittedly arbitrary guess about what you think a specific job should be paid, you are probably offering to pay too high and they don't want you to find out because it makes life easier for them.  When hiring managers grumble but are able to comply easily and operate adequately, then the approximation is probably just about right. 

If any SWAG based on the Best Available Data works out, then your B.A.D. decision will be the best possible outcome.

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.

Cafe Classic: Scenario Planning and Reward Design in an Uncertain World

Editor's Note: During this time of crisis and challenge, we are mining our archives to bring you Classic advice and ideas from previous tough times (because we've been around for awhile!).

Compensation planning - like life in general - is a lot tougher in today's reality.  Many of us are wrestling with where (the heck) to take our reward plans amidst today's environment of uncertainty.

Perhaps we can draw some help from a technique in the business planner's toolkit.

Scenario planning, pioneered by the military in the 1950's and long used by some of the world's largest corporations, involves identifying a small number of "scenarios", predictions or possible paths the future might take, and defining how to potentially respond or adapt to each of them.  It should come as no surprise that recent times have brought a new surge in popularity for this particular planning approach.

A Knowledge@Wharton article, Eyes Wide Open: Embracing Uncertainty Through Scenario Planning, talks about this resurgence and covers some of the challenges involved in doing scenario planning effectively.

From the article:

Trying to gain a better understanding of the trends shaping the competitive environment has always been critical for managers. In the 1970s, scenario thinking first became relatively popular as a structured way to look ahead -- to understand new growth areas, anticipate risks, spot opportunities and build a long-term vision. Perhaps most notably, Royal Dutch Shell used the approach to look more broadly at the trends and developments that could impact the price of oil and develop stories that could challenge management perceptions. Since then, however, companies of all sizes and in many industries have picked up the practice, particularly at times of crisis or dramatic change.

George S. Day, a professor of marketing at Wharton and co-director of the Mack Center, also has witnessed the recent rise in scenario thinking firsthand. "What has changed to make scenario planning so timely? Obviously uncertainty is way up. This is the main driver, because when conditions are stable it's easier to live with momentum and the projections we normally use," he points out. "The challenge is that when things are very uncertain we need to think differently, because what we project based on current momentum may be the least likely outcome. We need to start thinking about the unthinkable scenarios -- and what's new today is people are finally figuring out how to do it well, in an environment with a huge amount of uncertainty."

My point? Simply this question: Are there elements of scenario planning that we - as a profession - should be embracing as we try to position our reward plans to support success in a near- and longer-term future that is difficult today to predict? 

Let's face it.  The days of simply plugging a new budget number into our compensation program and rolling it forward with a few tweaks are behind us, at least for the moment.  Right now, we need a dramatically different process that considers our reward structure against the possibilities the future may throw at us ... and asks questions like:

• What are the boundaries of possibility for our organization in the coming year ... and beyond?

• What might the possible scenarios mean for how we manage and reward our employees?

• What direction should/would we move our reward plans to respond to these realities?

• What, if anything, do we do today to ensure we would be appropriately positioned to make these moves, if circumstances demand them?

I'm betting that there are some forward-thinking practitioners out there who've already incorporated questions like these into their compensation planning efforts.  The rest of us ... well, time to learn up and get on board.

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: Creative Commons Photo "It's about rules and strategy" by pshutterbug

Cafe Classic: Job Titles... Are They Really Free?

Editor's Note:  During this time of crisis and challenge, we are mining our archives to bring you Classic advice and ideas from previous tough times (because we've been around for awhile!).

Increasingly, job titles are seen as a currency with which to attract, retain and reward employees when hard dollars are limited or unavailable.  A study from Pearl Meyer and Partners, When Times are Tough, Titles Matter, confirms this fact, noting that a number of the 388 responding companies use titles to recognize valued employees when funds are limited.

From Pearl Meyer...

“Flexibility is widely embraced by companies when assigning job titles,” said Beth Florin, Managing Director and President of the firm’s survey practice. “Managers typically have the autonomy to customize job titles in order to reflect different divisions, regions and employee preferences.”

Florin also suggests that organizations maximize the perceived value of new titles by communicating them more broadly within an organization, much the way promotions have traditionally been done.

All of this flexibility and visibility seems sensible as a means to maximize the impact of a reward that costs the organization nothing to impart and is appreciated by employees.

But are job titles really free? 

When the economy turns and these uptitled employees begin to consider (or wonder whether they should consider) their options, they will be assessing their current compensation package vis a vis the outside labor market from the vaulted perspective of the new designation.  Depending on the degree to which their role differs from that associated with the "generally accepted" use of that title, they may come to a very different conclusion about what they are worth than the organization's job valuation or pricing method says.  Before long, they will be scheduling a meeting with their manager ... or Human Resources ... to discuss what they believe to be an inequity in their pay.

