Innovation, Failure and How Culture Trumps a Pink Feather Boa

It is clear to most of us, by now, that innovation cannot occur without taking risks and accepting the possibility of failure.  How, then, do we remove failure's sting? 

Master Trainer Beth Kanter, in her recent HBR blog post, introduces us to her favorite approach for making the most of a gaffe:  the Failure Bow.  She shares examples of the technique and its impact, which range from athletes trained to take a failure bow as a means of alleviating their fear of making mistakes to the quarterly FailFest implemented by one nonprofit where presenters share the goal, history, timing and lessons of their failure  while styling an obligatory pink boa. (At the risk of reinforcing a stereotype of the compensation pro as fun-kill, however, I must admit that the idea of presenting anything to anyone wearing a pink boa sure strikes me as more punishment than reward!)

What I love about the concept of a failure bow is the effort its practitioners make to turn the failure into not just an opportunity to learn, but the chance to do so in a spirit of light-hearted acceptance.

What concerns me about it is the knowledge that many organizations and leaders will simply drop the practice in place - perhaps "customizing" it by making that feather boa a bright apple green - in a token effort to address what is a much deeper problem.  Because curing a culture where problem burying is rampant, where blaming and accountability dodging are embedded characteristics and where no real competencies in processing or learning from failure have been developed, will demand much more than the staging of a failure celebration.

With all due respect to the failure bow, adopting a superficial practice meant to represent a shift in thinking, without actually shifting thinking, only serves to reduce what would otherwise be a fresh and inventive idea to mere gimmickry.  Which, unhappily, happens far too often in the field of rewards ... and others.

Creative Commons image "feather boas" by JMacPherson

Pay Satisfaction Reporting Made "Clear and Fair"

A client of mine with a gift for distilling information recently came up with a simple and elegant chart that tracks employee perceptions of the company's pay program.  As someone who believes there is still a place for the straightforward, low-tech solution (like this one), I wanted to share a version of the chart here, for comment and reaction.

Essentially, it works like this.  Employees go through a simple process where they rate the pay program on a scale of 1 through 10 (1 being the least favorable rating, 10 being the most) based upon their perception of it being "clear" and "fair."  The results are shared in the form of a scatterplot, like the example I've created and shared below.

Big data it may not be, but it does provide a fundamental two-dimensional snapshot of what employees think about the pay program.  It would also be interesting to:

• Track movement over time, perhaps with an overlay of different marker colors to reflect different periods (quarters, years, etc.).
• Separate by different employee variables/demographics, again potentially using different marker colors, such as gender, tenure, performance level, etc.

What do you think?  Anybody done something similar - or similarly simple and elegant - that they can comment about?

Navigating the "Open Salaries" Movement

There is a movement underfoot, particularly among start-up firms and profiled this week in a Wall Street Journal article, to open up business information that has traditionally been closely held.  This includes not only financial and operating data but also information on individual hiring decisions, salary and bonus details, and employee performance appraisals.

While I remain conflicted about complete pay transparency, I do believe there are some basic conditions and ground rules that can be put in place to maximize the odds of "open salary" success.

Find out more at my Compensation Cafe post today -- and share your take on the "open salaries" movement!

Creative Commons photo "Open Window" by glennalicious

Give Employees the Gift of Cash Clarity

Your organizations may be in the midst of planning holiday parties, gifts or special perks -- but know that cash is what's top of mind for employees as the year's end draws near.

A just-released survey by Glassdoor of more than 2,050 U.S. workers shows that what employees want most from their employers during the holidays -- by a significant margin -- is cash bonuses and salary increases.  Results of the survey are summarized in the table below.

This isn't to say that employees don't want to be recognized and appreciated with gifts and perks, or that they don't value flexibility and time off.  They do, of course.  But as economic (and, for many, employment) uncertainty lingers, the sense of financial security associated with cash appears to be trumping everything else.

So knowing this, what are we to do?

For those without boatloads of money to give out at year-end, I would suggest that one of the best things you can do for your employees is to offer them the gift of cash clarity.  Disclose and clearly explain your compensation objectives and priorities.  Detail the purpose and workings of your salary and bonus programs.  Tell them why things are done the way they are.  Share what employees should expect under different scenarios -- this year and going forward.

Fuzziness around compensation provokes mistrust and anxiety - and heaven knows there is already plenty of this to go around.  Give employees the facts and information necessary to understand why they are paid as they are, and what their options and opportunities are to earn more. 

And if your pay program can't stand up to the light of day, perhaps this is a good time to start on a 2013 plan to review and improve it.

The Limits of Feedback and Appreciation

Providing employees with specific information on their productivity is one no-to-low-cost way to drive improvements in their performance.  A recent Harvard Business Review Daily Stat (To Boost Workers' Productivity, Tell Them How They Rank) reminds us of this reality, via the story of a German wholesaler that saw an average and apparently sustained jump in average productivity after sharing information about employees' relative performance.  When the conditions are right, most of us will respond positively to feedback that either points directly to actions we can take or triggers an instinct to better our showing relative to our peers.

