Compensation Force

Our Role in Public Policy: Yes, We Can! (Have One, That Is)

I had the opportunity yesterday to attend a legislative update presented by Cara Welch, WorldatWork's Public Policy Director.  It was a great overview of the dizzying array of legislation and legislative developments in play that potentially impact the field of total rewards.  (Check out Cara's blog, open to the general public, as a great source of information and updates on public policy.)

While the presentation was extremely well-done and well-received, what I found particularly interesting was the points raised during our informal post-presentation discussion.  In this conversation, Cara drew a comparison between her experience as a public policy advocate for HR professionals and her experience serving in this role for other groups.  Her hypothesis: HR professionals are notably more passive - less likely to proactively pursue making an impact - in response to impending legislation than people in other disciplines.

On the one hand, this didn't completely surprise me; on the other hand, it kind of blew me away.

If this is true, what does this say and what does it mean in a year when a staggering amount of employment related legislation is making its way through Congress?  I know that Cara, for one, is making it a priority to engage WorldatWork members in proactively approaching legislation.  I can't think of groups whose input should be more front and center in today's employment related public policy debates than HR and reward professionals.

According to Cara, there are a number of ways to make our voices heard, including:

• Sending a letter to our own Congressional representatives, letting them know our position on a piece of legislation as well as the facts and experience that support that position.

• Submitting testimony or statements for the record for Congressional hearings (see here for how to communicate with Congress).

• Submitting comment letters or providing input to federal regulatory agencies (like the Department of Labor).

So, can we make it happen? 

Image: Creative Commons Photo "United States Capitol, Capitol Hill, Washington, D.C." by Phillip Ritz

New Graduate Salary Offers Dip

Unsurprisingly, starting salary offers to 2009 new graduates are coming in slightly below those extended to the Class of 2008.

According to the Spring 2009 issue of NACE's (National Association of Colleges & Employers') Salary Survey, the average offer to a 2009 Bachelor's degree graduate is $48,515; down 2.2% from the 2008 average of $49,624.

Average starting salary offers by major/discipline vary a bit, with some rising and others dipping from the previous year:

• Engineering Overall: $58,438 (+2.3%)

• Computer Engineering: $61,017 (+1.8%)

• Chemical Engineering: $65,403 (+2.8%)

• Civil Engineering: $51,793 (+1.7%)

• Mechanical Engineering: $58,749 (+1.6%)

• Computer Science Overall: $57,693 (-3.6%)

• Software Design/Development: $58,837 (-11.0%)

• Business Overall: $46,973 (+1.0%)

• Accounting: $48,377 (+2.0%)

• Finance: $49,754 (+2.3%)

• Business Administration/Management: $45,778 (+3.6%)

• Liberal Arts: $36,807 (+1.0%)

Rules, Tools or Somewhere Between: Where Should Your Pay Program Fit?

I see many organizations (particularly those whose compensation programs are in a bit of disarray) struggle with the question of whether - and how much - to enforce order and control.  Still others have structures and policies so closely defined that managers feel handcuffed and unable to use any judgment in making pay decisions?

What's the right approach?

I find that the following simple model helps my clients reflect and decide on the degree of structure and control that best fits their situation.  I think of the control as a continuum.  At the one extreme, we have Rules.  In a Rules scenario, we build a program with tight constraints and relatively narrow parameters around managers' pay decisions - basically locking them into a set of prescribed choices.  At the other extreme, we have Tools.  In a Tools scenario, we have some basic guidelines in place to support and influence managers' pay decisions, but we allow them a tremendous amount of flexibility and discretion.

Where on this continuum should your organization be?  I think it depends on your managers and the degree to which you have invested or are willing to invest in their decision making capability.

Cue the visual...

 

Do you have inexperienced managers?  Not willing or able to invest in the training and information necessary to bring them up to speed in pay decision making?  Not in a position to hold them accountable for making pay decisions well?  Then you'd better find yourself a seat close to the Rules end.

A more seasoned group of managers in place? Willing and able to invest in the education they need to make informed and effective pay decisions? Is your leadership committed to holding managers accountable for sound pay decisions, including consequences for those who cave in and take the easy way out?  Then feel free to move closer to the Tools end.

Don't view it as a permanent decision; it doesn't have to be.  Many organizations initially implement a program closer to the Rules end, with the objective of moving incrementally toward Tools as the organization gains experience and expertise in good reward management.

Where does your pay program fit?

Wondering What to Pay That Summer Intern?

Despite a drop in the number of internships (employers report a nearly 21% reduction) this year, the pay offered to college interns is (somewhat paradoxically) expected to rise 4.9% on average over last year, according to the 2009 Experiential Education Study published by the National Association of Colleges & Employers (NACE). 

The average bachelor's-degree-level intern will be offered an average hourly wage of $17.13.  Intern pay levels do, however, range substantially depending on a host of factors including employer industry and location, year of study (i.e., juniors earn more than sophomores) and major field of study. 

