Compensation: What Doesn't Kill You Will Make Your Organization Stronger

I love kids. My 7-year-old son claims I enjoy talking to kids more than talking to parents (often correct.) I am one of those people who coo about the cuteness of every baby. Sometimes I may stretch the truth. Compensation may be your baby, but sometimes you need to be a bit more honest. Sometimes your compensation baby is ugly.

The Head of Total Rewards for a client of mine is the inspiration for this post. The company is going through a bumpy patch, and there aren't any brilliant solutions that will make everyone whole or happy. Most of their value has evaporated for the time being. Things they have planned for and communicated at the corporate level have fallen through. Their industry is going through a (temporary) downturn. She said on a recent call, "admit it, Dan, the baby is ugly."

Admitting the truth about a difficult situation is often the first step to finding a resolution. It isn't fun, and it isn't enjoyable. It isn't everything we learn about work-life balance, attracting the best people, motivating them to perform, providing them with rewards to stay for a long time. Sometimes it's necessary to admit the facts so you can patch up the ship well enough to try another day.

But there is always something redeeming in nearly every situation. Perhaps your savvy compensation consulting expertise and efforts can make a hard landing softer. Maybe there is a way to save and reward the people who will be critical to correcting the course when the storm passes. Maybe your prior hard work of ensuring job titles was tight and making certain pay levels are market competitive will help those who must be let go find a better position somewhere else.

So, what should you do when your baby is ugly? First, remember that this is your job, not your baby. Admitting the truth about the situation is critical to finding solutions. Next, approach your answers from the perspective that you cannot fix everything in a truly terrible situation, but that doesn't mean there aren't any paths to success. Lastly, you need to communicate calmly and matter-of-factly to everyone affected as soon as the opportunity arises.

Start with a triage assessment. Identify who and what you can save, which things will survive without your help, and which items you must abandon. An example can be found here. Abandon the unsavable quickly but with respect for the people affected. Explain to those who will survive that you will get back to them soon. Focus your efforts on the things that require your efforts for future success.

With your priorities set, put your efforts into achievable solutions, not "great" solutions. You won't find most of these in your WorldatWork reference materials or contact friends or external salary consulting experts, and most will provide ideas without complaint. Focus on quick execution. It probably won't be pretty, but make sure it's effective.

Then stand up in front of the crowd and tell them the truth. Be direct. Be clear. Be confident about the future (even when you may be unsure or scared.) In difficult times, people need a leader who can shine a light on the facts while also pointing out that the darkness will pass. This is often the most challenging part. Remember that you have a plan for tomorrow and that the program depends on others to execute.

Sometimes the baby is ugly. When it's your friend's child, keep your thoughts to yourself and say nice things. When it's your compensation programs, be honest, fix what you can, and focus on navigating the storm.

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.

Posted by DanFutureSense on 10/14/2021 at 06:31 AM in Base Salaries, Compensation Communication, Compensation Philosophy, Executive Compensation, Incentives/Bonuses, Sales Compensation, Small Company Compensation, Stock/Equity Compensation, Total Rewards | Permalink | Comments (1)