Friday, September 25, 2009

Merit or COLA?

I just put down an interesting survey published by the Economic Research Institute on how cost of living adjustments sometimes replace pay for performance.

The most interesting finding in this survey is that taking the easy road may be more expensive in the long run.

The good: COLAs are easier to administer and roll out that pay for performance plans for obvious reasons. For one thing, they are highly standardized and easy to understand. You don't need a team of compensation specialists to give everyone a 2.3% COLA. Even managers understand it. And you don't have to deal with whiny or litigious employees who think they should be getting a higher than average raise because everyone is treated equally.

The bad: COLA tends to be a self-fulfilling prophesy. Once you have a COLA culture people expect it every year, regardless of their own performance or company performance, and over time modest increases can really hit you in the bank. And sadly, it's easier to close a plant than control salaries.

The funny: Here's my favorite takeaway line because it shows that even a fairly dry topic can amuse: 'There's a reason why comp specialists always go to lunch in threes.'

Thursday, September 17, 2009

Tiny Budgets

The Compensation Cafe has recently published some great posts on how compensation professionals can make the best of tiny merit budgets.

It's all good stuff and I have nothing to add except this poem:

Dear Employees,
This year’s budget is pretty lame
But we still all have to play the game.
Be sure to complete your performance review
Although there may be nothing in it for you.
Calculating your bonus don’t need a math whiz
Just close your eyes… and there it is!!!
Merit increases will be tiny
But before you get all whiny
Your manager has been trained to offer succor:
‘I know you worked hard, but we ain’t got the lucre.’
Oh, and stock? Not so much.
That’s just for top performers, which you’re not as such.

You were pretty close but no cigar
So work harder next year to be a star.
We still want to show appreciation so everyone wins
Therefore we are also handing out these lovely
tie pins.
Now that’s what we call talent management.
Sincerely, your HR department.

Tuesday, September 15, 2009

Common Cents

My first real job was with Andersen Consulting (Accenture today, not the Enron one). Now, you may disagree with me, but although I've worked with and for a number of great companies since then, to this day I look back at Andersen as a model of Talent Management.

Recruiting:
AC's recruiting process was really good. Their recruiters had refined the job descriptions and identified the core traits of people they were trying to hire. Fancy that! Applicants were given an opportunity to AC employees from staff consultant up to partner, giving both sides an ample opportunity to sum each other up. Not surprisingly, AC had a high success rate among new hires.

Compensation:
AC didn't pay much and explained it like this: "We pay a bit less but we'll train you and give you so much practical business experience that you can walk out of here and earn three times as much after two years. Or stay the course and in time, if you've got the right stuff, work your way up to partner." Sounds fair to me.

Training:
There was a full-sized campus near Chicago to handle AC's classroom training needs, where I spent a week going through various excercises, like managing a virtual project team. My virtual team members came to me with various problems, complaints and requests and it was my job to keep them productive.

Apparently I got the highest score ever on this part of the exam. Wanna know how?

Here's the secret to winning the virtual HR game: Apply a healthy dose of common sense to daily situations and be quick to show appreciation for the people who help make the business successful.

And here's another secret: It works in real life, too.

Career & Succession Planning:
Andersen offered a standard career plan that allowed people to move up the ranks to partner in a predictable amount of time, assuming they performed to clearly defined standards. Naturally, such an ambitious career path for so many people also required a high rate of attrition. Succession plans were clearly defined in each project and in fact, ex-Andersen consultants are seeded all over the business world today, so pretty smart, really, to encourage attrition.

OK, you get the idea. Obviously this model couldn't work for everyone. Most companies can't get such a high rate of return on new employees, which means mass hiring isn't feasible, which means en masse attrition isn't desirable, which means professional growth opportunities tend to be a bit thin on the ground, which means you can't offer professional growth in lieu of a high salary.

Darn.

But I think we can still learn something from these talent management strategies.

Speaking from personal experience, I worked crazy 80 hour weeks for not much money, helped make large strategic clients successful and waited to leave until I could be replaced, even turning down one tempting offer to do so.

That's called loyalty. If you can inspire it, it's cheaper than a six-figure salary and you don't have to pay taxes on it.

So consider this: What do you offer your employees? If it's just money, and not much of that these days, how many of them do you suppose would show the same loyalty if a better offer came along?

Be honest, now.

Friday, September 11, 2009

Talent MANAGEment

A cynical person might describe Pay for Performance like this: Management pretends to have a bevy of rewards that are earmarked for top performers and employees pretend that their daily activities are aligned with corporate goals and that their performance was instrumental in helping the company meet them.

