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

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

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.

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?

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 abares@alturaconsultinggroup.com

All the debate prompted by first Yahoo's and then Best Buy's decision to end their telecommuting/flex work programs reminded me of a great podcast released a few months back by WorldatWork, facilitated by Alison Avalos and featuring practice leaders Rose Stanley (work-life) and Jim Stoeckmann (compensation).  The podcast addressed a question I hear frequently: whether and how to apply geographic differentials in compensating remote workers who are located in higher paying regions than the rest of the organization's staff (or at least the worker's particular organizational cohorts).

Brief background.  Geographic differentials, of course, are the mechanism by which we pay employees in some locations differently in order to reflect geographic differences in competitive salary levels.  (Notice that I said differences in salary levels, not differences in cost of living.  Critical distinction.)

As the WorldatWork team notes, the question comes up in two ways with respect to remote workers.  It will come up in response to a general workforce strategy involving remote work, proactively chosen and pursued by the organization.  Or it can come up on a more case-by-case basis, typically in response to the request or circumstances of a particular employee, in an effort to accommodate and retain that worker.  The former clearly demands careful consideration of business priorities, competitive demands and costs, at the organizational level.  It is the latter, however, that I want to focus on here.

The case-by-case scenario comes up for a host of different reasons.  A common situation involves a valued employee who must relocate, as the result of a spouse accepting employment in another area, an aging parent demanding care and attention, or any number of things.

Jim Stoeckmann's position -- and I agree with it -- is that there isn't (and shouldn't be) a one-size-fits all policy for these situations.  It may be wise to establish a "default" position (I'd propose that an employee whose remote work location is at his/her own election, and not the company's request, not be paid at a higher level if their election takes them to a higher salary city), but it is also worth retaining the flexibility to respond to a specific employee and their case.

Where there are concerns about retaining the employee or where the employee has critical skills, fills a key role or is at high risk of being recruited away by an organization willing to pay the local upcharge, it might be worthwhile coming to a compromise.  Jim mentions "splitting the difference" as a good option for situations like this.  Depending on the risk, it may be smart to do even better.

Regardless of whether the bigger pendulum of remote and tele-work continues to swing out or stalls somewhat in the wake of the Yahoo and Best Buy announcement, I believe we'll see a continued rise in the case-by-case requests generated by the conditions facing individual employees.  Are you prepared to address all the pay implications of this trend in your organization?

There are rumblings underfoot among compensation and HR professionals concerning the once sacrosanct annual merit increase and whether the time may have come to (really) shake things up.

Should we be moving away from the one-size-fits-all, same-for-(nearly)every-employee merit matrix to something more differentiated, more strategic?  Is it time to reconsider the "once each year" timing and look at other, particularly longer, alternatives?  Should we finally get serious about shifting some portion of this annual increase in fixed base over to some sort of variable opportunity?

Do we stick with the tried and true?  Tinker around the edges?  Ditch the whole deal in favor of something more agile and aligned with business reality?

I'm hearing a lot of conversation and getting a lot of questions, but not yet noticing a lot of action being taken.  And so, in an effort to help all of us get a better bead on this, I'm kicking off a quick survey to see whether we can collectively get a sense of the movement.

Please take a quick minute to click through the link below and respond to the short questionnaire... and please also share it with a colleague or two. 

Click here to take survey

I'll share the results here.  Will also happily provide a brief written report (.pdf) with any participants who request it on the questionnaire.

Thanks!

Creative Commons image "fault lines from helicopter" by wharman

Some things change.  Other things are more enduring in their reflection of truth and human nature. 

I think of goals as falling into the second category.  Technology messes with them some on both ends; it brings us efficiency and organizational capabilities for goal management, but it also accelerates the business cycle so that it often feels impossible to even set them.  Nonetheless, this much is true:  Employees do better with clear communication about what is expected of them.

I forwarded a great quote from Alexander Hiam (from his book Motivating and Rewarding Employees) to a client recently, to follow-up on a discussion we had on this topic.  I thought it would be worth publishing again here.

"Do better" is not a performance goal.  Nor is "Do much better."  Nor is "Be the best."  Yet managers often state so-called goals like this.  The reason these aren't goals is that they are not specific enough to be clearly relevant to performance.  They set the employee up for a fall because they are low in task clarity.  What does a manager expect when he or she says to do a good job?  What's the manager's definition of good?  What does he or she care about?  Employees wrestle with these dilemmas every day, and they are generally pretty bad for motivation levels because you can never seem to guess quite right.

When the manager surprises the employee later by saying, "I told you to do a good job and look at the mess you've made of it," the employee is usually puzzled and hurt by the feedback.  Why is it a bad job?  The employee didn't mean to do a bad job.  People don't go to work to do a bad job, ... When they do, it's an unhappy accident for them and their supervisors.  But saying, "Do a better job" is a controlling approach.  It makes the employee dependent upon your judgment of what is good and bad, rather than making it clear enough that they can trust their own judgment and know why you like some work better than other work.

I pay particular attention to the last two sentences.  Refusing to set clear goals is a controlling approach.  Rather than empowering people, it disempowers them.  Instead of building their sense of autonomy and control over their work and performance, it sucks their power away and forces them to play guessing games in an effort to read their manager's mind to discover what will please and delight him or her. 

I know that setting goals is hard, really hard.  But we owe it to people to ditch the games and give them the clearest information we can about performance expectations.

That's what I think.

Creative Commons Image "Midnight Question Writer" by emily.laurel504