Compensation Cafe

Cafe Classic: Broadbanding in the Age of Equity and Analytics

Editor's Note: It is interesting to watch concepts that came into play and popularity during an earlier era be "rediscovered" (and sometimes even "repurposed") by the profession.  Ah, the arc of history.  Case in point today: broadbands.  

WorldatWork, in its glossary of reward terms, provides us with an appropriately succinct definition.

Broadbanding: A pay structure that consolidates a large number of pay grades and salary ranges into much fewer broad bands with relatively wide salary ranges, typically with 100 percent or more difference between minimum and maximum.

On its surface, the appeal of this is easy to understand.  Fewer "grades," coupled with wider ranges sounds like less structure, less bureaucracy, less administrative work and more flexibility.  In theory, that's true.  In practice, it can be a little more complicated.  The complications arise because broadbanding, at least as it was originally conceived, wasn't designed to support the traditional job-based work and pay program designs that are still the norm at many (perhaps even most) organizations.  It was meant to support more broadly-defined roles, to support and reward lateral growth and career development. 

When you collapse a pay structure into fewer, wider salary bands, at least in the "pure" sense of broadbanding, you effectively give up the control point (market reference or midpoint) of a traditional salary range.  Which makes perfect sense if you've moved away from job-defined work and pay, and are no longer concerned with setting and managing salary opportunity based on the attributes and value of a discrete job - if you are moving instead to managing pay opportunity by the skill, competency and/or performance of individuals within more broadly defined classes of work.

The issue with - and my personal objection to - broadbanding is when it is chosen simply as an easier, more flexible way to manage job-based pay by organizations that have not invested in the processes required to manage individual-based pay.   A pure broadbanding approach leaves these organization with a very wide band of salary possibility, now less a meaningful control point. They've removed the guard rails that control by job used to offer, made the margin for error now alarmingly wide, and created a system whereby effective salary management demands an ability to define and defend how individuals should paid within that wide range of possibility without the necessary support systems.  They encounter issues in areas like career advancement, when expectations born in the age of traditional jobs bump up against the new broadbanding realities and things like promotional opportunities vanish.  And yes, I know that many organizations will address this by adding a series of control points and sub-bands within their broad bands, to provide more guidance and control to salary decisions.  To which I say:  Gosh, that starts to sound a lot like a series of traditional salary ranges.  

Here's the thing though.  As we get better and more sophisticated in HR analytics, in understanding and measuring how employees create value in their work, perhaps we'll have a new data-grounded, person-based valuation foundation to pair up with a broadband approach.  Perhaps an alliance between rewards and analytics will lead us to a new renaissance in banding, featuring rigorous approaches to measuring how people grow in value across a broadly defined work class.  A BroadBanding 2.0 (or 3.0 or 4.0...  this cat's had a lot of lives).

Or perhaps the precision and rigor of analytics, as it gains a stronger foothold in rewards, will lead us in the opposite direction - to more narrow and precise salary opportunities.

Your thoughts?

Ann Bares is the Founder and Editor of Compensation Café,  Author of Compensation Force and Partner at 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 hiking, reading and hanging out with family in any spare time.

Cafe Classic: Eternal Sunshine of the Spotless Mind

Editor's Note:  There are several versions of the famous quote "Those who don’t know history are destined to repeat it" and it is attributed to individuals ranging from British statesman Winston Churchill to Spanish philosopher George Santayana.   Regardless of its roots, this statement is as true in the sphere of reward programs as it is in any other, as Dan Walter explains in his Classic post.

In the world of pay, we are almost always looking forward to the upcoming year or more. We often operate with little or no reference to our histories. If we are going to measure our success, we should probably understand the path that got us here.

I often work with companies who can provide very little information on how and why they are in their current state. They can speak in broad generalities, but the details are hard, or impossible, to grasp. None of these people are dummies. To the contrary, most are smart professionals who work hard to make the best decisions every year. How well can you explain your past decisions and actions? 

