Not every employee is capable of selling products or services to potential customers. The selling process requires an employee to possess a particular set of interactive and persuasion skills, as well as a compatible personality profile (garrulous, self-confident, unafraid of rejection, etc.). While some employees enjoy the challenge, most want no part of it and only a minority are neutral about the idea. For those tasked with a selling job, it’s typically a reflection of individual personality that would generate success or struggle.

For compensation practitioners, having the right person involved in the selling process can be more important than the compensation program itself, because dangling potential rewards in the face of the wrong person can be a waste of money and represents lost business opportunity. Read the rest of this entry »

Do you remember this line from the movie “A Few Good Men?” Jack Nicholsonwas telling Tom Cruisethat average folk couldn’t deal with the harsher facts of life. As a result, higher ups would tell them what they wanted to hear. They would offer excuses, verbal hedges that sidestepped reality and offered the illusion of comfort.

Today we remain stuck in the mire of a severe economic malaise, a situation that is causing enormous employment anxiety, deep concern for the future and perhaps more than a few sleepless nights. As organizations ponder the question of whether employees can handle the true state of affairs (health and future prospects) they can choose to deal from either the top or the bottom of the deck with their internal communications.

The troubling issues raised could be pending layoffs, reduced or frozen pay increases, hiring freezes, reorganizations or other such “bad news.”

Management messaging can either be straightforward regarding current events – addressing the cause of problem and how economic circumstances would likely affect employees – or they could toss out a series of artful communication hedges (i.e. excuses). In other words, employees could be fed “corporate-speak.” Read the rest of this entry »

A lot of talented folks are unemployed or “in transition” these days, working full time in their efforts to land a new job.

When that goal is finally reached, when someone says, “we love you, please come to work for us,” the tendency will be to respond with “thank you, YES.”  However, that immediate, knee-jerk reaction could be a mistake, as at that point you’re a desired candidate with options, while tomorrow you’ll be one of the staff – with little leverage at all.

When the moment of decision occurs, most Human Resource professionals would advise you to give the person who extended the offer a warm thank you, but then to take a little time for reflection on the particulars – the details.  The higher up the food chain you are, the more moving parts will comprise your employment offer.   No one is going to force you to decide right away, so don’t.

Presuming that the career implications are positive, that you don’t have to move to Northern Alaska, and that you want to accept the offer, let me suggest a few tactical strategies to help you make the most of what was offered.  Because with a bit of luck you can do better. Read the rest of this entry »

When I was growing up there was a popular advert for chips that featured a young girl who was asked by her older sister whether she preferred Daddy or chips. It’s probably indicative of the power of advertising that I now think of that advert whenever such comparisons are made. The comparison in question here, however, is one of slightly more importance. You see, a new study from Cornell University is asking whether people would prefer a highly paid job that demanded very long hours, or better work/life balance but with less pay.

This topic is not a new one. Indeed Nobel Laureate Daniel Kahneman suggested only last year that all we really need is $75,000 a year, over which any extra money adds nothing to our perception of happiness.

When The New York Times spoke with Kahneman about the study, he said “it’s not so much that money buys you happiness, but that lack of money buys you misery.”

So the Cornell paper goes against a pretty powerful opponent, with others such as Dan Pink also proposing that money comes quite a way down the list of things that motivate us. PricewaterhouseCooper added to the mix last year by suggesting that people would forgo their bonuses in return for more flexible working. Read the rest of this entry »

The one constant theme that Human Resource professionals emphasize when it come to international assignments (expatriate employees) is that the experience costs a great deal of money. Most of you reading this will simply nod your head at such a cautionary warning, yet not fully understand the why of it. Perhaps the topic doesn’t concern you, for now, but as managers who may become involved in such adventures down the road, you need to know the cause if you ever hope to manage this expensive proposition.

While companies continue to try new strategies for employing talent overseas (shorter assignments, use of third country nationals, extended business trips, shared responsibilities, etc.) two central premises remain; 1) companies will continue sending employees on overseas assignments, and 2) the cost of those assignments continues to be a big pill to swallow.

