Compensation Transformation it is More than a Haircut
Not that long ago I got my haircut for the first time in more than six months. The result was eye-opening (literally, because my hair was always in my eyes). I went with something that looked much like what “normal” was before March 2020. Around the same time, a friend had her hair cut as well. She had one side of her head shaved and went bleached blond for the rest. The difference was amazing, some would say transformational. But then I realized I had a third friend who had spent the past couple of years working out and eating right. She, after having two kids, was in better shape than she had been when she was in great shape in her twenties.
While the changes for each person were immediately noticeable, only one result was a true transformation. Transformations require time, commitment, and tenacity. This past year has proven to be transformational for many people and many businesses, but I have yet to hear much about transformations happening in total rewards. If there was ever a time to transform, this is it.
Base pay has proven to be a challenge in many ways. Remote work has given rise to questions about Geographic Differentials. Pay levels have been stressed by furloughs, layoffs, essential worker status, and volatility in staff availability. Bonus programs have proven to be fragile. In some cases, companies are concerned about meeting cash obligations, or expectations, when cash is at a premium. Traditional equity compensation program designs have been shown, for the third or fourth time in the past twenty years, to have critical flaws that can wipe out value with no-fault, or magnify value with little effort.
If all of this was happening in some other aspect of your life, you would be compelled to make some big changes. In the world of compensation, most companies seem content to wait things out and hope everything “returns to normal”. This is the real opportunity. It far easier to win when your competition is complacent.
As in every extreme situation, a few will seize the chance to exploit their competitors' weaknesses. In 2022 and 2023 we will all read about the companies that rolled out expansive changes to their total rewards while the pandemic raged. We will attend presentations and webinars with case studies about companies who corrected their diversity equity and inclusion issues, or how base pay increases became a driver of success instead of a baseline marker. We will envy those companies who made changes and we will try and create programs “just like theirs” (but two years too late.)
Perhaps you will call me or some other consultant and ask how so-and-so built the award system that has proven to be the trend-setter for the next decade. Even better, perhaps you will be the person presenting the case study because you decided that this year was motivating enough to inspire more than a haircut. You will be at the front of the pack, healthy, strong, and leading the way, while others wonder how you did it. Haircuts are easy. Transformation is not. But transformation is achievable and there is literally no better time than the present to get started.
Dan Walter is a CECP, CEP, and Fellow of Global Equity (FGE). He has convinced himself he is a “Compensation Futurist” and 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 the only 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.
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