But I'm not cynical. Let's face it, it's human to want to put your best foot forward and 'Pay for Performance' has a much better ring than 'Punish Medicrity' or 'We Have No Money This Year But Thanks For All Your Hard Work.'

When I started blogging on human resources topics about a year ago the market was depressingly oriented toward automated talent management solutions, as if to supplement poor management rather than improve it. Kind of like treating the symptoms rather than looking for a cure.

What not many people seemed to realize is this: The key player in making performance management process successful is the manager, not the process.

A good manager is more than someone with decent social skills who does an acceptable job of consolidating team metrics. Heck, anyone can do that. A good manager:

...is someone who makes employees feel important and valued.
...motivates people to either take on more responsibility or else be satisfied with the responsibility they have, as needed.
...makes employees believe they are rewarded in accordance to their contributions, which is especially important when times are tough and there are no promotions or raises to be had.

In other words, a good manager is equally versed in the art of mentoring employees and stringing them along.

And with respect to the current economic situation, if you only have a tiny merit budget, you need even better managers. Kind of like you have to spend more on flattering clothes if you're overweight - if you're skinny you can look great in any old thing but if you like to hit the cake you need better clothes.

From a corporate point of view the quality of managers is the single most important thing you can get right.

Think about it: This is the person you are counting on to coax the best possible work out of average performers, motivate or identify and eliminate underachievers, and retain the loyalty and channel the creative energy of top performers.

And it goes without saying that managers also need and deserve good managers.

The good news is that today I see ample evidence that the attention of HR professionals is starting to shift to the manager. Every HR blog I visit seems to have something to say about the importance of good management. Which is great but it's only the first step.

The next step is answering this question:

How can companies do a better job assessing and developing the skills of their managers?

Wednesday, September 9, 2009

Celebrity Compensation

This isn't the first time I've blogged about celebrities and human capital management. In my post about Non-Monetary Benefits, for example, I discussed the motivational benefits of hiring celebrities as managers instead of just normal people. And in my Diddy post I showed how performance management is alive and well in reality TV.

As a compensation specialist it was therefore inevitable that I would eventually fix my sights on celebrity compensation.

So let's talk about American Idol. I don't watch American Idol but I have caught snippets while channel hopping or being held captive at someone's house while they were watching it and on those occassions felt myself drawn to Randy Jackson's laid back competence and Paula Abdul's warmth.

Recently Paula announced that she would be leaving the show due to dissatisfaction with her compensation. Although the offer was rumored to be around $10 million, which you and I would probably find fairly generous, the sticking point seemed to be how it measured up to her colleagues' compensation.

Is this a case of gender discrimination or could it be fairly argued that Paula wasn't performing as well as her AI colleagues and therefore received a lower offer?

In any event, the AI producers decided to let her walk without upping the offer and I find myself pondering whether they made a good decision.

On the one hand, I am a firm believer that talent management is about treating good people fairly and well, so I personally side with Paula in her demands for more equitable compensation. I think paying her more would have been an overall win for the show since she clearly has a loyal fan base and has played a significant role in making the show a huge success.

On the other hand, after much soul searching I can't honestly say the producers made a mistake from a purely business point of view because no one is irreplacable once a critical mass of success is reached.

Not even someone who helped make a business venture successful and continues to do so.

What do you think?

Monday, September 7, 2009

A Convenient Truth... for some people, anyway

This weekend we were invited out to the countryside for a friend's birthday party. The weather was perfect, with a stunning blue and white Bavarian sky over lush green rolling hills as far as you could see, dotted by the odd red roof or light brown cow. All day long we sipped wine, grilled everything you can grill, ate frozen Snickers and downed all manner of ecclectic side dishes.

In between the more serious business of eating we talked about everything under the sun. We were a youngish (think new 30), urban, professional group from all walks of business and it was a great chance to compare notes on the workplace with other working moms.

One discussion stood out for me because it dichotomized two sides of a debate that I have been personally interested in since having children:

Part time employees and the role they play in modern business.

On one side of the debate was Tanja, an experienced orthopedic surgeon who has taken twice as long with her residency because she has two kids and only works part time. She feels it is unfair that her residency has been extended so long when, except for the actual hours present in the clinic where she works, she performs at the same level as her colleagues. At the end of the day, she sees the same number of patients, performs the same number of surgeries, fills out the same volume of paperwork.

'Part-time workers are the deal of the century,' she informs us. 'They cost about half what the full-time people do and they work more efficiently. When I was full-time I would take a long lunch break, chat for an hour, procrastinate before doing my paperwork, because I had plenty of time. Now I get in, check out my case load and usually grab a sandwich between cases because I know I have to leave at 3. But supervisors need to be more flexible to reap the benefits.'

