As any experienced compensation practitioner would agree, from time to time you will find yourself faced with someone who doesn’t think much of your job.  In fact, they’re pretty sure that they can do it themselves.  “Just give me the survey report and I’ll flip the pages until I find what I need.”

Have you heard that one before?  Scary, isn’t it? And just a bit condescending as well.

This suggestion may initially be made under the guise of saving time (“You’re so busy”), but it’s actually a bid to gain control over what they see is their dependence upon you as the one who analyses and reports on the competitive marketplace.

They may even say that they have obtained a survey of their own that they want to be used.

Flipping Pages

From the perspective of this skeptical client, all that you’re doing is matching the internal job title with that from the survey source.  Simple.  So, all one needs to do is to grab the highlighted figure from the designated page (it will be obvious) and, voila! Market pricing complete.

Aside from the insulting implications of this attitude that demean your objectivity and professionalism this simple self-taught process will certainly deliver the WRONG figure most if not all the time.  Remember that these clients will be looking for a figure that will support their pre-conceived beliefs, so their objectivity will have left the room.  They know the answer and want to see a figure that they can use to support it (picture someone running down the hallway waving a piece of paper). They will then tend to ignore such cautionary variables in the data as:

• Industry type
• Revenue size
• Geographic considerations
• Aging of data
• Matching the job content vs. title
• The reputation of the survey
• Challenges to survey methodology and cleansing

Consider the client “process” as it will run its course; job titles may be matched instead of job content, which sends you to a page in the survey report.  The most provided/highlighted figure will be grabbed if it fits with the client’s internal criteria (what they’re looking for).  Once they have the chosen figure, they will then flaunt that “answer” as what the survey is reporting.  The variables listed above are usually dismissed as smoke and mirrors aimed at confusing what is an otherwise straightforward report.  In other words, if they like the number they see, everything else becomes distracting chatter.

If perchance the figures offered don’t agree with the client agenda, figure adjustments may be made based on stronger vs. weaker job matches, greater/lesser complexities involved, senior vs. core jobs or even the tenure (experience) of internal staff. Sort of like molding clay (the survey) into the desired end product (the answer).

Not exactly a process recommended by compensation experts.

Give Me the Data

Now, this is a bit more contentious issue.  Every now and then someone will ask/demand to see the raw survey data from which you reported a market figure. This is only asked when the client doesn’t agree with the figure reported, so they want to see the data themselves.  They want to see if they would come up with the same answer. In other words, they didn’t get the answer they wanted, and they don’t trust you.

I have never been asked for the data prior to submitting my report.

During my career, I have NEVER agreed to this, either during my extensive time working in Corporate America or more recently as a global consultant.  Thankfully I had bosses who agreed with me, but you might not be so lucky.

The tact I took was that market analysis was the responsibility of Human Resources and that we have professional staff trained to objectively analyze the data variances provided by survey reports.  As such we are unable to hand the process over to the least objective players – the client.  We would be happy to discuss our findings at length, but it is our responsibility to properly evaluate and analyze the data before reporting our findings.

Guess what?  If you do provide the raw data, I’m willing to wager that they will find an alternative view of the competitive marketplace.

When dealing with clients I have found it helpful to make the point early on, that most often reported survey data provides more of a “Pricing Guide” suggestion than an “Aha!” moment. The data doesn’t purport to tell you what you should be paying but it suggests guidelines of what others are commonly paid for like jobs.  At that point, the decision (what to do next) becomes an internal one.

It’s a fact of life that not everyone is going to agree with your point of view.  How you deal with that reality will mark you, for good or ill, as you progress through your personal and professional experience.

On the business front, from time to time you’re going to come across colleagues or even management leaders who you think truly believe that two plus two equals five.  In other words, you have a difficult time understanding (and agreeing with) what they want to do, or why they want to do it.  Sometimes their ideas just don’t make good sense.

Perhaps the competitive market data points a strategic finger in one direction and management is looking in the opposite direction.  Perhaps management is pushing a policy or practice that goes against “common” or “best” practices, and you’re offered no other reason than “we’re comfortable with this.” Or perhaps management wants to go down a pathway that you believe makes little practical sense, will create more harm than good and is likely to blow up in your face.

