Compensation Force

Bored Employees: A Squandered Asset

Bored employees, employees who report having "too little work", are more disgruntled and lead to more negative consequences (for themselves and their employers) than overworked employees, those reporting "too much work."  This is the conclusion of new research released by Sirota Survey Intelligence.

While overwork is an undeniable issue for both employees and organizations, Sirota's findings suggest that the bored employees - encompassing 14% of the more than 1 million employees surveyed - create the more serious business challenge. 

Following are a few outtakes from the research.  While none of these findings are particularly surprising,  combined they begin to drive home the significance of the "boredom at work" problem.

• Bored employees are less satisfied with their jobs.  Only 50% of employees with "too little work" report being satisfied with their jobs compared to 81% of employees with “about the right amount of work”.
• Bored employees don't get a sense of accomplishment from their jobs.  Only 38% of employees with "too little work" get a personal feeling of accomplishment from their jobs, compared to 73% of employees with “about the right amount of work”.
• Bored employees are not as proud of where they work.  51% of employees with "too little work" report being proud of their employers, compared to 76% of employees with "about the right amount of work".
• Bored employees feel less encouraged to be innovative.  Only 43% of those with "too little work" feel that they are encouraged to be innovative at work, compared to 65% of employees with "about the right amount of work".

Interestingly, Sirota notes that employees reporting "too much work" are almost as favorable on the above dimensions as those reporting "about the right amount of work".

With all the furor and debate about employee engagement these days, this seems to me to be a more fundamental and critical problem.  How can we expect all of our employees to be "engaged "(whatever that means - and don't worry, I'm not even going to go there ...) when more than 10% are not even given enough work to keep them challenged and occupied?  We should not underestimate the potential negative impact of being under-challenged and under-occupied on an employee's morale.  Does an employee in these circumstances feel valued and respected?  And isn't feeling valued and respected a pre-requisite to any level of engagement in the workplace?

To some extent, this is a workdesign problem.  It is also a performance management problem and potentially an employee development problem as well.  But, at its core, it is a problem of squandering part of an organization's most important assets - its human capital.  While there may be good and defendable reasons for the under-utilization of some of these employees, I would be willing to bet that the majority of these 140,000 individuals represent talent, knowledge, skills and relationships that their employers have simply left untapped.

And it's a shame.

 

Tagged!

I have been tagged by my blogging buddy, the Career Encourager.

Here are the rules:

• Link to the person who tagged you.
• Post the rules on your blog.
• Share six non-important things/habits/quirks about yourself.
• Tag at least three people at the end of your post and link to their blogs.
• Let each person know they have been tagged by leaving a comment on their blog.

So here are my six non-important things:

• I am a dessert person.  When I go out to eat, I plan the whole meal around having room for a fabulous dessert.
• I was passionate about the sport of gymnastics through high school and my early college years, and for a short time even planned to major in PhyEd in order to become a professional gymnastics coach.  To help put myself through college, I
  • Taught several gymnastics classes for our local community ed program
  • Coached my junior high gymnastics team
  • Served as announcer for high school meets
  • Served as a judge for gymnastic meets around our region
• I have read every book written by Nelson DeMille.
• I love going out to movies, but my movie experience absolutely must include a large bag of buttered popcorn (butter in the middle, please, too) and a Diet Coke.  Now that is bliss.
• My last name is always mispronounced.  It should be pronounced as if it were spelled "bars".  Not the way it looks. 
• When asked once how I can tell, in developing a new base salary program, whether a salary structure "fits" an organization, I replied "well, once you get all the jobs slotted into the salary structure, it kind of speaks to you."  My boss at the time, present for this exchange, raised an eyebrown and said, "... and how long have you been hearing these voices?"  Yes, I am a compensation geek.

For the next round, I am tagging a couple of bloggers I have just recently been introduced to or become aware of:

Incentive, Compensation and Sales Performance Management by Julien Dionne

The Happy Burro Blog by Joe Raasch

Looking forward to hearing from them!!