What did your survey data look like three years ago? How did pay for each position align to it? Do you have these details and do you communicate them in any reasonable way?

How about your LTI plan? What were the specific "asks" and "expectations" five or six years ago How well did you meet these objectives and did you ask your employees or executives how effective the plan was in motivating them to those achievements?

Things in the past get fuzzier over time. This is especially true for tasks that require complex decision-making and involve discretion. We make hundreds of small decisions like this every time we benchmark compensation, determine incentive pay levels, set goals, and decide on merit increase minutiae. When we look back even a couple of years, the drivers of our decisions are often difficult to explain or defend. In a data driven world, our eternally spotless minds will prove to be an insurmountable obstacle.

A growing best practice is building regular reporting summaries at critical decision and measurement points. These summaries often include pictures or easy data visualization because our brains are best at remembering images. These summaries become a diary of our past. At their best, they also include the "why" of each decision. This approach to remembering history is seen in things like "Facebook memories" and old family videos but is very new to the world of total rewards.

Imagine if as you started planning each year you could quickly review the key decisions, failures, and successes that brought you to your current position over the past several years. While there are all kinds of tools that can help with this, a simple solution is a series of slideshows. 

Build a template for each program or process. Every decision cycle, usually annually, but more often for things like sales plans, create a quick set of charts representing your current state and desired state. Put together a bullet point of why you made key decisions. Then each following year, add new slides linked back the prior slides. As time progresses, you will easily be able to track whether you’ve been delivering real value (or not).

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. Dan is a leading expert on incentive plans and equity compensation issues. He has written several industry resources including a 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: Do We Need a Pay Structure?

Editor's Note: Many organizations - particularly but not exclusively start-ups, fast growing and founder-led enterprises - feel structure around pay weighs them down unnecessarily.  Maybe so.  At some point, its a smart move to understand the pros and cons, the risks and rewards around the structure decision.  Chuck Csizmar explores this Classic question.

Once an organization reaches a certain employee population it's been typical practice for the Human Resources department to replace their ad hoc compensation/reward processes with a more structured program.  A key element of that program development is the establishment of a base salary (pay) structure.  Here you will have an ascending hierarchy of grade level designations (your position is a grade "x," mine is a grade "y", etc), coupled with ranges that indicate a minimum-to-maximum value (pay) for each grade.

While distinctions in design can vary amongst organizations the central point of having a uniform structure is very much commonplace in both for-profit and non-profit organizations.

You probably see the "but" coming, don't you?

Startups And Small Businesses

Just the other day one of my clients, a young and fast growing high tech company, explained to me that they didn't use grades or salary ranges.  They didn't have a pay structure.  They felt that they didn't have the time to develop a standardized reward program. "We're moving too fast," the CHRO told me, and "We don't have the time, people or money to focus on an HR project."

That's a common response for start-ups and small businesses.  The feeling is that there aren't yet enough employees to start building an HR infrastructure.  Everyone knows everyone else's first name and the company Christmas Party could be held at a restaurant.  Also, business leaders are too engaged in more important endeavors: getting the business off the ground, developing products and services and setting up mechanisms to sell their offerings.

Therefore these first generation employees are usually paid on the basis of:

• Whatever the individual employee could negotiate
• Whatever the company felt it would take to get chosen candidates to join, or
• Setting of fixed rates for everyone in a particular job

Little thought is given to pay relationships (equity) or even the short term impact on payroll expense.  The focus is lock set on creating a business, of getting the ball rolling.  Even job titles become an afterthought, with resultant title inflation slowly infecting the organization, and most no one has a job description.

I get that.  That's the reality of getting a business off the ground.  HR takes a back seat.

But it can't last.

Paying The Piper

Eventually, these poor compensation practices will start to cause real pain within the organization, similar to how too much sugar inevitably causes tooth cavities in children.  Payroll gets out of hand (too high), inequity amidst the staff starts to cause employee relations issues and managers begin to see valued employees becoming disgruntled and heading for the exit.