If this situation hasn’t happened to you yet, fear not, because it will.

Swallow Twice Before You Spit

When the craziness starts, don’t lose your head.  Literally.

Avoiding an immediate, kneejerk reaction to irrationality is always sound advice, especially when you’re emotionally wrapped up with a controversial situation. You should step back, take a breath and think about what you might want to do next.  But don’t start voicing loud disapproval of the decision or threatening to quit.  That approach would only divert everyone’s focus from the problem issue to your own behavior.  You won’t win.  No one will go down with the ship with you.

Some factors that you might wish to consider while you’re taking that deep breath:

• Do you have all the data you need to have reached your conclusion? In other words, are you confident in your professional assessment of the facts and in the steps you chose to make improvements?  Any chance you might have missed a mitigating piece of information?
• Might you be facing unintended consequences that you hadn’t anticipated?  A good approach in developing recommendations is to always anticipate potential or likely glitches, to have answers ready when the naysayers challenge you.  But again, you might have missed something.
• Do you understand their rationale? Leadership may seem arbitrary and capricious with their decisions, but they’re not stupid. They’ll have a reason for their decisions, and it would behoove you to understand where they’re coming from.
• What are your next step options, from charging over the cliff (“damn the torpedoes!”) to settling for half a loaf (something is better than nothing) to slinking away chastened and embarrassed?  If they didn’t utter a flat “No!” then perhaps there’s life yet in gaining some part of your original recommendation.
• Can you regroup and try again?  Or is the door closed to your ideas?  Here your persuasiveness and influencing skills can pay dividends, because if you didn’t throw the baby out with the bathwater (those torpedoes again) the decision-makers may be willing to listen to a set of revised recommendations, recommendations 2.0

Each of the above factors can offer you options, should you wish to continue pressing your viewpoint.  Carefully consider each before deciding your next step.  However, if the future appears bleak . . ..

If It Still Makes No Sense

The time may come when you have a career decision to make.  Can you work in an environment that you find is fundamentally at odds with your professional beliefs, where you have concluded that management is not interested in your opinions?  Or at least they are not willing to act on them?

Or you could stand down from pressing management, turn in your activist label and join the bowling team.  Become an administrator.

However, those black/white options may be too simplistic.

The human condition seems to possess and display a basic “Fight or Flight” reaction to stressful environments.  You can of course, always decide to quit an organization that isn’t compatible with your professional belief system (flight), or you could stick around and employ more subtle half-a-loaf tactics to slowly move the organization in the right direction (fight).

What’s it going to be?

Have you ever had a day at the office when everything went your way?  When management thought your ideas were inspired, your recommendations spot-on, and they smiled on you and said nice things about you? A day when everyone nodded their head at you?

No?  Neither have I.

Instead, what we all too often experience are varying degrees of skepticism from indifference to outright negativity toward those same ideas and recommendations, from passive resistance to simply, “No, we’re not going to do that.”

Headwinds

The challenge that we’re talking about is facing “headwinds,” those barriers to success (the reasons why not) that every practitioner must face – some of you more times than others.  Think of a video game that you’re playing, where to win you must advance from your starting point to a designated target spot or goal.  A spot that means, “You win.”  Everything that stands between you and your target that can negatively impact your progress is a headwind (resistance blowing back against you).  That could be peers and management (a common choice), company policies/procedures, current organization culture, management bias – and we’ll even throw in the weather (time of year).

Think about your own organization, and whether the leadership pulse or mood is fertile ground for your ideas and recommendations.  Is the word “change” embraced, or is it considered a “bad” word?  Are minds open to new thinking, or still caught up living with past practices that aren’t broken?

Chances are your organization is somewhere in the middle between getting a green light and a red.  So, the headwinds you might face would be more of a tropical storm than a hurricane.  Could be.  Fingers crossed.

Getting Around Barriers

Facing these headwinds is an inevitable part of your role as a compensation practitioner; especially if you’re in a leadership position. Assuming you don’t plan on folding up your tent and leaving the field at the first sign of pushback, what are some techniques or tactics that you might employ to better your chances to attain those target goals?

