The Business Impact of Compensation Management

Imagine continuing to manage your personal investment portfolio with equal contributions spread across each account, regardless of its past performance or future potential. If a low-involvement, low rate of return approach fits your investment style, you might just be happy with the resulting meager financial gains.

Most of us expect our money to perform better on our behalf. We diversify our portfolio, search for investments that are trending positively, then monitor our distributions and make course corrections that, over time, reinforce our investment strategy. Those same best practices in money management can also be applied to an organization’s strategy for compensation management.

Compensation in terms of salaries and wages is often the single biggest cost to an employer and, depending on the industry, can be up to 70 percent of a company’s annual operating costs.[1] Yet many companies put this critical investment on autopilot by implementing across-the-board pay increases without taking individual performance into consideration.

With so many organizations focused on controlling costs, getting the most out of compensation budgets means developing a strategy for wise investments in talent. Effective compensation management starts by identifying a pay philosophy and strategy, then evaluating the plan on a regular basis to remain in balance with external market rates.

Once a compensation plan is in place, salary increase budgets can then be allocated to reward individuals for their performance against goals that drive the business, creating a true “pay for performance” culture. But it’s not just high-performing employees who benefit from effective compensation management; the company feels the positive impact from:

·       Higher productivity. When high-performing employees understand the connection between their individual contributions and their pay potential, motivation is created to deliver above-average results.

·       Budget effectiveness. By differentiating salary increases based on individual performance, companies can ensure that their merit budgets generate the greatest ROI.

·       Improved retention. When your strongest players realize that their performance is not only noticed but also fairly rewarded, they’re more likely to be satisfied and will continue to contribute for longer periods of time.

Perhaps some people are comfortable taking a “low involvement, low rate of return” approach to their personal investments. While that may be fine on a personal level, that strategy doesn’t hold up well for business. Invest the time to develop your compensation strategy, then invest in an automated compensation management software solution to ensure that your compensation program delivers a solid, long-term performance.

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[1] Harris, Stacey and Jones, Katherine. Getting Compensation Right: The Value of Compensation Analysis and Planning Tools. Bersin & Associates. April 2011.

Journal Your Way to the Top — Three Ways to Use Performance Journaling

Remember that little diary you kept as a pre-teen? The one filled with your childish thoughts and experiences, all safely tucked away behind an imposing-looking plastic lock. As you got older, the little diary was replaced with a more sophisticated journal to capture all the pleasures and pains of daily life. Some stories were of experiences meant to be savored and relived; others were of life’s greatest lessons learned when things didn’t go your way.

The benefit of journaling at work is much the same as keeping a personal diary: memorializing day-to-day experiences from the past to help us learn and grow. Keeping your own performance comments, notes and documentation will ensure that your accomplishments are captured thoroughly and accurately, which is especially helpful during a performance review cycle.

Use these three journaling techniques to support your performance improvement and career development:

1.      Capture Comments — Customer or colleague compliments will only stay fresh on your mind for so long. Record those favorable comments or kudos in your performance journal, and include additional context regarding relevant dates and related projects or goals.  


2.      Take Notes — Before checking that project off your list, summarize the highlights or obstacles that you experienced along the way. How did you keep things on track? Who was especially knowledgeable and willing to support your efforts? Refer to these lessons learned to help you to be more efficient or productive in your next assignment. 


3.      Keep Documentation — Maintaining work samples along with your daily journal will create a full picture of your performance during a specific time frame. For example, use your journal to summarize your prior month’s sales performance, then attach or link your notes to the monthly summary spreadsheet. Retain emails or any other documentation that demonstrates your teamwork, initiative, resourcefulness or other behaviors that are highly valued in the organization.


Why keep a work-related journal? Because leaving an assessment of your performance entirely in the hands of your manager means taking a passive role in advancing your career. If you’re asked to complete a self assessment of your performance, don’t present a response that’s filled with generalities or references to vague results. Gather all the comments, notes and any documentation you’ve retained as part of your journaling process to help you shine the brightest light on your past performance and future potential within the company.

Fire Up Summertime Performance — Reinforce Development-driven Learning During the Lazy Days of Summer

Fire Up Summertime Performance!

The temperatures are soaring, the birds are singing, and your employees’ thoughts are drifting toward summer vacations and leisure time in the great outdoors. You’ve got a business to run and customers to wow, so how do you keep everyone happy this time of year?