By the time management starts to realize they have a problem, not only have the problems grown serious and disruptive, but those pay practices that no one cared about earlier have now become ingrained in the small company's culture. Now it's not going to be so easy to change course.  Now management risks angering some employees even as they try to steer the ship away from the reefs.  Some of those employees could be valued contributors.

For example:

• Disconnecting inappropriate job titles is sometimes easier said than done.  Employee egos and self-identification have been blown out of proportion, but to make someone take a step back is difficult.
• Dealing with outliers who either pop out the top of a salary range or fail to meet the minimum level.  When faced with a competitive pay structure to replace the ad hoc and laissez faire suddenly some employees are found to be overpaid, while others are underpaid.
• Facing the cost implications of the above.  Raising someone to the minimum value of a pay range is an easy decision, but what if many employees are affected?  And if an employee has been with you for awhile, raising them to the minimum can still be perceived as a slap in the face.
• Setting grade assignments that reconcile a job evaluation system, competitive market pricing results, and internal equity.  Think of a juggling act where everyone is a potential critic.

So do yourself a favor.  Pay attention to germinating pay issues even as the business passes through its stage 1 and stage 2 development.  Then, when it's time to standardize and structure your reward programs you will find the road ahead all the smoother for your efforts.

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 "Structure" by Gunnar Wrobel

Cafe Classic: Pay Communication -- Avoid the Parent Trap

Editor's Note:  Too often, we fall into "parent speak" when responding to employee questions and challenges around their compensation.  Margaret O'Hanlon shares ideas on how to avoid the Parent Trap and other pay communication pitfalls in this Classic Capstone to her series on how to be a better communicator!

We all know the parent mantra:

• I understand this situation far better than you do
• Do what I am telling you, you'll find out it's the best way
• I don't want to hear about it (shorthand for, "You'll realize I'm right once you've done it")

Parents resort to these tactics when time is short and everyday tasks are at hand. However, so much of HR-speak comes off that way, too. And then we wonder why HR communications are unpopular -- a reaction that is especially unnecessary and undermining when it comes to compensation communications. You'd think that we'd get the benefit of the doubt, since the topics that we are talking about are money and rewards, but it's not the case.

Here are some suggestions to break the "parental tone" habit.

Brainstorm a new topic -- what's on employees' minds -- instead of assuming that you already know everything you need to know. Imagine how much you could learn and how much these insights could help everyone prepare for planned HR activities if you held a meeting, invited the right people (including a line advisor, maybe), and free-formed the teams' ideas on today's employees' and managers' thoughts, perceptions, attitudes and challenges. Then break what you find into subgroups -- this Division vs. that; this product area vs. that; new managers vs. experienced managers; and so on. It's easy to see how much richer your communication and implementation plans would be as a result of this conversation. Of course, free forming isn't often a compensation professional's strength, so mix up the group with those who can help you get going.

Recognize that your compensation and performance management software annoys a small or large subset of your employees and managers. It's just a given. Stop acting as if the programmed instructions are enough, thank you very much, that's what we paid the provider for. Admit what the tough spots are and add information in your reminder emails that can help people find their way around them. If you don't know what they are, ask a few managers.

Push your communications one or two notches up higher on the transparency continuum. Again with the meetings! But today, this really can't be overlooked. The HR team should create this challenge for themselves, develop a contract among themselves to make real progress and determine a measure or two to hold themselves accountable.

What is the hardest thing that you're asking managers to do this year? Even if it hasn't changed from last year, plan how you can support them better, so they will be more successful and/or less stressed this year.

Has anyone ever used a hotline during performance review or compensation discussion time frames? I know it sounds dicey, but in the right circumstances and by promoting it as a coaching option, it could be considered as a way of diminishing the "I don't want to hear about it" tone to HR's performance management and compensation end-of-year activities.