The following table shows average hourly wage for interns by field of study from the NACE report: 

       

According to NACE, nearly all the employers participating in their survey report that they pay their interns.  As someone personally acquainted with a number of college students, many of whom are still nailing down their summer internships, I know that - at least in my marketplace - there are a number of unpaid internships being offered this summer. 

Considering unpaid internships at your organization?  Then you'd better first check out the rules and legal ramifications, explained here at the Ohio Employers Law Blog. 

Image: Creative Commons Photo "MIB" by KellyB

New Compensation Blog - Introducing the Compensation Cafe

A while back, I posted here about my interest in forming a multi-contributor blog about compensation.  Today I am pleased to introduce you to the Compensation Cafe, where we will be serving up straight talk, original thinking and caffeinated discussion on everything compensation.

While I will continue my solo effort here at Compensation Force, I am excited to also be part of a blog that offers a variety of opinions and perspectives on reward topics.  Today's line-up features a few of our contributors, with more to come in the days ahead.

So click on through and check it out.  And don't hesitate to jump into the comment stream - we're looking forward to your feedback and hoping you'll join the discussion.

For Strategic Rewards, There Must First Be a Strategy...

"Strategic rewards" has long been a cherished buzz phrase in our profession.  In these times, rewards had better darn well be strategic, right?  Can't much afford them otherwise.

Too often, though, the buzz phrase is an empty one.  There isn't enough strategic thinking behind the rewards.  The truth of this can often be found in an organization's compensation philosophy, assuming they even have one.

After many years helping organizations develop (or confirm or test) their compensation philosophies, I have come to believe that the most important part of the exercise is articulating a specific set of compensation objectives.  By specific, I mean something beyond the standard "attract, motivate and reward employees" language we typically see.  These are, as one of my clients would say, lovely words, and certainly outcomes which most - if not all - organizations should aspire to.  They do not, however, signal what your reward program must do in order to drive your particular business strategy.  As such, they do not provide the necessary underpinning for strategic rewards.

If you don't know the two or three critical things that your pay programs must do in order to help your organization push its strategy forward, then you'd better figure it out soon.

It could be "push our employees to constantly develop and improve their capabilities, both on the job and off."

It could be "ensure that employees who embrace and deliberately live our defined values stay, and those who don't leave."

It could be "create an environment where decisions are made by first asking 'what is best for the whole Company?' rather than looking out solely for ourselves, our teams or our functional areas."

These are meant not to illustrate what is right - or what is right for you - but offered simply as conversation starters.  The point is that they provide clear, actionable reward design guidance. 

Without which I am hard pressed to see how rewards can be strategic.

Image: Creative Commons Photo "Mount Airy Arrow" by Zyada

 

How & Why We Fail Upwards: Revisiting the Peter Principle

 This may not specifically be about compensation, but it is completely about life in organizations -- where we are all challenged to make reward and performance programs work.

The classic business bestseller The Peter Principle, first published in 1969 by Dr. Laurence J. Peter, is being re-released later this month with a wonderful new forward by Bob Sutton (here in its entiretyas part of an exclusive sneak peak by BusinessWeek online).  In re-introducing the book, Sutton talks about the particular delight that his father, who ran a company that sold and installed furniture and equipment on U.S. Navy ships, took in the book:

My father loved The Peter Principle because it explained why life could be so maddening—and why everyone around you seems, or is doomed to become, incompetent. The people who ran the U.S. Navy and the shipyards didn't intend to do such lousy work. They were simply victims of Dr. Peter's immutable principle. They had been promoted inevitably, maddeningly, absurdly to their "level of incompetence." Dr. Peter also taught my father not to expect the few competent bureaucrats and managers he encountered to stick around for long, as they would soon be promoted to a job that they were unable to perform properly. Dr. Peter even showed that such incompetence had pervaded my dad's business for hundreds of years. The book quotes a report from 1684 about the British Navy: "The naval administration was a prodigy of wastefulness, corruption, ignorance, and indolence…no estimate could be trusted…no contract was performed…no check was enforced."

Particularly delightful is the pseudoscientific jargon that Dr. Peter invented to describe the motivation and behaviors displayed by those "languishing at their level of incompetence".  Check out these gems...

• Final Placement Syndrome - the condition of incompetence that forms the root of the entire book.

• Tabulatory Gigantism - an obsession with having a bigger desk than his colleagues.

• Teeter-Totter Syndrome - a complete inability to make decisions

• Cachinatory Inertia - the habit of telling jokes instead of getting on with business

• Percussive Sublimation - being kicked upstairs: a pseudo promotion

• Peter's Circumambulation - a detour around a super-incumbent, who is a person above you who, having reached his level of incompetence, blocks your path to promotion.

Gotta love it.  I understand that the book shows its age with some archaic moments and even sexist examples (evident even in the definitions above); however, my copy is already on order.