A recent survey of American workers suggests that employers are becoming more flexible and accommodating to their employees’ schedules during the summer.[1] Giving employees some reasonable leeway in deciding how and when they work isn’t just a sign of generosity on the part of the employer; it also benefits the bottom line with improved employee engagement and retention.

 

Even while allowing for additional flexibility during the lazy months of summer, there are things that managers can do to help keep their employees focused and on top of performance and productivity during the lazy days of summer:

·        Dust off development plans. Summer is an ideal time to revisit development plans that may have been sitting idle. Identify specific developmental activities that are aligned with performance goals and set short-term milestones to keep performance on target.

·        Ramp up communication. Hold more frequent conversations to stay on top of projects, roadblocks or potential barriers. Ask employees to share their plans for managing their schedules, their workload and any adjustments they’ll be making to their working styles over the summer months. 

·        Increase learning. Allow time for job enrichment by adding or prioritizing role-based learning activities. Using an automated learning management solution is an easy way to create targeted learning plans that directly support and improve employee performance.  

·        Broaden business perspective. Schedule time for employees to job shadow in other areas of the business to increase their company and industry knowledge. Opportunities might include listening to customer calls, attending various department meetings or riding along on customer visits.

Summertime certainly does present employers with seasonal distractions. Take a proactive approach and communicate with employees to understand their needs, your expectations and the flexible arrangements that will work best for both of you.

[1] Hirsh, Eytan. Employers Turn Up Flexibility for the Summer. SHRM. May 2012.

MY DIRECT REPORTS AND I TALK ALL THE TIME

“I Don’t Need 360 Feedback; My Direct Reports and I Talk All the Time  (Not)”

Let’s be clear: Conversation is not performance management. No way, no how.And just as that’s true for assessing performance down the ladder, it’s also true for getting effective, meaningful assessments of managers from their direct reports.

It doesn’t matter that you’re a personable manager who enjoys chatting it up with your direct reports around the proverbial water cooler. Or that you play together on the company softball team or hang out at the local pub.

It doesn’t matter that you think regular staff meetings and an open-door policy are good enough means of communication for your direct reports to let you know their concerns about how you’re doing your job — or if they want to praise and support you.

So, we’ll say it again: Conversation is not performance management. You may be talking, but you’re sure not engaging in performance assessments in any valid meaning of the term.

In Fierce Leadership, executive training authority Susan Scott puts it this way: “Simply having the conversation isn’t enough. It’s the quality of the conversation that matters. Conversations provide clarity or confusion. They invite cross-boundary collaboration and cooperation or add concertina wire to the walls between well-defended fiefdoms.”

Many 360 reviews fail because, at best, managers mistake casual office conversation for performance assessment input. At worst, managers use the veil of office camaraderie as concertina wire atop the walls Scott refers to.

In short, managers often confuse “conversation” with performance management because they or their organization lack a plan for communication that is specifically centered on defining performance goals and establishing formal performance management.

The solution is to develop a culture-wide appreciation for the power of discussing performance assessments in the “right environment” and at the appropriate time. That ain’t the water cooler, the softball field or the local pub.

To help get you there, Roland Smith and Michael Campbell, co-authors of Talent Conversations: What They Are, Why They’re Crucial, and How To Do Them Right, offer these six steps to guide a true talent management discussion: 

1. Clarify the goal
2. Explore the issues
3. Identify the options
4. Set expectations
5. Motivate
6. Identify the plan

As Smith and Campbell say, a conversation of performance assessment is not done to someone but with someone.

I’M ONLY A COG IN THE MACHINE; MY THOUGHTS DON’T MATTER

“You Are Not a Cog in the Machine”

Monday morning. You show up for work right on time. The deadlines and projects from last week apparently reproduced on their own over the weekend. It’s early, and the cortex of your brain hasn’t achieved maximum velocity quite yet. Ever feel like you’re just a cog in the mighty machine, fueled by endless venti café Americanos?

Who doesn’t? Despite the position, the paycheck or the portfolio of work, we all wonder from time to time how much our contributions really matter in the grand scheme of our company’s success. When we question our talents or second-guess our capabilities, we look to our immediate manager to help us refocus. But what happens when your manager isn’t there for you in a professionally supportive and encouraging manner?