You know you're good, but are you a great communicator? This is Episode 5 in a series on improving employee loyalty through better, uncomplicated end-of-year compensation and performance management communications
Episode 1 = Expect More (From Yourself) This Year
Episode 2 = Value End-of-Year Implementation--How to Make It Important, Worthwhile and Useful to help you get started
Episode 3 =Tips for Improving Manager Meetings to give you new strategies
Episode 4 =The Tip That Will Change People's Minds

Margaret O'Hanlon brings deep expertise to discussions on employee pay, performance management, career development and communications at the Café. Her firm is re:Think Consulting. 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 everythingiscommunication.com. She is a member of U.S. Masters Swimming.

Cafe Classic: Aligning Incentives, Performance Metrics and Strategic Objectives

Editor's Note:  What can an experiment involving singing, dancing and posing teach us about performance pay?  Plenty ... as this Classic from Stephanie Thomas reveals!

How clear is the line of sight between your performance pay programs, strategically linked performance metrics and the organizational strategy? Do your managers see these performance measures as they really are (imperfect proxies for larger, intangible strategic constructs), or do they focus on the performance measures themselves as the ultimate goals?

Let's say that one of Company X's strategic objectives is to maintain its market share. This strategic objective is translated into tactical goals, one of which is retaining current customers. Assessing managers' performance in supporting the overall strategic objective of maintaining market share can be done different ways, but let's assume that Company X focuses solely on the tactical goal of retaining current customers and evaluates managers' performance through a customer satisfaction survey. Managers will receive bonuses tied directly to their survey scores.

Will Company X's managers see through the survey scores, understanding that the overall strategic objective is maintenance of market share, and ensure all their decisions are consistent with this objective? Or will managers act exclusively to maximize survey scores and paychecks, losing sight of the overall strategic objective of the firm? 

If managers focus solely on the metric, they exhibit what is known as surrogation. Choi, Hecht and Tayler describe surrogation as the situation arising when managers "fail to fully appreciate the fact that [performance] measures are merely representations of the true constructs of interest, ultimately acting as if the imperfect measures are the constructs of interest"("Lost In Translation: The Effects of Incentive Compensation on Strategy Surrogation",The Accounting Review, Vol. 87, No 4, pp. 1135-1163). Surrogation can hinder managers' ability to make decisions and take actions that are consistent with organizational strategy. 

Unfortunately, using performance pay linked to a strategically linked performance metric increases managers' propensity to exhibit surrogation. The way in which performance pay affects performance is complex and there are a variety of mechanisms in play. However, a substantial amount of research suggests that incentive pay has attention-directing effects that influence an employee's experience with performance measures. In their paper, the authors explore these attention-directing affects and address the question of whether using multiple compensated performance metrics, rather than one compensated metric, will reduce the problem of surrogation and help keep the organizational objective clearly in managers' view.

The authors design an interesting laboratory experiment to examine these hypotheses. Graduate students at highly ranked U.S. business schools were asked to create a virtual character in the computer game Spore according to the following instructions: design a creature that can socialize with other life forms such that it will become the dominant species on the planet. 

Within the game, four "traits" influence a creature's ability to socialize: sing, dance, charm and pose. Participants were informed that all four traits were equally important in a creature's ability to socialize, and were asked to keep this in mind when designing creatures.

All participants received compensation based on a post-experimental assessment of their creature's ability to achieve global domination via socialization. The top performer received $20, the second-best performer received $18, and so on. In addition, a bonus was awarded based on specific performance metrics. One group of participants (single-measure-compensation participants) received a bonus based on the creature's ability to sing: they received an additional $2 per level of "sing ability." For example, a creature with a sing ability of 4 would generate an $8 bonus. The other group (multiple-measure-compensation participants) received a bonus based on the creature's ability to sing, dance and charm" they received an addition $1 per level of sing ability, dance ability and charm ability. For example, a creature with level 3 sing, dance and charm abilities would generate a $9 bonus.