Appreciation, we all know, can work in a similar way.  Big bang without the big bucks (and without a lot of the baggage that can accompany the delivery of those big bucks).  Having our work recognized, knowing that somebody notices what we do and cares enough to directly acknowledge it -- this is powerful stuff and it can have a tremendous impact on work energy, motivation and performance.

Amid the exciting possibilities of all we can achieve with feedback and appreciation, it can be easy to lose sight of an important fact.  The employment relationship, when you strip away all the bells and whistles, is an economic one at its core.  And the foundation of that economic transation, for most workers, is their cash compensation.  Right or wrong, good or bad, this is what's top of mind for the average worker when they take toll of the "rightness" of the employment exchange.

In my conversations with workers, I find many are particular sensitive to this balance.  Top performers, often acutely so.  They believe that when their efforts create economic value (e.g., profits) for the employer and other stakeholders, that they should reap some of the rewards of that success.  In their minds, this might be through increases to base salary or some type of profit-based incentive award. 

The point?  While feedback, appreciation, and the well-placed "thank you" may deliver motivational impact that a cash award or raise does not, we cannot overlook the importance of the cash package as the baseline of the employment relationship.  We must get cash compensation right - and do the communication and information sharing necessary for employees to understand how this critical baseline of the relationship is set and managed.  If we fail this, if employees believe that there is a fundamental imbalance at the core of employment exchange, chances are good that our efforts to provide sound feedback and express genuine appreciation will fall on deaf (or at least highly skeptical) ears. 

Creative Commons image "Bundle of Dollar Bills" by Images_of_Money

Everthing We Do in Compensation is Communication: The Session, The Video and More...

This past May, my Compensation Cafe colleagues Dan Walter and Margaret O'Hanlon and I had the chance to present at WorlatWork's Total Rewards Conference in Orlando.  Our session, Everything We Do <in Compensation> is Communication: How to Do Everything Better! was one of the top five most popular/most downloaded sessions from the conference.

As part of that experience, I had the opportunity to sit down with WorldatWork's Marcia Rhodes to talk about compensation communication and some of the insights from our presentation.  That workspanTV video is embedded below. 

At this very moment, Margaret, Dan and I are hard at work on the next phase of our Everything is Communication journey.  Look for more exciting stuff to come soon!

Simplicity Requires the Courage to be Clear

Complexity is a frequent challenge with incentive plans, particularly (but by no means exclusively) in the arena of sales compensation.

Complexity enters the picture for a number of reasons.  Sometimes, for sure, a certain degree of complexity is necessary simply to achieve balance, so that no one dimension of performance is given too much ballast at the expense of other important behaviors and results.  Other times, however, it boils down to a reluctance to stick a stake in the ground and take a strong stand.

I was struck by the following statement while reading the recent Memo to Sales Compensation Plan Designers published by Jerry Colletti and Mary S. Fiss.

Simplifying plans requires courage

In making their point, Colletti and Fiss note:

Most plans could be designed with up to three measures in mind. Often the reason they are not is because there is an unwillingness to sort, prioritize and discriminate relative to optimal performance results.

So true.  And not just in sales compensation design, but in reward programs overall.  Committing to a few measures is a powerful thing.  In essence it involves leadership saying to the troops: "This is what's most important right now."  Leaders are often reluctant to do this, preferring to leave things unsaid, distinctions not made, options left open.  Sometimes for valid reasons, but often not.

Reward plans speak, however, and a plan filled with metrics and contingencies says this: "We have no idea what is important so JUST DO EVERYTHING for heaven's sake!"

Helpful, yes?

Take a look at your plans, particularly as the annual review and renewal times comes upon us.  Is the complexity you find necessary and appropriate, or could it reflect a lack of courage and conviction?

Creative Commons image "BulboxZoomb8"" by ellenm1

Remedying Pay Angst: Clarity, Process and Structure

As an independent advisor, I am often called in to help with situations where compensation has become a very emotional and even intractable problem.  Having the opportunity to work with -- and through -- many of these situations over the years has taught me a lot.

The biggest lesson is probably this: Clarity, process and structure are the most effective remedies for compensation angst.  This is true whether the pay concern involves an individual or a group of people. 

In the absence of clear, explicit process and structure for addressing and making a decision about the compensation concern, you must go about creating these things.  Process first -- determining who will be involved in what role, what steps will be taken and in what order, and what timeline will be followed to a final decision.  Then, you follow the process to create and apply the structure -- the information and rules which will frame and guide the decision.  If a process and structure already exist, it is important to step back, clarify them, and then track carefully through the roles, steps, information and rules in order to revisit, adjust and/or confirm the decision.

Plodding and methodical?  It can seem that way in today's fast moving environment, particularly to executives and entrepreneurs accustomed to making decisions on the go with the best information available.  It can also fly in the face of custom and tradition when managerial flexibility and discretion have historically reigned supreme over compensation decisions.  Certainly some level of flexibility is important in a world where organizational agility and responsiveness are at such a premium.  But sometimes flexibility is just another word for reluctance to commit oneself.