Hiring New Grads: Popularity of Signing Bonuses Continues to Grow

In their annual Job Outlook Survey, the National Association of Colleges & Employers (NACE) reports a robust outlook for college hiring and an anticipated increase in the use of signing bonuses.

Nearly 54% of the 276 U.S. employers responding to NACE's Job Outlook 2008 Survey reported that they will use signing bonuses to sweeten the offers to potential new grad hires.  This represents a notable increase over the 47% of respondents who reported plans to offer the bonuses in 2007, and the 44% who indicated such plans in 2006.

The size of the average hiring bonus appears to be increasing as well.  The average signing bonus reported by survey respondents this year (among respondents who plan to offer a bonus to all entry-level college hires) is $4,450, up 25% from last year's average of $3,568.

Monitoring Your Base Salary Practices: The Indefatigable Compa-Ratio

Those readers who know all about the compa-ratio, feel free to skip this post.  But it occurred to me, in responding off-blog to a recent reader question (Thanks, Judie), that perhaps not everybody is familiar with this statistic and its uses.

In its glossary for the rewards profession, WorldatWork defines the term compa-ratio as follows:

The ratio of actual pay rate (numerator) to the midpoint or some other controle point for the pay range (denominator).  Compa-ratios are used to measure and monitor an individual's actual rate of pay to the midpoint or control point of their range.  A compa-ratio can be calculated for a group, a department or an entire organization.

So, for an individual employee, a compa-ratio give you - at a glance - important information about where they are in their assigned salary range.  An employee with a compa-ratio of 100% (I tend to express compa-ratio as a percent) is paid exactly at the midpoint, or control point, of their salary range.  In a traditional salary range that is 50% wide from minimum to maximum, with the midpoint set exactly in the middle, an employee with a compa-ratio of 80% is paid at range minimum and an employee with a compa-ratio of 120% is paid at range maximum.

So far so good, right?

But where this statistic really gets useful, in my opinion and as alluded to in the final sentence of WorldatWork's definition, is at the group level.  And if you track compa-ratio on an organization-wide basis for every employee (or at least every employee who is assigned to a formal salary range), there is no end to the interesting and informative analyses you can perform.

For example:

• Compa-ratio by performance rating - What is the average compa-ratio for an "exceeds" versus a "meets" performer?  Are you putting your money where your mouth is in rewarding performance?
• Compa-ratio by functional area - What is the average compa-ratio for an IT employee versus an HR employee?  Are you finding the need to hire or pay some functions/professions higher in their range than others?
• Compa-ratio by gender - What is the average compa-ratio for male versus female employees?  Are your pay practices non-discriminatory?

Tracking and monitoring this statistic over time can give you a good picture - at both the macro and micro level - of how you are paying people relative to the formal structure you have in place.  Good information to have.

Thoughts on Asking for a Raise

I recently posted on the fear of over-praising employees, referencing a Business Week column on the topic by Liz Ryan.  One of the biggest reasons behind the fear of over-praising employees, according to Ryan - and I think she's right - is the expectation that praise will lead automatically to a request for a pay increase.

Using that fear as a stepping off point for a bit of career advice, the Career Encourager has written a great post, targeted to employees, on Asking For a Raise.

Because I tend to approach compensation questions from the management perspective, I always find it interesting and enlightening to see the same questions explored from the other side of the table, as is done so nicely in this post.  Check it out!

Sales Roles & Incentives: Administrative Vs. Selling Activities

Continuing our now daily coverage of sales compensation happenings (you can't stop the beat )...

I spoke to a group of CEOs and General Managers earlier this week on the topic of sales compensation.  One of the topics we discussed at length was defining the role of the salesperson.  As customers demand ever more of their vendors (from inventory management to distribution solutions), these leaders were finding that the roles of their sales staff are becoming ever broader as they try to oversee and manage this larger set of deliverables.  The initial question that came up was:  How do you adjust the sales compensation plan over time to respond to this shift/growth in responsibility?