And, suddenly, those new job titles aren't quite as free as they initially seemed to be.

I don't mean to say there is never a place for flexibility, even creativity, in assigning titles to employees' work. For many workers, the prestige and respect associated with a new title is highly valued and appreciated.  And even deserved.

I'm just saying we'd better go into the practice with eyes wide open as to the eventual implications and costs of such a move.

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: Creative Commons Photo "Free-Sign" by koka_sexton

Cafe Classic: How to Reward Those Who Must Step Up During Tough Times? Thoughtfully!

Editor's Note:  In the chaos of what organizations are facing today, many employees are stepping up.  Many because they don't see an alternative to doing so, many heroically.  Today's Classic was originally posted during an earlier time of crisis, more than 10 years ago; sharing it with a few light edits as food for thought today.

During these times of upheaval, many employees are being asked (that's a nice way of putting it, eh?) to take on more.

The question becomes: Who, where and how to reward for this?

My advice is to proceed with thought and care.  These days, and for the foreseeable future, it is likely that everybody's job will require going above and beyond, taking on additional work or stepping up to new levels of responsibility.  And operating in a climate of stress.  For this reason, we should be thoughtful about the manner in which we reward these efforts. Emotions can be running high and people may be extraordinarily sensitive about how and to whom extra recognition and rewards are being funneled.  Looking forward and optimistically, chances are good that this too will pass and we will find ourselves at some point (hopefully sooner than later) settling into a new normal.  While we must take care of our employees, particularly those who are facing down enormous obstacles to take care of customers and team-mates, colleagues of mine who've traveled through crisis and back would caution us against creating a culture where being asked to do more always sets up the expectation of a raise. 

While cash is king, there are an array of tools in your reward toolbox.  Do be sure to consider them all.

Having said that, I think we can all agree that there are situations where someone takes on more ... and situations where someone takes on MORE.  The trick is to establish clear, defensible criteria for distinguishing between the two.

For employees who are clearly doing MORE, where some kind of reward is probably appropriate, I would advise taking a closer look at the circumstances to determine whether MORE ...

• Is a temporary/short-term situation or likely a longer-term thing.  If the duration of the additional work is expected to be short-term, I think a (permanent) base salary increase is ill-advised.  Perhaps some kind of cash bonus or non-cash recognition program would be the best fit to rewarding these employees.

• Involves more of the same level and type of responsibility or reflects a different and higher level role.  With the former, I would start by looking at whether your performance management/merit increase programs are positioned to provide an appropriate reward.  If not, perhaps cash or non-cash recognition is - again - worth exploring as an approach.  In the latter case, it sounds to me as though you might consider re-evaluating the position and treating it (and the employee holding it) in a manner consistent with your policy for job upgrades.

I'm not suggesting that these are the right answers or approaches.  My point is simply that rewarding those who step up should happen in a way that is commensurate with the circumstances, mindful of the precedent being set, and - ultimately - aligned with your longer-term values and reward philosophy.

What you begin today you will live with tomorrow. 

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.

Cafe Classic: That's The Way We Do Things Around Here

Editor's Note:  Stuck in yesterday and the practices of the past?  Jacque Vilet has some Classic context and advice for you (and/or the Keepers-Of-Tradition that are holding you prisoner)!

Ever hear that line before?   Most of us have, and there’s research behind it.   Harry Harlow was an American psychologist best known for his experiments on Rhesus monkeys.   Here’s the story of one of his experiments .

The Monkey, Banana and Water Spray Experiment

5 monkeys are in a cage, a banana is hung from the ceiling and a ladder is placed underneath it.  Immediately, one of the monkeys races towards the ladder to grab the banana.  However, as soon as he starts to climb, the researcher sprays the monkey with ice-cold water as well as the other 4 monkeys.

When a second monkey tries to climb the ladder, the researcher again sprays the monkey with ice-cold water, as well as the other 4 watching monkeys. This is repeated again and again until they learn their lesson – climbing equals scary cold water for EVERYONE.   So no one climbs the ladder.

Next the researcher replaces one of the monkeys with a new inexperienced one. As predicted, the new monkey spots the banana, and goes for the ladder. The other 4 monkeys, knowing the drill, jump on the new monkey and beat him up. The new monkey therefore learns “no going for the ladder and no banana period” without even knowing why.   (The water hose has been removed and is no longer a threat.)

The process of switching out monkeys is repeated until none of the original 5 monkeys remains in the cage. The new monkeys never experience the icy water treatment and don’t know why they shouldn’t climb the ladder, yet each time a new monkey is introduced to the cage, it is beaten into submission. In effect, the “old” monkeys become the enforcers and caretakers of the “rule”, without even knowing its purpose.    It’s just because “that’s the way we do things around here…”

Sounds silly doesn’t it --- but that’s how company policy begins. We become the enforcers and caretakers of the rule, without even knowing its purpose.