Flexibility and discretion rarely resolve acute compensation distress.  For that, you need clarity, process and structure.

This is because compensation angst, at its core, is usually about fairness.  Compensation decisions made without context or explanation behind closed doors and/or entirely inside the heads of executives, unless they are utterly in sync with or in excess of an employee's expectations, will rarely be perceived as fair.  Fairness, contrary to what many seem to believe, is not about paying everyone the same.  It is not even about paying people enough to take money off the table (just try devising and executing that approach in a way everyone agrees is fair!).  It is about having everyone's pay subject to a clear, logical and explainable set of rules and information. 

Which is exactly where the application of clarity, process and structure aims to take you.

Creative Commons image of The Scream by Christopher Macsurak

Orlando 2012 and the Six C's of Total Rewards

Another year, another total rewards conference.  Another chance to indulge in my favorite post-conference pastime, looking back and trying to tease out key themes and takeaways.  As a presenter this year, and with a few related obligations, I didn't get to as many sessions as I would have liked - but I dedicated my travel time home to looking through the handouts from a number of those I missed in an effort to upload as much conference information as possible.

As so, I present my take - and the six C's of total rewards.

Communication.  Of course, this was the lead theme for me and my Cafe colleagues Dan and Margaret as we made our case that Everything We Do in Compensation is Communication during our own conference session.  I also noted a few other presenters, particularly those sharing case studies, highlighting an effort to embed communication earlier in the reward process.  We can, and must, get better at this.  Particularly interesting was the fact that several presenters, including Pat Flume from PwC, who shared her firm's journey to redesign its reward and recognition efforts, talked about engaging with the external media as a key communication step.  More on that in an upcoming post.

Careers.  What does it take to be a total rewards superstar?  As part of the conference, WorldatWork rolled out the results of a new census of the profession, aimed at answering the question what differentiates top performers among total rewards professionals?  If you  haven't yet had a chance to check it out, get the report and results here.  Very interesting reading.

Contextual and Conditional.  Data provided by Kenexa and discussed in the session Why is Compensation Foundational to a Great People Strategy highlighted the fact that pay matters - a lot - but it matters in the context of (and the success/satisfaction it delivers is conditional on) other elements and intangibles, from exciting work to education/career growth to being part of an environment of truth. 

Careful and Committed.  Several presenters emphasized the importance of a careful, well-planned and committed process in order to take an organization to a new reward state.  Key advice from Delta Emerson from Ryan LLC who presented Converting a Culture: Shifting Focus from Face Time to Results: "Measure twice, cut once" and "Do not panic or abandon the plan at the first sign of trouble."  We must learn to have faith in ourselves and in the journeys we undertake to make rewards better. 

On a different and final note, I so enjoyed the chance to reconnect with many old friends, make a few new ones, and go face-to-face with several people I'd only known "virtually" before.  Special shouts out to Compensation Cafe alumnae Doug Sayed and Becky Regan.  And - of course - it was a blast to hang out and present with colleagues Dan and Margaret. 

Another great conference!

The Nine C's of Engagement and Why EVERYTHING is Communication

R. "Ray" Wang, Principal and CEO at Constellation Research Group, shares this warning about attempts to communicate with and engage today's customers.

Most customers now ignore targeted marketing campaigns, avoid responding to offers, and provide minimal feedback when asked. Instead, potential customers interact with each other, bypassing sanitized corporate messages devoid of meaning or value.

 Switch out the word "customer" for "employee", and I think the same warning and observation could apply to our efforts to communicate with our workforces about rewards and our efforts to solicit their involvement in and buy-in to our reward plans.

And so Wang's advice is worth considering for our reward communication efforts.  In his HBR blog post, he outlines the nine C's of engagement, which are worth our consideration as we strive to craft the right customer employee reward experience.

The Three C's of people centric values

• Culture - norms and preferences
• Community - internal and external stakeholders
• Credibility - trust earned through actions

The Three C's of delivery and communication

• Channel - means of communication
• Content - topic or information being covered
• Cadence - frequency of delivery (ad hoc, scheduled or continuous)

The Three C's of right time drivers

• Context - roles, relationships, timing; factors impacting how communication is absorbed and interpreted
• Catalyst - what inspires action and/or response
• Currencies - things that influence behavior through the exchange of value (important for us to keep in mind that these extend beyond the obvious cash elements to things like recognition, access and influence)

Wang's Nine C's should serve as a helpful reminder to us that communication (in compensation) is about more than words, and certainly about more than an annual memo and brochure.

And on that note, please join me and my Compensation Cafe colleagues Margaret O'Hanlon and Dan Walter at the WorldatWork 2012 Total Rewards Conference (May 20-23 in Orlando) for a chat on "Everything We Do (in Compensation) Is Communications."  Hope to see you there!

Creative Commons image "Megaphon" by floeschie