But the bigger/better question is:  Do you simply stand by and allow your sales positions (hunters, in particular) to get broader in reaction to customer demands - or do you regularly examine the sales role(s) to see which new demands should be addressed by those in a traditional "sales representative" position, and which demands should shift to other, perhaps new, positions in order to allow the sales staff to stay focused on sales activities?

And here comes Watson Wyatt with a new study and some interesting findings that are very relevant to this dilemma.

According to Watson Wyatt's newly released 2008 Report on Sales Effectiveness and Compensation, companies are leaving millions of dollars in revenue on the table as a result of not organizing, deploying and compensating their sales forces effectively.  Specifically, the study focuses on how the structure of NBDs (New Business Developers) versus AMs (Account Managers) can enhance sales performance and company growth.  The study also addresses different approaches for high growth versus low growth periods (see related posts here and here).  Findings include:

• Shifting two hours a week from administrative to selling activities could lead to as much as $225 million in additional sales for a company with 1,800 NBDs.
• Companies can derive even greater value from their sales forces by carefully allocating activities between NBDs and AMs. Reallocating time and resources can create more than $600 million in additional sales for a $20 billion company.
• For NBDs, sales is a “contact sport” that rewards high touch and persistence. Top-performing NBDs prefer to communicate with clients and prospects in person (other NBDs rely more on the phone) and are more likely to cultivate a prospect over an extended period of time.
• Administration creates more than $300,000 in lost expected sales per NBD per year. Pushing nonselling administrative activities downstream from NBDs to AMs, and then from AMs to an administrative sales support role, can increase productivity.
• Top-performing salespeople report annual incomes that are 24 percent (NBDs) and 23 percent (AMs) higher than those of other salespeople in the same roles. Sales-related variable pay for top performers represents 90 percent (for NBDs) and 75 percent (for AMs) of this difference.
• Optimal productivity for sales roles varies considerably based on the company’s level of growth.
  • During periods of high growth: NBDs should focus on prospecting, qualifying leads, entertaining customers and closing deals. AMs should conduct business planning with customers, focus on needs identification and solution development, handle sales administration and concentrate on professional development.
  • During periods of lower growth: NBDs should focus on identifying opportunities to expand existing customer relationships, conduct needs identification and solution development, continue to entertain customers and close deals. At this level of growth, successful AMs become more prominent in the business development process, prospect more among existing customers, qualify leads, develop proposals and help close deals.

To summarize - astute companies will be reviewing/refining all aspects of how they go to market on a regular basis and particularly in the face of a potential economic slowdown, and not just the tweaking of their sales compensation plans.

If Salespeople ARE Different, What Does It Take to Steal One?

As part of the recent wall-to-wall coverage of sales compensation (sometimes you just have to go where the universe is sending you...), I direct you to The HR Capitalist where Kris Dunn (riffing off my recent post on how salespeople differ from other employees) asks the question "What Percentage Increase Does it Take to Steal a Sales Rep from your Competition?"

To get the discussion rolling, and acknowledging the newly confirmed fact that salespeople are - indeed - more motivated by money than the rest of us, Kris throws out his initial guess of 20%

What say you?  Join the conversation and put your opinion in there.

More on Motivating Sales Employees in Tough Times

In follow-up to my recent post on sales compensation in the face of an economic downturn (and my hints to him regarding the great thoughts he left in my comment thread), Paul Hebert of Incentive Intelligence has posted on Motivation in Tough Times.  The wisdom in his post has application well beyond sales employees, particularly the ideas on communication and recognition (which go a long way in helping maintain a positive and motivational work environment) that he shares from a terrific related post on The Happy Burro Blog.