Fueling Persistent Cost

If you accept the premise that an employee sent overseas should be kept “whole” (expense-wise) with their home country situation (maintaining their income and expense exposure as if they had never left the U.S.), then certain incurred liabilities naturally fall to the company. Read the rest of this entry »

I’ve never been particularly good at mathematics, and yet have made for myself a successful career in Compensation.  Now, why is that? One would think that all us comp folks are strictly numbers people, focused on statistics, surveys and regression formulae. On the other hand, math experts often fail to rise to the top of my profession. Counterintuitive? Another quandary to ponder over.

Why is it that some compensation people manage to succeed (climb the specialist ladder into management ranks) while others don’t? There may be several reasons for this, but I think a person’s persona has a lot to do with it.

Changing View of Compensation

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“Why doesn’t my Company consider inflation when determining my pay increase?”

Have you heard this question before? What this employee is actually asking is: “Shouldn’t my annual pay increase percentage at least match increases in the cost of living? And, as management is always talking about the company’s pay-for-performance philosophy, shouldn’t my increase be higher than that, given that I’m a good worker?”

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Have you ever been in a situation where an employee complains to you that their pay increase is no better than the inflation rate? Or worse, that it’s lower? As a further aggravation, they might ask you how the company can say there’s a pay for performance policy when all they do is grant increases that no more than match the inflation rate? Isn’t that like treading water, just staying in place without moving forward? Is that fair? Where is the reward for good performance? Shouldn’t everybody receive at least the inflation rate?

The truth of the matter is that it’s common practice for companies to only give a side look at inflation (cost of living) when determining their annual pay increase budget. They do make note of it as a reference point and to compare against a final decision, but what they’re actually focused on are two prime considerations: 1) competitive market survey data that tells them what everyone else is paying for like jobs in their area; and 2) the expense (annual grant and fixed costs) to maintain competitiveness.

Read the rest of this entry »

It used to be a common view that the Human Resources department in large companies was more sophisticated, more professional and more forward-thinking than what you would expect to find from HR in smaller companies.

We all presumed that the “big guys” knew what they were doing.

But current thinking among some practitioners now challenge that presumption.

The pendulum of thought has begun to swing the other way. Indeed, sophisticated has become cumbersome, professional has become bureaucratic and forward-thinking has created a chasm of credibility between philosophical concepts and the practical realities that managers deal with every day.

Remember the K-I-S-S principle (keep it simple, stupid)? Many large organizations seem to have forgotten that common sense caution as they saddled their reward programs with ever more forms, procedures and bureaucracy.

Read the rest of this entry »

How do you judge the effectiveness of your compensation practices? I’ve always held to the belief that, as far as pay programs go, pretty is as pretty does. We can admire an incentive plan for its elegance of design and its adherence to the hottest new theories of motivation, but at the end of the day if it doesn’t channel reward dollars in a way that makes the organization (and the people who work in it) more successful, then it hasn’t lived up to its promise.

How do you know if your compensation programs are strategic? How do you go about designing programs that really drive organizational success? Here are a few suggestions to get you moving in the right direction.

Strategic rewards are…

Differentiated. Competitive strategy is about being different, according to Harvard Business School Professor Michael Porter, commonly acknowledged to be the father of the modern field of business strategy. It is about making trade-offs and choices. One of the most important functions of strategy, according to Porter, is to guide employees in making the choices that arise in their individual roles and day to day decisions. Look closely at your pay programs and practices. Do they take full advantage of every opportunity and all available reward dollars to show employees the most important places and ways for them to invest their time?

Read the rest of this entry »

How many of you reading this article have a piece of paper that you can lay your hands on, one with the title, “Compensation Strategy”? Or, do you know if such a document exists in your organization?

The common response at this point is usually a blank look. But why is that? If paying employees is the single largest expense item for most organizations, why don’t they have a plan to manage it?

