It's Time to get Your Compensation House in Order

I went to a very informative SHRM-Atlanta presentation last week on "The Return of the Pay Discrimination Class Action - How Should Employers Evaluate Their Compensation Practices in the Wake of New Federal Laws" by Antonio Robinson, from Littler Law Firm. Robinson discussed the Lilly Ledbetter Act and the Paycheck Fairness Act, which the later is pending before congress. After listening to the presentation and thinking about what I have heard so far regarding these 2 pieces of legislation, it becomes crystal clear that companies are going to have to prove why the pay people differently. How many times do managers make pay decisions and not document why those decision are made? These two acts are going to require managers and/or HR to explain why compensation decisions are made. (It was also clear that merit increases may be forever changed as well. See, Mike Haberman's comments on this subject).

Given my post last week, regarding "Pay for Performance-Really," I had to ask the question, "Are companies going to have to get serious regarding pay for performance." Robinson stated, he thinks companies will have to start doing a better job in this area.

Given that pay disparities need to explained according the Paycheck Fairness Act using a "bona fide factor other than sex" making sure that factors such as education, experience or training is JOB RELATED.

So, what I think this means for HR professionals is:

1) Compensation structures need to be updated and equitable both internally and externally. I believe compensation studies are going to be very popular as a good offense. (Phillip Blount and Associates are excellent at this)
2) Job descriptions will have to be accurate about those bona fide factors that are job related. Another good offense!
3) Managers need to explain and detail all compensation decisions.

What are your thoughts on the impacts of these pieces of legislation?

Pay for Performance-Really?

We have all talked about paying for performance for a very long time. It is interesting to me that when I bring the subject up with clients or with my students, I see rolling eyes and smirks.

I think Pay for Performance will be the new Mantra and companies are not going to be kidding this time.....With what has happened in the last few months with companies folding and executives being rewarded for poor performance, we need a different mindset. NO RESULTS, NO MONEY

I believe what kills pay for performance is sheer commitment. Let's face it, managing a true pay for performance system that is integrated from competencies and behaviors on performance appraisals straight through the compensation system is hard. This is especially tough when your company has an entitlement culture rather than a high performance culture. Training managers on how to execute a performance system is also hard.

With that said, the hard work is worth it. Rewarding high performers is crtitical to their retention. There is a lot of research on how much more value high performers bring to the organization. By rewarding marginal and low performers we are sending the wrong message and our high performers get demotivated.

We are working with a client right now, that is truly committed to a high performance culture and will be rolling out its true pay for performance system very shortly. The driver behind the change was that this company is facing different external challenges that will possibly force them to enter a more competitive environment where there will be more choices for the consumer for their particular product. They need a work force that is customer focused and results oriented. This transformation will not happen over night and many months have been spent on data gathering and research. The key to the success of this project is that the top executive is TOTALLY committed to its success and has a very clear vision of what needs to happen.

With budgets shrinking, we no longer can afford individuals that half perform or have bad performance. Our salary dollars are very precious and we need to spend those wisely.

I believe the following are key points in a true pay for performance system:

1) Definition of success has been determined and is linked to organizational goals

2) Competencies and behaviors are clearly defined (performance appraisal) and communicated

3) Salary structure has clearly defined compa-ratio zones outlining where high performance occurs

4) Managers and employees are trained on how they are measured

5) Deficiencies are addressed in a spirit of continuous improvement

6) Results are tracked and success is celebrated

So through away your merit increase bell curve and replace it with:

High performance= increase

Meeting Expectations-Thanks for doing your job-no increase

Low Performance-We will work together to fix that-no increase

Bad Performance-Find another job-no increase

Call to action: Do you have a true pay for performance system? If no, start by having a conversation with your top executive to see how committed he/she is to high-performance.

Accentuating the Positive for Better Results – Especially Now

Today's post is written by ICC's Co-Founder, Barbara Hughes.

It sure is hard to avoid the negative these days; I’d have to live in a cave with no social media, television, Web or radio to escape the relentless grind of bad news occasionally interspersed with glimmers of hope. We know the cumulative effect on our personal and work lives in terms of morale, feelings of isolation, and, yes, fear. But, what if we accentuated the positive at work? What if we talked about what we’ve done well and what has been accomplished even in the face of such negative news? Would the cumulative effect of positive news counteract and even overcome the negative?