• Know your audience: What are the personal biases of the decision-makers?  Who is an easy sell and who will be the hardest to convince?  If you don’t know, you better find out.  Never lead with your chin at a management meeting.  Don’t be surprised.
• Know the business: You must be conversant in how your ideas and recommendations will impact your business operations. Understand a wider perspective than simply the Compensation viewpoint.
• State the problem: Get their attention by first stating that, “We have a problem,” then illustrate that problem as specifically and graphically as possible. Out of control costs will get everyone’s attention, and headwinds will tend to dissipate in relation to management’s understanding that “something has to be done.”
• Anticipate challenges: The more questions you can answer in advance, while still presenting your points, will soften the eventual pushback from some in your audience. This preparedness also shows that you have thought of their concerns while developing your strategy.
• Look for glitches: Don’t be too prideful of your ideas and recommendations, as you’re not Moses coming down from the Mount with the Ten Commandments. Ask your staff or supportive colleagues to point out potential glitches (math errors, unintended consequences, inappropriate language, stepping on someone’s toes, etc.) before you make your pitch.
• Accept half a loaf: Until you’re the CEO, taking a “My way or the highway” approach is not a good tactic.  Too many doors get closed that way.  Be open to compromise, to accepting less than you want while still making progress in the right direction.  Show flexibility and open thinking, which may well help your image with the decision-makers.  Keep your ideas alive to be brought up again, perhaps with a new slant that may later help get you the rest of what you want.

Headwinds will always be blowing against you, but if you’re prepared for them the burden can be eased a great deal.

Have you ever considered whether the job you’re holding down today is a good one to have help your career?  Many of us never take the time to step off the treadmill of life to ponder where we are today, against where we want to go.  Life seems to just happen and then seems to take us along for the ride.

For me, I never thought that I’d end up as a senior compensation practitioner-turned consultant.  I never prepared one of those five-year plans that self-help articles are always talking about.  In fact, I seemed to back into my career, letting things happen and going with the flow, which is something that I strongly advised my children was a bad idea.  Do what I suggest, not what I did <g>.

Sure, I made choices along the way, but those were often from the limited options staring me in the face at a point in time, not the result of any sort of a career life-plan.  While I am happy with where I journey brought me (whew!), statistics would suggest that I’m in the contented minority.  Many more would look back with regret at wasted opportunities and poor choices.

So, where are you?

Happy Compensation Practitioners

If you were sitting back in your lounger by the pool, sipping Mai Tais and staring up at the warm blue sky through your Ray-Bans while contemplating your compensation career, where would you envision this imaginary pathway ahead leading you?  Let me guess.  Probably to a senior position playing a significant role with high impact within your organization, along with a nifty reward package and a business card that sports an impressive title.  All that would be nice, wouldn’t it?

Someone once said that a desire without a plan is nothing more than a fantasy.  It’s nice to picture yourself being successful, no matter how you define it, but unless you take steps to reach your goals you’ll be left on that lounger under cloudy skies and with an empty glass. Disappointed.

So, you need to take stock of yourself, and your aspirations.

If you had to, how would you prioritize the value of these elements of your dream career?  Sorry to burst your bubble, but I’m guessing that most would put “impact within your organization” as dead last.  Money is king, I know, and the title and senior position are great for bragging rights and family gatherings.  We do like the trappings of our position.  And hitting three out of four isn’t a bad score.

But . . ..

Can You Live with That?

Can you be satisfied with that?  In many organizations, you can reach that 75% career attainment by simply being an administrator to your existing reward program(s).  You know, keeping the place afloat and not rocking the boat.  Where you don’t have to make tough decisions, and everyone likes you. Where you can pass the buck either sideward or upward.  Where you can join the bowling team.

It’s tempting, isn’t it, to have money, title and a high-level job without being challenged.  Where the workdays seem to blend one into another as the calendar stretches through yet another year.  Because administrators tend to remain in position longer than average – or try to.

