Just like your teeth impact your speech your pay can impact who you hire, the kind of people you keep and whether you will succeed at all. Pay is a foundational component of your future success. What you pay someone today sets an expectation for them and for every hire of a similar person.
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Your new compensation program is the car. Your roll-out communications are the first tank of gas. The rest is the story of nearly every new program in the world of compensation. Communication is often viewed as a maintenance item. In truth, it is an essential component that makes compensation…
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Editor's Note: Ever feel like things are a little backward pay program wise? You're not alone, friend! Dan Walter, master of the compensation metaphor, shines a light on the Classic problem we all face at one time or another - particularly those of us who work in or serve smaller, entrepreneurial organizations.
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For several months many of us have wondered why base pay wasn’t spiking upward out of respect for the historical strong job market. The basics premise of our economy is the strong demand and short supply results in high prices. This is true for peaches, cars, and people. With unemployment at very low levels and a job market continuing to create jobs at a rate of 210,000 per month, we should have been seeing pay rise far faster than our now sad 3% annual increase. It turns out the trickster was simple math.
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Here’s a test for you, valued reader. Draw four columns on a piece of paper. In the first write the name of each compensation element. In the second write the purpose of that compensation element. In the third define what happens for the company if that purpose is met. In the last column define what happens if that element fails.
Then sit down with each member of your HR team, and then each member of the executive team. For each element ask them to tell you…
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The real best practices on equity are found at the edges, in the corners and behind the curtains of survey data, trend articles, and recent big winners.
I like to say a good program starts with knowing “who you want to be when you grow up.” The potential future value of the company and the time and number of employees it will take to get there should be a…
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Executive compensation, especially at larger companies, continues to soar ever upward. Headlines in local newspapers and websites around the US are reporting record years, once again. While there are valid arguments for many huge CEO pay packages, there are at least as many that defy explanation. Why can’t we get our arms around this issue?
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If we cannot expect this team to be paid for their performance, how convincing can we possibly be when we claim that ANYONE is being paid for their performance? (I know, I know, some of you work at companies that have fixed this problem, but you are still the minority.) More importantly, if this is such a difficult thing to fix for a group of fewer than 30 women, how can most companies expect to fix pay issues for much, much larger groups?
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Actor Gene Wilder’s recent passing, along with a recent client call, reminded me Veruca Salt’s “I Want It Now!”. The song from Willy Wonka and the Chocolate Factory (the real one, not that lame version starring Johnny Depp.) As reminder, Veruca wants not only the goose’s golden egg, she also wants the goose itself. Mr. Wonka declines and chaos ensues. This seems to be an increasingly popular story in our tight job market.
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Millions of people around the world have been captivated by the recent Jeopardy winning streak by James Holzhauer. Holzhauer was recently able to amass the second largest haul in the game show’s history. During his winning streak, he averaged $77,000 per game. For those not familiar with Jeopardy, the game is often won by someone with winnings in the single-digit thousands. Yes, he knew a lot about nearly everything, but that’s not why he won so much.
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“People who live in glass houses should not throw stones.” We can trace versions of this saying back to Chaucer around 1385. I am pretty sure he never thought it would become famous enough to be used in a blog article by me! Glass houses have more problems than just simple stone throwing. Anyone who has stayed at a hotel with a room directly across from another hotel knows this.
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IPO markets often work in much the same way. When markets are truly hot everyone is waiting for the perfect time to go public. After a while, it seems like everyone is going public at the same time. Values soar. This usually results in fantastic headlines, but many of these companies struggle to become “core” components that will survive the transformation of the market.
hat raise doesn’t mean what you think it means! Employees keep hearing how great our economy is performing. Jobless rates are at near all-time lows. Talent acquisition professionals are wailing about the availability of great talent. While all of this is happening, we are once again seeing predictions that annual merit budgets will be around 3%.
Merit: the quality of being particularly good or worthy, especially so as to deserve praise or reward; Synonyms: excellence, goodness, standard, quality, level, grade, high quality, caliber, worth, good
…and the similar sounding, but far different,
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Many of us spent time a few years back watching the news about a man in Southern California who was wanted on suspicion of murder, including the killing of at least one police officer. Horrified and fascinated, those of us in, or near, Los Angeles were aware of what this man looked liked. And most of us wouldn’t have hesitated to contact the police if we had even glimpsed this guy’s shadow. So, what does this have to do with compensation?
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Could it be that we are designing and communicating incentives for our highest performance all wrong? A recent study titled “Reappraisal of incentives ameliorates choking under pressure and is correlated with changes in the neural representations of incentives” appears to show that the fear of losing a reward allows people to perform at the edge better than the desire for earning more award. This study specifically looked at the impact of incentives on motor and neurological performance in high-pressure situations. While this may not apply to an average broad-based plan, it seems to have possible application in the high-stakes game of executive compensation.
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So often we see companies whose executives are paid handsomely only to falter shortly after. How does this happen? Goals were apparently met. Success seemed to have been achieved. But the final result of the goals and success is a large payout followed by a sharp corporate collapse. Are we doing something wrong when we incentivize our executives?
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