Brigitta, a tall, blue eyed Austrian who seems quite friendly until someone whispers that she manages the entire pension fund of one of the world's largest companies, and then you think she can't actually be that nice, nods but disagrees.

'I think some jobs lend themselves to greater flexibility than others. Your job is a perfect example. If you're operating on someone's knee it doesn't matter if you do it in the AM or the PM, and Monday may work as well as Tuesday. But if you're working on something like ongoing negotiations, where you need to be in constant contact with the other parties and easily reachable, it's not feasible to make the other person wait or brief someone else to step in on your off days.'

Then she laughs and since this is before I know what she does for a living I see it as a friendly laugh, and maybe it is, because who says that women who are reponsible for billions of dollars in a male dominated culture can't also be genuinely nice? 'I personally hate it when I can't reach someone.'

What the heck, I laugh, too, because I'm tipsy and, I mean, who does like that?

She continues: 'Whenever I call someone in the US and get their voice mail it drives me crazy. And I know it drives the Americans crazy to call here and not be able to get straight through to the person they want to talk to because anyone in the office might pick up. Americans like voicemail better than talking to people.'

I felt this was a little off topic but it still struck me as an interesting observation.

She focuses on Tanja's situation again and offers a truce: 'Look, I'm pretty easy going about letting folks work from home, although I have plenty of colleagues that are total hardliners about that because it makes them feel out of control.'

Tanja rejoins with: 'Exactly. They feel uncomfortable. But I see that as a lack of trust.'

Brigitta: 'True, I see your point. But it's easier to work with people if they're right there.'

Tanja: 'Oh, ja, it's definitely easier, if that's all that matters.'

Brigitta (raising her wine glass at Tanja and me): Hey, if someone would offer me my current job at 80% FTE I'd jump at it!'

We drink to that. And I thought Brigitta raised a fair point about ongoing negotiations and the different levels of suitability of some jobs over others when it comes to working fewer or more flexible hours.

But bottom line, I think Tanja hit the nail on the head when she pointed out the potential economic advantage of part-time workers, if only companies could be more creative about utilizing them.

What do you think?

Tuesday, September 1, 2009

Everything I ever learned about good management from bad managers

Several weeks ago I had lunch with a colleague of mine, who had confided to me that she had had the worst managers ever at a former company. Naturally I was intrigued, because poor managers are a special interest of mine, and I hoped to cash in like Scott Adams on her tale of woe. So, while tucking into a delicious French country salad with mushroom pizzata, I settled in for a pleasurable tale of pointy haired bosses.

Here is her tale: Her first hiring manager out of school had left the company by the time she showed up. Her new manager was not unkind but unable to either communicate what he wanted or understand what she needed from him. She moved to a new team and again her new manager transitioned somewhere else. Her next manager was a 'resource hog, an information hog and a gate keeper.' On one memorable Monday she was no where to be found - it turned out she was in Europe and couldn't get home until the middle of the week! When my friend requested some additional training to grow professionally and add more value in her current role, this was denied on the grounds of it being unfair to the other team members. And when she finally complained about her manager's incompetence to the next level manager, that manager failed to treat the information in confidence and disclosed the entire converstation to her manager, making it impossible for them to continue working together. She then went on to have several other medicre manager encounters before going to graduate school and starting over with a clean slate.

What chiefly struck me as I listened to her tale is that nothing very horrible happened - no one was yelled at or publicly insulted or forced to clean toilets with a toothbrush. No sexual harassment or anything like that. A fresh, ambitious new hire was thwarted in her desire for speedy professional growth, which is frustrating but not that unusual. And a poor middle manager was protected by an equally poor upper manager. In fact, if anything the upper manager is the real villain in the piece for allowing a poor manager to destroy team morale on his watch.

But far more interesting than my own reflections is what my friend took away from this experience: She learned that bad managers get away with bad management and that the only way to escape bad management and enjoy management perks - and make a positive difference - is to become a manager.

Our conversation made me wonder if this is what companies are teaching people by promoting people who lack management skills into management positions and then allowing them to continue in leadership roles regardless of whether they have the makings of a leader. If so, the workforce is probably full of people who are dissatisfied with both their current role and their current manager.

Oh, wait, it is.

I refer you to a thought-provoking post over at Talented Apps about the importance of job fit when considering promotions. Here we see the hint of an ideal world where success is not about the next promotion, but about doing what you love and being recognized and rewarded for doing it well. This can only happen, however, if management stops being seen as the path to autonomy, recognition and higher pay.

Or alternatively, I should add, a thankless job that involves lots of paperwork and political tapdancing so that no one with the right skills wants to do it.

What do you think?
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