As time moves on though, staying with such a safe job may jeopardize your chances of eventually gaining that high impact job you say you want.  Because maybe you’ve lost your edge over time, become too complacent, haven’t punched enough project tickets to impress a recruiter who isn’t interested in your high bowling score.

Because you’ll be asked, “What have you accomplished?”  ‘Are your experiences both deep and broad?”  Or have you been performing the same work for “x” number of years?

So, give your current job some thought.  Is what you’re doing today likely to advance your career?  Soon?  Eventually?  Maybe?

• Are you learning new competencies, technologies or skill sets?
• Are you being exposed to diverse project work that punches tickets on your resume?
• Have you been identified by succession planning as ready to move up?
• Or are you sitting there watching as time passes by, knowing that you’ll be doing tomorrow what you did yesterday and today?

Think about it. Maybe it’s time to take a step in the right direction.  Maybe it’s time for a good career decision.

Maybe it’s time for you to have a job that’s working for you.

This may sound like an odd question to ask compensation practitioners, but some organizations have actually passed the buck to outsiders when it comes to developing and communicating their reward programs.

Several times during my career I have come across organizations that publicly referred to their “Hay Grades” or their “Mercer salary ranges” when communicating to employees.  Picture the compensation practitioner throwing their hands up when challenged, and stating “Hey, it wasn’t me.  Hay/Mercer/Towers etc. made that call.  But I’ll ask them.”  It’s like driving a rental car; you get to go where you want to go, but you don’t own the vehicle.  It’s a rental.

One client compensation leader I was introduced to had their consultants on speed dial in order to get questions answered.

These were not small companies.  One example was a €3B multimedia company in Europe.  So, it happens.

Finger Pointing

Talk about being risk-averse!  These organizations were content to pass the responsibility to paid outsiders for explaining to employees how company reward programs were designed, implemented and communicated.  No internal blame here.  Those outside guys (picture the wagging finger) did it.

What typically happens is that the consultant(s) is asked to research the competitive market and make recommendations.  These recommendations would include average market pay levels, the assignment of pay grades for jobs and the determination of pay ranges (minimum to maximum values).  All fine and good so far, as these are the types of projects I (consultant) regularly work on.  The problem occurs when the client accepts the recommendations without proper review or challenge.  It is what they say it is.  The market data becomes the Hay data, the grade assignments become fixed by Mercer and the pay ranges are set by Towers.  Meanwhile, the compensation practitioners who should own this process are sitting on the sideline, munching popcorn.

It’s at this point that the practitioners compound the error by assuming the recommended pay programs are 100% proper and they readily admit where the components of the program(s) came from.  After all, someone else did the work and all the insiders did was to blindly sign off on all the pieces.

Granted, there’s a comfort here in not having to face the traditional criticism that every effective compensation practitioner – at whatever level – must deal with.  And the consultants don’t mind saying NO to anyone, except perhaps those paying their invoices.  And they don’t mind the ongoing billable hours.

Chances are though, that if you asked senior management, the top of the house wouldn’t be aware of this buck-passing.  Instead, they would be expecting that their professional staff has taken accountability and responsibility (ownership) for developing the company’s reward programs.

Responsibility

I don’t suppose that I need to remind readers that, at some point compensation practitioners need to take eventual responsibility for their reward programs, raise their hand and admit, “Yes, I did that.  It was my call.”

Consultants, when used properly, can be a great source of information and recommendations.  But their role should stop at the decision line.

I always tell my clients that ultimately all decisions are theirs, whether it be individual pay levels, or grade assignments or even what the salary ranges should look like.  I can show them the landscape, suggest options and show them the likely outcome of their decisions, but that’s it.  The decisions should remain with the employee practitioner.  It’s their responsibility.

Consultants will have a difficult time factoring in subjective considerations like culture, management biases, past practices, and even politics into their recommendations.  To my mind, a compensation program should make sense for the organization I’m advising.  Not for my last client, or even my next.  This leaves open the opportunity, even desirability of doing things a little differently than the market, or as the consultants have suggested.

So, stand up and make your mark within your organization. Take some ownership and responsibility. While it’s perfectly reasonable to use consultants to provide you objective data and advice on how to use that data, it remains your JOB to decide what the next steps are.