How many programs, initiatives and policies in your company are being carried out without an understanding of the original purpose? How about in your own backyard --- Compensation?  Programs often exist because they met a need years ago.   Likely that need has changed or no longer exists ---yet the program or policy remains.

Look at what your company offers and ask these questions:

1) Do you still pay all employees at the same market position when it may make more sense to have different market lines for some key/critical positions?

2) Look at your sales commission plans.  In the last few years have all the salespeople reached or exceeded target?   Do you think that might mean targets are set too low? Are commissions more of a “given” anymore?

3) Is the $50 gift card to Walmart the company’s had for the past 10 years really viewed as an appropriate award for “recognition”?   Is it possible that with the influx of Gen Y employees in your company there may be other things that might be more appreciated?

4) Have you looked at your medical claims in aggregate to see what the biggest health issues are?  Might it be a good idea to initiate some sort of wellness program geared to these particular health issues?

5) Given the last recession when many of your employees probably lost a good deal of their savings in the stock market, would it be a good idea for the company to offer retirement planning workshops to educate employees on some good ways to build up their retirement accounts?

We all need to be wary of relying on prior successes as an excuse to do what has worked in the past.  In these fast-moving times, things change so quickly that it’s important to reevaluate and gain new perspectives.

Don’t be afraid to ask the tough questions and challenge past practice . . . even if it’s your past practice.

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: To Innovate in Rewards, Get Outside the Rewards Profession

Editor's Note: Because innovation is messy and irritating, and because we like to ruffle feathers here at the Cafe. Please share your take below!

There appears to be general agreement among reward professionals that the compensation approaches and protocols which have dominated practice for the last few decades are ripe for reinvention.  That disruptive change in the field is necessary and inevitable.

I also sense an assumption that we will be the change that we have been waiting for.  That we will lead the revolution, just as soon as we get those year-end budgets and plan changes completed and find the time to get our innovation game on. 

Not sure it will pan out that way.

An article in The Atlantic Why Experts Reject Creativity takes a close look at the bias we all have against new ways of thinking.  Senior Editor Derek Thompson asserts that not only are our brains hard-wired to distrust creativity, but that the more knowledge and expertise we have on the subject, the more hostile we are to new approaches.  And he highlights a number of research studies that support his claim.

In one study, 142 world class researchers from a leading medical school were randomly assigned to evaluate proposals for research funding.  Sometimes the faculty were experts in the subject matter being considered, sometimes not.  The experiment was triple blind, so that evaluators didn't know submitters, submitters did not know evaluators and evaluators did not talk to one another.  What the researchers found: New ideas -- those that "remixed information in surprising ways" -- got the worst scores from everyone, but were particularly punished by experts in the subject matter.

Thompson goes on to demonstrate that, in reality, most of us dislike new ideas, regardless of what we say or believe about ourselves. Ouch, right?  Read on.

Another study found that teachers who claim to enjoy creative children don't actually enjoy any of the characteristics associated with creativity, such as non-conformity. And a famous 2010 study from the University of Pennsylvania showed that ordinary people often dismiss new ideas, because their uncertainty makes us think, and thinking too hard makes us feel uncomfortable. "People often reject creative ideas even when espousing creativity as a desired goal," the researchers wrote. People are subtly prejudiced against novelty, even when they claim to be open to new ways of thinking.

Which means that disruptive change, innovations that move the field of play and introduce new compensation management solutions, might likely originate outside our profession.  They will come from business leaders and others with talent management smarts (but perhaps not the "credentials") -- particularly (but not exclusively) those in emerging and fast-growth organizations and industries -- who are willing to experiment, put new ideas to work and learn from their efforts.

It will happen out at the edges and beyond, outside the perimeter of "professional" reward practice.  And so I propose that our mission, if we choose to accept it, will be to discover, devote attention to and learn from what is happening outside the core of our field.  And then to bring those ideas in, adapting and piloting them in our own organizations.

A few years ago, I had an interesting conversation with a few leaders at one of our own professional associations.  I shared the observation that much of the association's focus and attention was centered on very large organizations, the Fortune 500 and their ilk.  I was informed that this was the case because it is at these big employers that the leading edge of reward practice takes place.

Maybe.  Maybe not.

To paraphrase the wisdom of Gordon MacKenzie, author of Orbiting the Giant Hairball: A Corporate Fool's Guide to Surviving with Grace (and only the best book on business creativity every written!), we won't be able to truly push the boundaries of practice until we figure out how to escape the Hairball -- our entanglement with the policies, assumptions and practices of the past.  Orbitting -- escaping the gravitational pull of the Hairball enough to observe and embrace original ideas and lessons -- will require that we read and interact outside the boundaries of our profession. 

Irritating, inconvenient and messy, for sure.  But that's what the road to discovery typically looks like.

What do you think?

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 "An Idea" by aloshbennet