The results of this experiment are not surprising. The single-measure-compensation participants constructed creatures with higher levels of the sing ability, at the expense of the other, equally important, socialization abilities. Their creatures were less successful in achieving the overall objective of domination via socialization. This is exactly what we would expect if the participants were engaging in surrogation. Surrogation among the multiple-measure-compensation participants was statistically significantly less than among the single-measure-compensation participants, and their creatures were more successful at achieving domination through socialization.

At the end of the day, this experiment empirically confirms what many of us already know: people do what you pay them to do. When designing performance pay systems, make sure that the attention-directing effects of incentives are directing attention to the achievement of the overall strategic objectives of the organization, not just to singing, dancing and charming.

Stephanie Thomas, Ph.D., is a Lecturer in the Department of Economics at Cornell University. She teaches undergraduate and graduate courses on economic theory and labor economics in the College of Arts and Sciences and in Cornell’s School of Industrial and Labor Relations. Throughout her career, Stephanie has completed research on a variety of topics including wage determination, pay gaps and inequality, and performance-based compensation systems. She frequently provides expert commentary in media outlets such as The New York Times, CBC, and NPR, and has published papers in a variety of journals. 

Image courtesy of Electronic Arts

Cafe Classic: Price is Only an Issue in the Absence of Value

Editor's Note: Dan Walter's Classic post is a great reminder to us, especially we pay professionals buried in our price data, that there is another (sometimes more qualitative but no less important) measure out there that impacts employee retention, and that is the value of the jobs we offer.

The title of this article is not something I invented. But, the smart person who first said it seems to be lost to history, so I am borrowing it. But, that’s not the point.

As compensation professionals, we worry an awful lot about prices. Value is something we often put on a back burner while trying to build a better benchmark. The secret that the best businesses and salespeople know is that pricing loses its power when the value is properly understood.

It’s such a simple premise that it can be hard to believe fully. But, study after study confirm this simple fact. When something has value to a person, the price they put on it is higher.

Are your employees leaving for an additional $0.25 an hour? I recently spoke to someone who told me just that. While pay for these roles must be evaluated and possibly corrected, there is something deeper serving as the cause of this issue. The company knows it. The individual knows it. But neither have been able to put their finger on it. Identifying, defining, and building the perception of value is not always easy.

First, you must be able to create the feeling of value from the perspective of the individual. It doesn’t matter one bit whether you see value in the offer. You probably helped determine the details, so you probably see some value.

You need to understand what is valuable to the individual. Don’t guess. Don’t assume. Don’t tell them. Ask them.  Listen and confirm. Then get to work building or communicating that value to the individual. Don’t do this as some defensive counter-offer to someone who has said they are considering leaving. Be proactive.

Work on learning what people in the problem area find valuable about their jobs and in life. Work on showing them how your solution builds on that value. Show them new ways to find value in what they do. If you can effectively do these things, you may find that minor pay differences are no longer an issue.

I can already hear some of the negative Nellie’s saying that this is too simple and it won’t work for everyone. You are right! It won’t work for everyone, but it will work for a bunch of someones. This is a purpose-built approach to dealing with people who are “leaving for better money.”

Think about it this way. Diamonds are made exclusively from one of the most abundant elements in the universe. They are incredibly expensive for something so abundant. But, they have great value to people purchasing and receiving them. They have come to represent something of significance between two people. They represent commitment. They represent the fact that you are doing well enough in life to own that shiny bauble. But, make no mistake, they are expensive!

The value they deliver exceeds the price required to obtain them. Spend the next two months figuring out what your people value and how your company can deliver it. If you do it well, you will find that prices are only an issue in the absence of value.

Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. Dan is a leading expert on incentive plans and equity compensation issues. He has written several industry resources including a 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: Can Quantum Mechanics Make Your Pay Programs Better?

Editor's Note:  One of our favorite things to do at the Cafe is to step outside the familiar confines of our jobs and look at the things we do through the lens of another field. 

Today we're going to reach out into the strange world of quantum mechanics for insights on pay program design and implementation.