Admitting to having Hay grades or Mercer pay ranges simply tells the world that you didn’t do your job.

Someone will eventually ask, “What are we paying you for?”

When describing their annual incentive plan (STI) most organizations will highlight to eligible employees the upside reward opportunities provided by the plan.  That is, the better your personal performance the greater the reward. Also, the better the company performs the greater the reward. But there’s usually less talk about what happens when times are tough, as incentive communication tends to focus on the positive.

Fast forward to end-of-year to see how that variable reward process works in application.  If the company has a so-so year your individual incentive payment would take a hit, right?  Even if you personally had a great year, your annual reward would likely suffer because the company didn’t do as well as expected.

Now look at what happens in the same scenarios with your senior leadership team.  Were their reward payments, as a percentage of base salary, reduced like what happened with lower-level managers and individual contributors?  Did they take the same hit that you did?

The Dark Side

In my experience, the too-frequent answer to the above question is NO, the top of the house did not share as much of the pay-at-risk repercussions as you did. For some reason, the rules of pay-at-risk are not as rigorously applied at the top as they are for the rest of the eligible population.  Now, why is that?

Leadership will tell you that they need to pay at competitive levels to attract and maintain high caliber talent.  And that competitive level includes incentive payments, regardless of company performance. They don’t want to lose anyone.  Chances are though, that there is a lot of high talent personnel at lower ranks as well – but no one has protected them.

What is left unsaid with this rationale is that there is often a double standard when it comes to calculating annual incentive payments. Management tends to take care of themselves, though they will never admit it as such.  Payment decisions that are meant to be based on measurable levels of performance suddenly become subjective and open to interpretation, though only for a select few leaders.  I’ve seen financial reports explained in ways guaranteed to protect senior management incentive payments.

I have also seen a company forgo executive merit increases (with great fanfare), only to grant additional rewards in the form of higher annual incentive payments – which more than replaced the lost merit monies.

Another client rated over 90% of its executives as performing either Above Average or Excellent, all while the company itself was floundering and preparing to sell off pieces.

Note to self: Check to see whether it is part of the company’s culture that at least a portion of an executive’s annual incentive payment is guaranteed.  Not for you and me, but for the select few.

Unintended Consequences

While the top of the house may be taking care of themselves it is highly unlikely that such duplicity will go unnoticed by the rest of the incentive-eligible population.  However, if the favored treatment also increases their own reward opportunities, then little will be said.  But more than likely “protected” incentive rewards will be limited to the higher levels of eligibility (VPs+), leaving the majority of us alone in facing the “risk” of pay-at-risk.

It’s always a head-shaking surprise to me how senior leaders will believe that their incentive payment manipulations will remain a secret.  Such an eventual exposure would be very damaging to morale, as trust is more easily lost than gained.

What Can You Do?

Going up against senior leadership to expose their double standard would be harder for you than Atlas pushing that boulder up a hill – and not a career-enhancing move for you either. Be careful when attacking sacred cows.  Entrenched biases and a long history of such generous practices will likely shade your senior leadership from even seeing the problem – never mind addressing it.  Their defense will always be, among other excuses, that of the need to provide competitive pay at senior levels, regardless of performance.  They will be blind to the double standard so obvious to everyone else.

Wouldn’t it be nice if your own incentive reward calculations didn’t have to depend on those pesky performance issues?

Sadly, there’s not much you can do other than to (politely) mention this incongruity to the CEO or other senior leadership, and highlight the likely negative impact on employee morale. Then step back and see what, if anything will happen.

On the other hand, if you want to be an activist on this issue and poke the hornet’s nest, just make sure that your resume is up to date.

When you think of the payroll expense that represents your staff of employees, do you consider that amount of money primarily as; a) a required cost to the business, or b) as an investment in business success?  I’ve heard both terms used, usually along the lines of a glass being either half full or half empty.  It’s all about how you look at the same figure.  Do you value the employee contribution, or consider it a necessary evil that should be minimized?