Because that’s what a strategy is – a plan of action, a guideline or directional map that lays down a series of principles to be acted upon. A plan helps you avoid the “let’s try this and see what happens” tactic.

Look around you; if Marketing has a plan, as well as Manufacturing and Finance, and of course you have the Corporate plan – then why not a plan that encompasses how to spend a lion’s share of the organization’s money?

Of course, when prodded a bit, most do seem to come up with an answer to my question – though they often sound reactionary, if not defensive.

Read the rest of this entry »

It’s fairly common these days to find articles written by those who advocate increasing the eligibility of employee incentives. Their recommendation is to push inclusion further and further down the organization’s hierarchy. What a grand concept! Everybody wins, right? The argument is that all employees affect a company’s success, that each and every will chase the almighty dollar of variable pay, and that the opportunity for ever larger rewards will motivate them to do great things. All of which would, in turn, deliver improved financial results for the company’s bottom line.

Maybe.

And maybe it’s not such a good idea after all, when you think on it. Perhaps it’s a bit of a crap shoot as to whether the corresponding higher compensation costs (which would be a certainty) will result in improved financial gains (possible, but certainly not a slam-dunk). Let’s take a look at the challenges to be faced when you consider a broader eligibility for your annual incentive program.

Read the rest of this entry »

Recognize This: Poorly structured recognition programs can be more damaging than no program at all.

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Many organizations have a policy prohibiting their employees from discussing salaries with each other. We can safely assume that employees disregard plenty company policies on a regular basis. Sneaking in a few minutes late. Checking Facebook every once in a while – or maybe all the time. You might think salary discussions are another example of employees ignoring their bosses, but that might not be the case. A recent survey from CareerBuilder suggests that men and women have starkly different views of gender inequality in the workplace – especially when it comes to income.

Here’s what the survey found:

From the women’s perspective:
-38 percent feel they earn less than their male counterparts
-39 percent believe men have more opportunities to advance their career
-36 percent believe men receive more recognition for accomplishments
-35 percent believe their decision not to rub elbows with upper management (while the men are doing it) is the reason for the pay and advancement disparity
-22 percent cited favoritism toward men as the reason for the income and advancement differences

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Recognize This: Cash rewards go unnoticed, leaving no impression on employees of your appreciation for their efforts.

To my American friends and colleagues: Did you notice the extra money in your paycheck? According to an article in last week’s Boston Globe newspaper, most didn’t.

“‘What?’ said the professor waiting for a train at South Station. ‘I get extra money?’ asked the mom with her son. ‘I didn’t realize that,’ said the guy getting his shoes shined. Three weeks after a payroll tax cut took effect, few people are noticing the extra money — $40 a week for some, $10 to $30 a week for most — that Congress put in their paychecks.”

As I’ve written many times before, cash rewards do nothing to reinforce the messages you’re trying to send. Employees often don’t even notice it in their paychecks. As one client told us after surveying their 300,000+ employees, of those that even realized they’d received a cash reward, 29% used it to pay bills and 18% didn’t remember how it was spent. Is that what you were hoping to achieve?

Or, as one Globoforce colleague of mine recently related:

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Recognize This: How you reward employees is a key indicator of underlying company culture.

We’re often asked why we don’t encourage the use of cash as a reward in strategic employee recognition program. The simple answer is: cash = compensation. Rewards must use a different “currency” than cash or employees will lump your “rewards” into their paycheck, guaranteeing it will become an expectation.

A better question to understand is: What kind of company culture do you want? A culture of appreciation or of compensation?

Your culture is built on the interactions and conversations that happen every moment of every day between your employees. Building that culture begins by encouraging recognition between and by all employees, yes, but it also builds on the rewards employees can enjoy that links the behaviors and actions they were recognized for to the memorable rewards they choose.

When that reward is cash, you can’t – as our client Symantec explained – have a conversation with colleagues, “Oh, I got $500 dollars.”

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