Compensation Planning - Time to Work Out Your Chicken Legs
Editor's Note: Top heavy pay plans and design emphasis? Missed opportunities for investment in your broader workforce? Might be time for your company to work out its chicken legs, as Dan Walter notes in his Classic post.
We have all been to the gym or have seen this guy walking down the street (here’s an example). He’s the guy with those big arms, broad chest, and a narrow waist looking like a cartoon superhero. The guy is impressive in a t-shirt but carried around by skinny chicken legs. It’s obvious he puts in the work. It’s also noticeable what he likes to do and what he doesn’t.
More and more companies have compensation programs to raise salaries and increase employee happiness that look like this guy. Pay for executives is muscular and impressive. It has outpaced pay at lower levels for a long time. Despite how strong and impressive these companies’ pay look, the truth is they are vulnerable to a competitor kicking their legs out from under them. Heck, some of these companies have such weak foundations that they could easily trip themselves, tumbling straight to the ground.
Money spent on pay innovation, research, and consulting is first focused on executives. If there is anything left it trickles downward and disappears quickly. These chicken leg companies seem to believe that performance is based on a strong upper body. Any athlete will tell you this isn't true.
Great athletes in almost every sport first have incredibly strong core muscles. The middle supports and directs every movement while allowing for long-term growth above and below. Next, come powerful legs. These are the foundation of any great performer. They create stability, speed, and maneuverability. Only after these components are working at peak condition does it make sense to build the upper body. Even then the goal is lean usable strength not gaudy restrictive size.
Doing squats and sit-ups isn’t much fun. The results from these efforts are far less visible in everyday activities. Convincing management that the rank and file should receive a bigger percentage raise than the executive is even less fun. The results are also unlikely to be as immediately visible as a great executive incentive plan. But, once the effort has been made consistently for awhile, you will not only see a difference but, it will allow you to be better at a wide array of other things. The path of least resistance is undeniably seductive when you are already swamped with other projects. And, the people who need to approve your ideas are the same people who will feel the most negative Impact. Try it anyway.
Look at your company in a mirror and determine if you are this guy. Tell your executives you read about this on the Internet. Tell them other companies are looking into it (and they are). Heck, use me as the bad guy. But, mostly tell them that you are passionate about doing the best you can to help the company succeed. Right now, that means doing the tough legwork.
Contact FutureSense - Human Resource consulting - if you have any questions about human resource functions, capital compensation as supplemental pay, or incentives for workforce strengthening. Managing your pay structure to bring in and keep the best personnel for your company is our area of expertise.
Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He works as Managing Consultant for FutureSense. Dan is also a leading expert on incentive plans and equity compensation issues. He has written several industry resources including a resource dedicated to Performance-Based Equity Compensation. He has co-authored ”Everything You Do In Compensation is Communication”, , “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or follow him on Twitter at @DanFutureSense.