This isn’t a trick question.  It is a legitimate response to say that you value your employees, while at the same time you want to minimize their cost to the company.  It’s all about being effective and efficient with your payroll dollars.  You need a balanced program that provides, 1) the right reward, 2) for the right employees, and 3) for the right reasons.  Have a care though, because if you miss one, you’ll be wasting money and digging yourself into a big hole.

In this posting, we’re going to take a closer look at the third consideration.  (See Part I and Part II of this series for discussion of the first two considerations.)

All the Right Reasons

If I asked you why your organization has a process of regularly scheduled performance reviews and changes to employee pay, what would you say? (click as many as apply)

• Everyone else is doing it
• We’ve always done it this way
• We should acknowledge that the cost of living has increased
• To maintain competitive pay levels (part of our mission statement)
• So that employees won’t get mad and quit
• It seems fair – after all, it’s been a whole year since the last increase
• We budgeted the money already
• To motivate employees to perform next year
• To reward and recognize the efforts of individual employees over the past year

Perhaps none of these apply to you and that each year you “wing it.”  Perhaps you change your tactics and rationale every year, usually to justify decisions that have already been made at the top of the house.  If this is your life, good luck to you.

For the rest of you, if the business was yours, and the money you’re sharing with employees is coming out of your own pocket, which of the above reasons would sound the most attractive to you?  Would it be of the most assistance for your company? Or are dumb ideas that should be ignored?

Let me ask the question another way; why do you want to reward your employees for their individual efforts? It wasn’t that many years ago that annual performance reviews and pay increases were not a common practice.

Whatever your rationale, make sure that you have one and can explain it.

What is Your Right Reason?

In the course of my career, I have seen many rationales for giving employees an increase in base pay.  Many tactics I advocated, while some I disagreed with.  But the point was, and always should be, was it the right reason for this organization at that point in time?  Did it make sense? Not for me or my other clients, but was it the correct approach for this organization with its particular set of circumstances?

This answer-seeking needn’t become a full-blown compensation or reward strategy but does need to be a consistent and transparent approach to providing rewards that you can get behind.  That employees can understand, because you are talking to them, right?

Whether you are a strict pay-for-performance company that discriminates reward sharing between employees based on individual job performance, or an organization who feels that everyone should get something every twelve months, regardless of personal performance – or perhaps your practices fall somewhere in-between.  Whatever your circumstances, have a reason for what you’re doing that you can share with your employees.  If you don’t, they will fill in the information gap themselves, usually with data points that do not serve you well.

When you think of the payroll expense that represents your staff of employees, do you consider that amount of money primarily as; a) a cost to the business, or b) as an investment in business success?  I’ve heard both terms used, usually along the lines of a glass being either half full or half empty.  It’s all about how you look at the same figure.  Do you value the employee contribution, or consider it a necessary evil that should be minimized?

This isn’t a trick question.  It is a legitimate response to say that you value your employees, while at the same time you want to minimize their cost to the company.  It’s all about being effective and efficient with your payroll dollars.  You need a balanced program that provides, 1) the right reward, 2) for the right employees, and 3) for the right reasons.  Have a care though, because if you miss one, you’ll be wasting money and digging yourself into a big hole.

In this posting, we’re going to take a closer look at the second consideration.

The Right Employees

The foundation question that’s usually asked of Human Resources is whether you (your organization) have a pay-for-performance system (P4P) or culture.  That you reward your employees based on their job performance.  In my experience the answer will almost always be an adamant “YES,” but have you ever looked behind the curtain?  If you’re granting annual merit/pay increases to upward of 95%+ of your population, then you’re kidding yourself. Instead, what you have is a modified giveaway program that says, in effect, “You’re still here at year end, so you deserve something.”

Do you think that’s an effective, motivational message for your employees?  How about for your high performers?

If everyone is getting some degree of pay reward, would you have enough money to properly reward that small cadre of high achievers?  Because giving your performance stars only 1% or 2% more than Joe Average isn’t going to be enough to retain them.  But when pressed with budget constraints (you can’t have more money) most managers would be reluctant to trim back or cut off Joe’s pay rise, so those extra discretionary dollars would be taken from – you guessed it – those employees whom you can least afford to lose.

Joe is the employee that you can afford to lose, yet too often he’s not given a reason to leave.