Quantum mechanics, as briefly defined at LiveScience.com, is...

...the body of scientific laws that describe the wacky behavior of photons, electrons and the other particles that make up the universe. Quantum mechanics is the branch of physics relating to the very small. It results in what may appear to be some very strange conclusions about the physical world.

That, it turns out, is an understatement.  Quantum theory (which underlies the field of quantum mechanics), when it emerged a hundred years ago, turned our understanding of reality and the classic world of physics upside down.  Niels Bohr, one of the theory's pioneers, liked to say that "Anyone who is not shocked by quantum theory has not understood it."  A century after its birth, now being used daily in applications that range from MRI scanners to solar cells to DVDs, it is still considered a puzzle.

What can the murkiness that quantum physicists discovered at the heart of the atomic world possibly offer to us, who practice in human resources and compensation?  I think it is encapsulated briefly and beautifully by Italian theoretical physicist Carlo Rovelli, author of the bestsellers Seven Brief Lessons on Physics and Reality is Not What it Seems:

Reality is only interaction.

Quantum theory holds that things, at the atomic level, don't always exist.  They exist only when they are observed by or when they interact with someone or something else.  The controversial finding at the heart of quantum mechanics is that there is no objective reality independent of whoever happens to be reacting with whatever.  As Rovelli likes to put it, the things of the world can be better compared to a kiss - which only exists when it happens - than a stone.

You think of your new salary structure, that incentive plan you developed in collaboration with your cross-functional design team, as things that exist as their own independent and objective realities.  But what if that isn't true?  What if your pay plans only exist, only become real when managers and employees interact with them?  What if their reality is solely the experience that managers and employees have when they encounter the plan in their work lives.

The problem is that we often go about our jobs believing that our pay plans are like stones.  We create them, we set them neatly in their place, we write a memo or hold a communication session (maybe even several communication sessions!), and then we step back and wait for the magic to happen while we turn to our next initiative.  And we try to understand why they don't drive the changes and produce the impact we hoped for.

How would we do our jobs and plan our priorities if we considered the interaction that people have with our pay plans - rather than the plans themselves - as the product of our work?  What might we do differently if we focused our ideation, design and implementation efforts on the "kisses" - those moments when managers and employees observe and interact with our pay plans?  If we envisioned the result of our work as the net of interactions that builds over time around them instead of the content of the written plan materials?

Could this make our pay programs and our work better?

Ann Bares is the Founder and Editor of Compensation Café,  Author of Compensation Force and Partner at 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 hiking, reading and hanging out with family in any spare time.

Cafe Classic: Before You Link Pay to ANYTHING...

Editor's Note: Sometimes the best advice on pay comes from outside our profession.  Today's Classic post serves as Exhibit A.

Rob Markey of Bain & Company's global Customer Strategy and Marketing practice wrote a great "series" of HBR posts awhile back on the perils of linking pay to customer feedback (The Dangers of Linking Pay to Customer Feedback and Before You Link Pay to Customer Feedback).  As any of us who've considered using customer feedback metrics in incentive design know, this can be a potential minefield.  Markey's cautionary advice on pay linkage is well written and worth our consideration beyond the boundaries of customer feedback metrics ... before we link ANYTHING to pay.

With that in mind, Iet's consider his five essentials - preconditions for trust and credibility - in the context of broader compensation design:

Essential #1: Truly reliable feedback and metrics.  If your metrics aren't trustworthy, if they vary widely from one time period or unit to another and you don't know why, your compensation system won't be trustworthy either.  This "essential" has obvious application to any metrics we might consider tying to pay.  Markey provides some great suggestions for digging into prospective metrics to assess their viability with questions like is the sample controlled and stable? and are response rates high enough to reduce responder bias?

Essential #2: A clear link to financial and strategic outcomes.  Your metrics must correlate with financial and strategic goals.  I've posted before about the importance of grounding incentive design in value creation.  Markey makes the same point here: Without a confirmed link between your selected incentive metrics and business outcomes, your incentive system won't last long.

