Compensation Force

Skills Shortage: An Opportunity for Recruiting and Compensation to Get Along!

Are our current recruiting and compensation strategies causing us to overlook "nearly perfect" candidate pools for those hard-to-find skill sets?

Is our focus on job titles - rather than a broader consideration of competencies - undermining our ability to bring in the talent our organizations need?

Learn more about an interesting study -- and what its findings tell us about these questions -- by clicking over to my post today at the Compensation Cafe.

Creative Commons image "Collaborate" by jonny goldstein

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

How Dynamic is YOUR Compensation Philosophy?

Can it do back bends?  Turn on a dime?  Leap across sudden obstacles?

Is it agile enough to help your company anticipate and respond to the workforce challenges dished up by a fast moving competitive environment?

What might a more dynamic compensation philosophy look like?

For some inspiration and ideas, check out my post today at the Compensation Cafe.

Creative Commons image "leap" from sabrina's stash.

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?

Survey Results: Is The Earth Moving Under The Annual Merit Increase? (The Conclusion)

Has the time come to shake up the annual merit increase?

Yesterday we began coverage of our survey findings where 124 compensation and HR professionals provided their answers to that question, based on what is happening in their respective organizations.  We learned that while most respondents' organizations are not considering changes to their annual salary increase policies beyond tracking and responding to competitive salary increase levels, a sizeable minority (34%) are attempting to break new ground.  We learned that smaller firms (<500 FTEs) may be leading the way in this regard.  We learned that there is still a lot more talk than action happening, with  three times as many organizations considering changes as have already planned or implemented them.

And we also learned something very interesting: that the kind of changes being talked about are quite different than the kinds of changes being planned or implemented.  Take a look at the tables below.  Notice that differentiation tops the options being considered, but it drops to a distant third when it comes to those that have been already implemented.

 

These data show that differentiation is the option most under consideration, cited by over half of those who have something “shaking.”  (Differentiation, you'll recall, was described as moving from a one-size-fits-all to a more selective policy that differentiates salary increase opportunity in response to mission critical skills, job value or other factors.)  Differentiation, however, comes in second to Shifting from Fixed to Variable where plans have been put in place to move forward in the next 12 to 18 months.  Differentiation comes in a distant third to Shifting From Fixed to Variable and No Longer Annual when it comes to changes that have already been implemented.

The upshot?

While the earth may indeed be starting to move under the annual merit increase, there appears to be more talk than action at this time – more organizations are discussing or considering changes to their annual salary increase policy than have actually made near-term plans or gone forward with implementation.

It is also very interesting to note that the options being discussed and considered relative to changing the annual increase practice are different than either plans that are underway or changes that have already been implemented.  What’s driving conversation, but not yet a lot of action, is the notion of differentiation.  As organizations look to the future and reflect on how to best direct the spending of precious base salary dollars, they are increasingly coming to the conclusion that this longer term investment must be done in a manner that responds selectively to business and talent needs (versus “one salary opportunity fits all”), helping to cultivate and craft the workforce needed for tomorrow’s success.  Yet, very few respondents have made definite plans or taken the first steps to put a truly differentiated salary increase approach in place. 

Why?

There may be a number of roadblocks, but a most likely one is that those charged with managing and supporting salary policy do not yet have the data or the analytical tools in place to define and categorize their workforce in a manner that supports differentiation in salary increase opportunity.  There is a tendency, among reward professionals, to focus on external benchmarking and competitive practices at the expense of looking more deeply within, and developing a more empirical understanding of our own workforces.  And so while we appreciate and value what differentiation has to offer, few of us may be in a position to execute on that potential.

Instead, those moving forward with definitive plans and implementing changes are focusing on shifting some of their available salary increase dollars into variable pay opportunity and extending salary increase timing to a period longer than 12 months.  These moves may help reduce some of the pressure on salary increase budgets, but do not demand the kinds of sophisticated information and tools that differentiation does.  They also fall somewhat short of the more strategic impact that a well planned and executed differentiation approach might deliver.

That's my take on the survey results.  What's yours?

Survey Results: Is The Earth Moving Under The Annual Merit Increase? (Part 1)

Has the time come to shake up the annual merit increase?

Should we move away from the one-size-fits-all, same-for- every-employee merit matrix to something more differentiated, more strategic? Reconsider the "once each year" timing and look at other, particularly longer, alternatives? Get serious about shifting some portion of this annual base increase over to some sort of variable opportunity?

There has been a lot of discussion around these questions, but how much real action is being taken? Last month I launched a brief survey in order to find out.  Many thanks to the 124 compensation and HR professionals who responded; survey reports have been distributed to all participants who requested them.  Today and tomorrow, here at the Force, we'll cover the highlights of the surveys findings.

Findings: A Minority Breaking Ground?

Survey findings suggest that there may be more talk than action at this point, but there is also evidence of movement underway. 

Most of the respondents indicate that their organizations are not considering changes to their annual salary increase policies beyond tracking and responding to competitive salary increase levels. A sizeable minority (34%), however, are saying that their organizations are considering or planning changes.

Who will lead the way?

While breaking the study respondents into organizational size groupings by FTEs yields sample sizes too small to be either statistically valid or clearly conclusive, it is interesting to observe that the smallest size group (<500 FTEs) is nearly twice as likely as either of the larger size groups (500-4,999 or 5,000+ FTEs) to be considering or planning changes to their salary increase approach. 

Many in the reward profession (particularly those in positions of power) hold fast to the belief that innovation typically happens at the largest employers, because they have the professional staff and the means to be creative.  These findings raise the possibility that the opposite may be true, that smaller organizations who may not even have reward specialists on staff (and thus might not be hampered by “conventional wisdom” or a traditional rewards perspective and education) may be more willing to react directly to the needs and opinions of business leaders.  

Whether a valid conclusion or not, it is intriguing to consider.  Perhaps we in the reward profession would benefit by stepping outside our echo chamber and learning more about what is happening in smaller, more entrepreneurial organizations.

So, what shakes?

Next, we take a closer look at the one-third of respondents who are considering, planning or have already implemented changes to their annual salary increase policy.  We asked these respondents to select from among the following four options to describe the changes being looked at or pushed forward by their organizations.

1. Differentiated. Moving from a one-size-fits-all (or mostly so) to a more selective policy that differentiates salary increase opportunity in response to mission critical skills, job value or other factors.
2. No Longer Annual. Moving from an annual increase timing to something less frequent and/or that varies based on certain factors.
3. Fixed to Variable. Moving to shift some portion of annual salary increase opportunity to a variable/incentive award opportunity.
4. Other.

Then, for each of the above, we asked respondents to tell us whether that option was (at their organization):

1. Not being considered.
2. Under consideration.
3. Planned in the next 12 – 18 months.
4. Already implemented.

More Talk Than Action

Respondents confirm that there is more talk than action happening at this point.  As the table below shows, there are three times as many organizations considering changes as have already planned or implemented them.

But here is where it gets interesting.  It turns out that what's being talked about is quite different than what's being planned or implemented. 

Intrigued?  Stop by tomorrow for Part 2.

Note: If any survey participants have not received their complementary survey report, please feel free to contact me at [email protected]