It’s Been Twelve Months

Putting aside corporate messaging (mission statements, compensation strategies and “we pay for performance” posters on the breakroom walls), what do your managers really think when it comes time for the next round of annual performance/pay reviews? Are they prepared to discriminate between employees based on demonstrated performance?  Or do they hesitate?

• Managers like to be liked
• You don’t build a team by penalizing someone
• The cost of living has increased; people deserve more money
• If someone gets mad and quits the workload will be harder on me
• Performance assessments are subjective; I could be criticized for my decisions
• My own performance rating can be based on retaining my team
• Best of all, some managers don’t like being the judge and jury over an employee’s career and will pass the buck if possible

Each of these reasons can be compelling under certain circumstances, yet if your managers – as a group – subscribe to one or more of these attitudes, then your P4P program will become little more than a throwaway phrase that is divorced from reality.

The right employees to receive a reward are those who do the most to help the organization succeed.  The question becomes, can you make that distinction amongst your employees and act on it?  If you can’t/won’t then you do not have a P4P system.

What you have is an entitlement process that delivers payroll dollars using an administrative method that is divorced from individual effort and organization results.

You don’t pay for performance.

When you think of the payroll expense that represents your population of employees, do you first consider that amount of money primarily; a) a necessary cost to the business, or b) as an investment in business success?  I’ve heard both phrases used, usually along the lines of a glass being either half full or half empty.  It’s all about how you look at the same figures.  How much do you value the employee contribution being paid for, or is the expense a necessary evil that should be cut wherever possible?

This isn’t a trick question.  It’s a legitimate response to say that you value your employees, while at the same time you want to minimize the associated cost to the company.  It’s all about being effective and efficient.  You need a balanced program that provides, 1) the right reward, for 2) the right employees, and for 3) the right reasons.  Have a care though, because if you miss one, you’re wasting money.

In this article, we’re going to take a closer look at the first consideration.

The Right Reward

What do you count as a reward for employees?  Cash of course, and hopefully at competitive levels.  Incentives too.  But how about a subsidized cafeteria?  Or tuition reimbursement, an on-site clinic, a credit union, or perhaps product/service discounts?  Ask yourself, what other programs, policies or initiatives are either provided or available to employees in your organization that help make the working environment a more pleasant place to be for so many hours a week?

The list of possibilities is almost endless.

How many of these somethings being offered within your organization bring a smile to your employees?    Find out what those goodies are because those become a reward for working there.

Initiatives don’t have to be large programs, or expensive offerings; just “something” that is meaningful to the employees.  Cash may be king, but it will never be enough.

Look Beyond Cash

Every organization is different, with myriad characteristics, infrastructures, management bias, ingrained cultures and degrees of financial strength, so it’s hard to point at any one reward item and say, “do this.”  But if you presume that cash is not always going to be available, or enough, try something else as well.

• Benefits: Not just the core programs (medical, dental, life, disability, etc.) that almost every organization provides these days, but perhaps there are other initiatives, whether funded by the company, the employee or a split, whose offering would be appreciated.  My wife still remembers the job where I was able to buy her roses at work or take care of our dry cleaning needs from my office.
• Work-Life: Do you expect your employees to maintain a “live to work” or a “work to live” mindset about their job? It matters.  Look at your PTO policies, remote access for employees, job sharing, or simply the ability to periodically work from home.  Do you believe in the priority of health, family, job? Are you in the habit of asking employees to change or forgo their vacation plans?
• Performance & Recognition: Everyone wants to be recognized for their efforts, be it in the form of money received, public appreciation in front of co-workers or simply a handshake with a sincere “thanks.”  Avoid giving recognition and some employee attitudes might shift to “why bother?”  Paying someone well but then otherwise ignoring them presents a problem by itself.
• Development & Career Progression: No one wants their career to be years of treading water in the same position, but instead they want to be challenged and allowed the chance to work toward something greater. Give them an opportunity to advance themselves before they decide to go elsewhere for a better job. Let employees grow with you, versus with someone else.  This is especially true for your high performers, who will always have options.