This was the premise of an interesting article last week in Business Week by Fred Collopy, a professor at Case Western Reserve University. Professor Collopy calls our rush to a solution based on framing a problem as “Deficit Thinking”: focusing on what’s wrong and problems that need to be solved.

Managers’ jobs have evolved from “thinkers” and “planners” into “fixers” and “solution providers” and the solutions had better be delivered ASAP. Professor Collopy says that we spend so much time thinking about what’s wrong with our businesses that we overlook what’s right and the result often is sacrificing a great solution for an expedient one. So, what have we got to lose by trying to accentuate the positive in our work and see where it can go? We could be amazed by the results not only in terms of new and better solutions but also an improved outlook on ourselves and our futures.

I have a client who recently wrote a State of the Company paper to his employees and called it the “We Do Not Know How to Quit Strategy”. It sure beats a “Why We Have to Survive Strategy” for reframing the challenges and making them opportunities. Here is an outline of what this very courageous and entrepreneurial CEO wrote to his people:

• Do your job with character and integrity. Nothing is more important!

• Spend quality time learning our customers’ businesses, as well as their particular challenges.

• Create action plans for delivering products and services to our customers that will help them be successful.

• Bring all of our company’s products and services to our customers; never stop asking for an opportunity.

• Be responsive to our customers and suppliers by offering the best service anywhere in our industry.

• Care about the success of fellow employees and our customers and encourage each other to believe that success is possible during these challenging times if we stick together and become a partner in the success of our customers and suppliers.

• Strengthen your belief in yourself, your fellow employees and our company.

My CEO friend ends his message with, “I remain 100% confident we will be very successful. Times are tough but we are tougher! Our future is very bright so go buy a pair of sunglasses and get ready!”

Rather than focus on things outside the control of the employees, this CEO modeled behaviors for his team to lift them up and remind them of what they can control and that how they do their jobs can make a difference. He accentuated the positive and stayed away from “Deficit Thinking”. In my view, this is a better way to lead and to work in these tough times. What do you think?

Five Ways to be Sure We Get Our Share

Today's blog is written by ICC's Co-Founder, Barbara Hughes.

In the heady times of economic prosperity, “share of wallet” is a marketing metric that usually receives scant attention. Could it be that as individuals, business owners and managers, we want more, more, more and the way to get it is by acquisition? After all, isn’t there something downright seductive about the new and something, well, blah about the known? If that wasn’t true, wouldn’t cell phone providers and cable operators treat existing customers as well as the new ones they are courting?

There is a big problem with finding and signing new customers: it’s an expensive pastime. Share of Wallet, on the other hand, has a greater return on investment and the data behind it is available in your existing financial and sales systems (note: these and other databases like CRM should be integrated so that everyone connected with a customer has the Big Picture) and can be updated because, after all, you interact with your customers frequently (don’t you?).

Real share of wallet measures the amount of the customers’ total spending you are capturing in any particular category of product or service. (Read what marketing guru Seth Godin says about SoW here)

Knowing what you already have and how you might capture more of those dollars from the wallets already in your clients’ pockets is my definition of sanity. Right now, without a lot of spending on initiatives with money we don’t have, here are five ways that you can engage your entire workforce on SoW metrics and delight your loyal customers in the process:

1. Educate your workforce on “share of wallet”: what a great opportunity to get the Finance Department to share what they know with other employees! When employees understand how their work contributes to company performance, engagement happens!

2. Encourage share of wallet behaviors: the dots have to be connected between an employee’s job and the ways in which he or she can put those SoW dollars into your pocket and not your competitor’s pocket.

3. Recognize employees who get on board with the idea of Share of Wallet: recognition has been shown to be a higher productivity and engagement booster than monetary rewards. However, recognition should be tailored to the employee, his or her geographical location and the organizational culture. Click on this link to watch a brief video from the CHRO at Accenture to pick up some additional ideas on recognition.

4. Listen to the feedback from employees that can provide immediate improvements to your SoW initiatives.

5. Ask customers the following question, “If you had to decide between purchasing from two different stores or companies, what is the most important factor in that decision?” Satisfaction data is fine; loyalty data is better. You’ll get great insight from this question and most client-facing employees from sales to customer service to point-of-sale have those moments of truth with your customers every day. It’s time to tap into this valuable insight and bring it together with other performance data.

If we truly are focused like a laser on our existing customers and if we genuinely want to grow those relationships, Share of Wallet is a metric that matters for not just this economic time but for all time.