As difficult as it may be, it might be time for “the conversation.” Your future performance and growth may hinge on your taking the initiative and offering feedback to your manager so that he can take the necessary next steps to meet your development needs. It really shouldn’t be so difficult — after all, he’s been placed in his role to be a leader. It’s his job to improve employee satisfaction and increase your engagement in your work and with the company you both support. He’s been placed at the front lines of advancing your company’s performance management strategy, and you’re there backing him up. When you reinforce him with leadership suggestions that specifically address your individual needs, you’ll collectively contribute to a high-performing force within your organization.

Maybe you are just another cog in the machine — or perhaps you’re the driving axle holding the entire team together. Either way, your bright thoughts and big ideas matter, especially for a business strategy based on innovation. So go ahead — next time you’re ordering that Joe to go, grab one for your manager and strike up a conversation about how he can best lead and encourage you, so you can truly fire on all cylinders.   

MY REVIEW OF MY MANAGER WILL JUST SIT IN HIS (OR HER) DESK DRAWER

“And I Should Give You My Feedback Why, Exactly?”

OK, OK. We know you get it. You’ve heard it from speakers on the talent management circuit long enough. You’ve read it in enough academic blog posts and best-practice-type white papers.

You know by now that the most effective performance review systems include assessments of managers from their direct reports.

Yeah. Right. Like everyone in your organization believes that’s going to happen. Never mind it will occur with any sort of frank, open and productive communication.

Why are they so skeptical? Why might your organization be among those that won’t benefit optimally from authentic and effective 360 degree reviews for managers?

If your company is like most, one big reason is that too many employees think their managers will simply ignore their feedback, that it will sit in the manager’s metaphorical desk drawer, never to see the light of day again. Other reasons are that direct reports:

·        Don’t believe that their assessments of their managers will ever receive serious consideration from the manager’s supervisor.

·        Doubt their feedback will result in concrete suggestions for performance improvement that will help their manager grow and, in turn, improve things for the direct report.

In short, too many employees simply can’t wrap their heads around what an integrated talent development and performance management system is all about.

And why can’t they get past thinking that their feedback simply ain’t goin’ nowhere, as the folk tune says? Because for them to get a handle on the true potential of manager assessments, direct reports need to understand:

·        How those assessments relate to talent mobility throughout the organization

·        Why managers need to send performance management up the ladder for everyone on their team, including themselves

Call them tricks, call them hints, or call them key features of a best-practice integrated talent-development system, but here are four components to achieving buy-in and engagement for manager assessments:

1.      Encouraging open conversations up and down the ladder regarding each person’s skills and potential, and about what the organization needs

2.      Engaging in frank discussions between managers and employees about the manager’s performance

3.      Moving managers and their direct reports seamlessly from one job to the next, vertically and horizontally, and across business, function and geographic lines

4.      Making talent decisions based on an alignment of each person’s capabilities and aspirations

On the other hand, ignoring the fundamentals raises the risk that employees will continue to believe their feedback will be ignored, forgotten and left sitting in a virtual desk drawer collecting dust.

HONEST FEEDBACK ABOUT MY MANAGER

"Come, Give Me Your Feedback"

You have a pretty solid relationship with your boss. Even so, why does it feel like an invitation to jump aboard the Terror Train when he asks, “So, how am I doing?” You hope the invitation is offered with his genuine openness to feedback, but do you really know what lies beyond his call?

Many companies support 360 degree reviews for managers, with an intent to draw out honest feedback from a broad perspective, including direct reports who are inherently reluctant to participate in the process because:

       ·        They’re cynical about whether feedback is truly kept confidential

       ·        They fear their comments will come back to haunt them during their own reviews

·                They wonder if the manager will be held accountable for follow-up and long-term improvement

Feedback from direct reports can provide managers with invaluable insight and provide specific and concrete examples of performance upon which to focus development. If your organization uses 360 degree reviews, help employees prepare for their role in the process:

·        Communicate — Create awareness for the overall performance management program with a steady drumbeat of employee communications. Start from the top of the organization and send clear messages regarding participation, process and timing.

·        Cascade — Model support of the performance management process and activities from the top down. When managers themselves first experience the process of providing upward feedback, they’ll be more effective in cascading the process down the organization.   

·        Clarify — Clearly explain the process of handling feedback. Is the feedback kept confidential and anonymous? Is the process open and transparent, involving a face-to-face meeting with the manager? Address these questions early on and you’ll alleviate employee concerns.