The value of rewards is in the eye of the beholder – the employee.  If I have an opportunity through employment with you to gain something that I value, then that “something” is a reward.  Granted, my hot button may not work for you.  You may have your own somethings, and they could coincide or differ with my own.  Such is the strength behind the Value Proposition – which has morphed into a cafeteria-style menu of reward and opportunities.

Don’t be like the manager who feels that a well-paid employee can be ignored or taken for granted.  Unless you enjoy having to fake smiles at employee going-away parties.

They are out there somewhere, that’s for sure. Incredible as it may seem, but some business leaders still hold to their heart employee treatment practices that have been debunked for decades. The enlightened practitioners of today occasionally find themselves shocked to discover that some dangerous throwback beliefs still exist in some American companies.  Dinosaur thinking may be nesting in your organization as well.

Ask yourself, are your practices regarding how you treat your employees on the leading edge, common practice or perhaps are they holdover attitudes and perceptions from bygone days?

Just the other day I sat in a meeting where a highly placed manager was complaining about the pending introduction of a new compensation plan.  His complaint?  Human Resources would tell employees for the first time what their pay grades were, and worse, what their new salary range would be.

A Blast from the Past

What this manager was espousing was a return to the “Theory X” style of management, where employees by their nature couldn’t be trusted, where they needed to be taken care of, where they wouldn’t be able to understand such complexities as grades, ranges, and competitive practice.  Where they might start to ask questions about individual situations that managers didn’t want to have to deal with.

If employees knew their pay level vs. the new pay program, so the argument went, they might start asking “why and what about…?” questions. They might not like where their pay level stood in comparison to the minimum, midpoint, and maximum of their new pay range (why is my pay still at the minimum level after five years of good performance?”).

“Why am I paid below the minimum value of my pay range?”

Now I could have understood if the concern raised was that “We’re not ready for this communication. We need more training for managers as well as employees.”  Or some other excuse to delay the introduction/communication.  But no, the attitude from this fellow was instead that we should never take this step.  We should never tell employees their grade or salary range.

The crowning touch for me was when this long-serving employee, one with a good performance reputation as well, argued that managers knew best how to take care of their employees.  That the communication step we wanted to take would be a disservice to employees and would “rile them up” unnecessarily.  That even if asked by an employee, a manager should refuse to divulge the information – given its “confidentiality.”

I think that my mouth dropped open as I listened to this fellow.  I had thought that such thinking had died out decades ago.  That no one still held such a patronizing, condescending attitude toward their employees anymore.

Common Practice or Not?

In the days following this meeting, I conducted a non-scientific survey of my own, asking colleagues and acquaintances in a diverse network of organizations (industry segment, geography, size, for-profit and non-profit) what they thought of this manager’s viewpoint.

Unanimously, everyone I spoke with took exception to this manager’s thinking, and several asserted that such an employee would never be made a manager within their organization.  While practices differed as to how each organization communicated to their employees, each person I spoke with thought that the employee had the right to know their grade and salary range.  They had a right to know how they were being treated.

Which brings us back to asking the “why” question of those managers so adamant about not willing to communicate with their employees.  How bad can the truth be?  What are they afraid of?  And yes, that’s exactly what I think was the root cause here, a lack of managerial courage.  A fear of having to explain.  When managers have been long accustomed to doing whatever they want to do with their employees, to suddenly be required to answer “why” questions from those same employees can be a daunting prospect.  Something to be avoided at all costs.

This scenario was a real wake-up call for me. In fact, I almost embarrassed myself by snorting with laughter at this manager’s antiquated and anti-employee attitude.  It was hard to believe what I was hearing.

However, I had realized from long experience that the larger a company was, such was not an indicator of higher levels of HR sophistication. In many cases, longstanding practices in dealing with employees haven’t changed in a very long time. In these pockets of historical antiquity too many leaders are too comfortable with what (they think) worked decades ago.

When present in the workplace, such beliefs about how to treat employees are usually the bedrock of a culture frozen in time.  If you’re the one facing similar scenarios where you work, have a care to proceed cautiously, as marching to the beat of a different drummer could send you to the Exit.

Dinosaurs have teeth.