Essential #3: Processes and tools for understanding root causes.  Markey uses the example of a company which began linking improvement in customer feedback scores to executive compensation before it had developed the discipline and processes for truly understanding those scores.  The company's managers - understandably - felt helpless and frustrated.  This is perhaps our most common mistake with incentive plan development, one that critics like Alfie Kohn and Dan Pink nail us on for good reason: throwing incentives at a problem before/without understanding or providing the tools to deal with its root causes.

Essential #4:  Organized learning.  The root cause discipline noted in #3 above must be supplemented with the means and the leadership support for learning and improvement.  Again, often an area where we are at fault where we try to implement incentives in lieu of learning and development(I've seen it tried and I'll bet you have, too).

Essential #5:  Repeated communication.  Why, Markey asks, do so many leadership teams spend countless hours devising the details of incentive systems and then under-communicate their intent?  Amen.  Although, as my Cafe colleague Margaret O'Hanlon and I have both noted in earlier posts (mine here, Margaret's there), effective communication in this age of information overload is more about creating patterns than repeating messages. 

Sometimes our best advice comes from outside the profession.

Ann Bares is the Founder and Editor of Compensation Café,  Author of Compensation Force and Partner at 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 hiking, reading and hanging out with family in any spare time. 

Image courtesy of seo.com

Cafe Classic: What Do You Do?

Editor's Note:  Dan Walter tackles the Classic holiday get-together question, offers some thoughts from the Cafe contributor team as well as his own tips, then opens the floor for YOUR thoughts.  How do YOU answer this question?

The holiday season is now in the rear-view mirror and everyone reading this post has recently had to answer some version the question, “what exactly do you do?” Maybe you had to explain it for the umpteenth time to a family member who spent the past year sending you articles about payroll. Maybe you had to explain it to someone who blames you, personally, for the disparity in pay between executives and “everyone else.” Perhaps you had to deal with why you had not yet fixed the minimum wage, income taxes, health care or some other headline issue. Or, this might have been the year where the light went on and someone FINALLY realized that you were some sort of workers compensation attorney.

Some of you might have it even worse, your job might include compensation AND benefits. Maybe your title includes the words “total rewards.” Heaven forbid your business card or email signature includes the words analyst, consultant or director. Explaining what you do in a way that everyone can understand can be one of the most difficult parts of the job.

I asked for some help on this post. Some of my esteemed Compensation Café contributors provided two-sentence descriptions of what they do. Some also provided short descriptions of what YOU do.

Here are some of the descriptions of what the contributors do. (Feel free to guess the writer of each in the comment section.)

I help HR leaders leverage the power of thanks and social recognition to empower employees and build cultures of appreciation. Through a more modern and strategic approach to recognition, companies can fuel employee engagement, productivity, and ultimately drive business results.

I assist organizations in solving and resolving their employee pay challenges. From across the street to across the globe, I advise clients as to how best to effectively and efficiently design programs, value positions, measure performance, communicate transparency and ultimately properly spend reward dollars in a manner that benefits both the employer and the employee.

I work with companies on their employee pay/compensation issues. They may need help on problems with salaries, bonuses or a certain benefit. Some of my work is helping companies with employee pay issues in their offices or manufacturing facilities overseas in other countries. Because the laws about compensation are different in other countries, they may need help in making sure their pay plans are legal.

I try to get people to think in new ways about how people and technology impact business outcomes.  ​

I diagnose situations and 'splain the range of most applicable HR and compensation policies and practices.  Drawing on many decades of experience with virtually every industry and location in North America, I research, summarize, distill and (hopefully) clarify the range of options available for total rewards applications.

Here are some descriptions of what you do…

The primary role of a comp professional is to ensure the right mix of rewards to attract, retain and motivate people to execute its business strategy.