Paul also shares some suggestions for new sales goals that might be considered for slower times, to be rewarded on a non-cash basis in order to maintain a separation from the ongoing compensation structure, including:

• Meetings with clients to discuss their business to see if there are ways to reduce costs vs. sell more stuff. Give points for each meeting and for documenting new ideas.
• Meetings with clients that are "non-traditional" users - brainstorm about this and set up some targets for "meetings" not sales. This will be more of a learning exercise not a sales call. The goal is to get the sales person outside their normal comfort zone and see if there is a market where they never thought there was one. Award for the meeting and for sharing the information.
• Administrative activities - updating databases, expense reports, etc. Anything that sales people don't typically do - get them to do it now. Spending time on these activities won't impact sales too much if the market is down for a bit .

I like and will leave you with a quote shared by Joe Raasch (aka The Happy Burro) on the post that Paul links to, which suggests a wonderful framework from which to approach the challenges that may be coming our way.

Better to light a candle than curse the darkness

The Compensation Market: An Increasingly Bumpy Ride

The market for talent is a dynamic one.  As the world continues to change, in ways both expected and completely unanticipated, the dips and jumps are coming at us faster and with greater frequency.  Market compensation levels for different jobs have never moved along in complete lockstep - at least not in my recollection - but the swings tend to be more significant now than in the past.  Salary levels for some positions remain relatively flat, while others are positively surging.

All of this makes managing our pay programs, particularly those that are built primarily on market as their underlying "value system", ever more challenging. 

The implications?

Well, for one thing, the days of letting your compensation program, and particularly your base salary structure, run on autopilot are gone.  Keeping your finger on the pulse of the market - both informally through your sourcing, recruiting and even networking efforts and formally by regularly accessing at least a few reliable compensation surveys that cover key elements of your labor market - will be a critical part of proactively program management. 

And when signs indicate that market pay levels for a particular field or job family are leaping ahead, put a plan in place.  That plan might, initially, simply involve watching the situation closely and determining your criteria and potential timing for action.  And then acting, in accordance with your plan.  Waiting until the circumstances become unbearable will only make the inevitable corrections and adjustments that much more difficult. 

If the economy does slow down, it won't necessarily mean that market pay growth will uniformly taper off.  There will continue to be professions, job families and skill sets where demand outstrips supply, and where proactive and aggressive pay management is necessary for successful recruitment and retention.

Is this a reason to move to a base pay approach less closely tied to market (e.g., point factor, or other internally-focused method), as some of my clients have asked?  Not to my mind (unless there, of course, are other overriding reasons).  While a market-based salary program may require you to adjust in line with market changes, the good news is the it also allows you to adjust in line with market changes.  In times of an increasingly dynamic market, I'd rather be hooked to an approach that allows the flexibility to react to those market zigs and zags.  

Confirmation that Salespeople ARE Different

It probably comes as no surprise for most of us to learn that sales employees are more motivated by money than non-sales employees.  We count on it, in fact, and the design of most sales compensation plans is proof of this.

Beyond confirming this fact, however, Sibson Consulting's most recent Rewards of WorkSM (ROW) Study shows us evidence of other more nuanced ways that salespeople appear to differ from their fellow workers.

The ROW Study found that sales employees, compared to non-sales employees, are:

• More engaged (57% versus 51%)
• More committed to their company (68% versus 62%)

And, of course,

• More motivated by compensation (82% versus 62%)

Moreover, they have:

• A greater sense of affiliation with their organization (67% versus 60%)
• Higher career satisfaction (57% versus 52%), and
• More trust in management

I find these additional differences interesting and wonder what lessons they offer us about motivation, engagement and retention.

Is a salesperson's very immediate connection to both the company's service/product and the customer a factor in the higher levels of engagement, commitment, affiliation and satisfaction that this group reports?

What about the direct feedback, recognition and reinforcement (both positive and negative) that results from the highly leveraged (higher proportion of variable versus fixed pay) and results-oriented compensation package - does this account for higher levels of engagement, commitment, affiliation and satisfaction?  What about higher levels of trust?

Or is it simply in the nature of those people who are attracted to direct sales opportunities - along with the nature of this work and the methods by which it is usually rewarded - to be more engaged, committed, affiliated and satisfied?

Worth pondering.