A comp/TR professional collects and analyzes data, conducts diagnoses, makes presentations and implements the most situation-specific suitable range of optional prescriptions for effective solutions in human behavioral issues.

I think the descriptions above simply prove the point of how hard it can be to explain what you do. The thing about the problem is this: If you can't explain what you do, how can you engage your business stakeholders in helping you help them?

Here’s my stab at it.

A compensation professional figures out when, how and how much to pay people given their company’s strategy, budget and culture. In the end the goal is to pay, recognize and support employees (or consultants, etc.) in a way that allows both the employee and company to be successful.

Or, try this:

I figure out how to pay people and adjust as needed.

I should point out that some of my own family still call me to ask if I can provide stock investing advice (I have some deep expertise in equity compensation, but…no.) Friends still ask me to talk to their bosses to explain why they should get a raise (not generally my day job.) And, of course, people regularly blame me for the wealth gap, executive compensation excesses and the rise in housing prices (I wish I had, but do not yet possess, the power to control any of these.) I think you get the point. My holiday season is usually as fun as yours when it comes to this topic.

I would love to have you post your own two sentence descriptions of what you do. Maybe someone else (like me) can use it at this year’s family reunion or holiday party.

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

Happy New Year and a Cafe Announcement!

Happy New Year Dear Readers!

As we ring in 2022, we are also closing a chapter in the life of the Compensation Café.  After serving up straight talk, original thinking, and caffeinated conversation on everything compensation since we opened for business in April 2009, this site has published its last batch of new posts.

The good news is that this site, with its treasure trove of great content, will remain here for you (at least for the foreseeable future).  Going forward, we will continue to publish Classic posts on a weekly basis.

Here’s the great news: there’s a new Café in the works!  Long-time regular contributor Dan Walter is putting the final pieces in place for a reboot of the Café at a new place and URL (www.TheCompCafe.com).  The Comp Café will work to pick up and expand on what the Compensation Café started. The format will change slightly for the video-oriented world we live in. The contributors will be mainly new (with some familiar voices like Dan and Reena Paul).  The hope is that this new resource will provide another decade or more of fresh thoughts, open conversation, new ideas and technical know-how for the next generation of total rewards professionals.

I want to thank everyone who has written for the Café over the years, particularly the regular contributors.  Few people can turn out on-target original content, laced with humor and attitude, day after day after month after year, the way this group has.

Special recognition to those who carried this site right to the end:

They include my dear friend Margaret O’Hanlon, who has been on this journey from Day 1 and who I have often described as the Café’s co-founder.  It would be difficult to imagine the Café apart from Dan Walter, whose unique voice, sense of humor and unmatched gift for reward analogies helped define our cheeky, in-your-face brand.  There is Chuck Csizmar, whose wisdom and insights (and cat pictures!) made him a cherished favorite of so many readers.  And a shout out to the newest regular, Reena Paul, who joined the Café team just this past May.

Many others did stints, long stints in some cases, as regular contributors over the past 12 years.  This esteemed group includes Jim Brennan, Stephanie Thomas, Derek Irvine, Jacque Vilet, Laura Schroeder, Darcy Dees, Becky Regan, Doug Sayed and Terri Albee.

We’ve been privileged to feature the writing of so many great guest contributors, way too many to list them all, but I want to send a special shout to just a few: the incomparable team of Pat Zingheim and Jay Schuster, Howard Risher, Gerry Ledford, Paul Weatherhead, Chris Dobyns and Joe Thompson.

And readers … how can we express what your readership, the comments and encouragement you’ve shared, and the great discussions you’ve started with us have meant?  What a wonderful thing it has been to meet and connect with you at this funny on-line coffee shop!  We are more grateful than you’ll ever know.

For me, I want to say that all of you who’ve written, who’ve read and who’ve shared our content have blessed my career and my life in more ways than I can count.  Thank you.

Please watch here for announcements on the reboot under Dan’s care – coming soon – and do continue to check in/subscribe for great Café Classic content!

Ann Bares  |  Founder/Editor