·        Commit — Managers should create specific action plans to address performance gaps identified in feedback. Action plans should be shared with direct reports, with progress discussed at regular intervals throughout the following year.

·        Culture — Most important, consider your company’s culture when introducing 360 degree reviews to your organization. Take an approach based on best practices, and tailor your program to meet the unique needs of your people. Anything less may make them Scream.

Give My Manager Feedback? Are You Serious?

You re-read the email from HR in disbelief: “As part of this year’s performance appraisal process, employees will be asked to evaluate their managers.” As if performance reviews weren’t painful enough; hiding out under your desk sounds more comfortable than giving your boss feedback.

Regardless of how you — or your manager — feel about this new process, you’re both expected to comply. So crawl out from under your desk and get underneath your fear. Better start identifying your assumptions and planning a strategy:

    ·  My manager’s not open to my feedback. It’s hard to know if your input is welcome, since the directive came from HR and not the manager himself. Ideally, your manager would initiate the request and create an environment of safety for your discussion. Absent his doing so, it’s up to you to determine his receptiveness. Ask your manager how he’d prefer to receive your comments. If you sense disengagement, peppering him with constructive feedback will fall on deaf ears or may even be turned against you. Better to play it safe and stick with positive statements. If your manager genuinely supports the process, ask him where he’d like you to focus your feedback —

ü  Is there an area of development he’s working to improve?

ü  Was there a past project he was involved in that could benefit from your input?

Knowing specifically what type of feedback your boss is looking for will help you frame your response in a way that resonates well when delivered.

·        It’s not my role to coach my manager. True, your manager’s boss is primarily responsible for her development. But for organizations using a 360-degree feedback process, gaining a full spectrum of performance insight typically includes direct reports. So now that you’re involved, be sure you understand how the process works:

ü  Will you be asked to complete a manager assessment form?

ü  Will your responses be open or confidential?

ü  Will the feedback be delivered at a skip level or directly to your manager?

ü  Should you expect to have a face-to-face meeting with your manager to present or review your feedback?

Once you have a handle on the process, follow it:

ü  Answer questions honestly and professionally.

ü  Focus responses on your own perceptions and avoid acting as a spokesperson for others.

ü  Use specific examples of performance.

ü  Provide recommendations for improvement if requested, but avoid telling your boss how to do her job.

Your feedback, when combined with others, will help your manager to develop and improve her leadership skills, which ultimately benefits you.

·        Why does my feedback matter, anyway?  In short, because it’s in your best interest to tell your manager how you want to “be managed.” Your manager plays a central role in the company’s performance management process. Beyond just reviewing the performance of his direct reports, he’s also expected to understand the unique motivational triggers of everyone on his team:

ü  What do employees expect from him as a manager?

ü  How does each employee prefer to receive coaching and direction?

ü  How much oversight does the employee need and how can they best be challenged?

By collaboratively participating in an exchange of feedback, you’re improving your chances for a successful and supportive working relationship between you and your manager.

As with any new process, start by getting answers to your questions and understanding the process. You’ll alleviate your fears and be in a better position to focus on feedback that benefits your manager and, ultimately, you.

Mirror, Mirror on the Wall — Reflections of Performance: Five tips for writing an effective self-assessment.

There it is — the email invitation from your manager suggesting a date for your next performance appraisal. No sweat, you think. You’ve been killing deadlines and kicking the competition for the past six months. But what’s that last sentence? “A self-assessment should be completed prior to the meeting.”

Unless you’re a practicing narcissist, the idea of assessing one’s own performance leaves most employees either cold or confused. “What if I underrate my performance and negatively influence my manager’s assessment?” “If I toot my own horn, won’t it come off like I’m boasting?”

Employee self-assessments have been widely accepted for some time, and for good reason. Asking employees to evaluate their work against their own standards of performance gives the manager insightful perspective to use when preparing feedback.

Don’t leave employees scratching their heads, not knowing what to expect from the process. Share these best practices to help them reflect honestly and accurately on their performance:

1.      Tap your long-term memory. It’s easy to forget about the accomplishments or learnings from long ago. Cite specific and relevant examples of performance throughout the entire time frame under review.

2.      Be confident. This isn’t the time for modesty. Your manager has asked for specific examples of your performance, so highlight your accomplishments with professionalism and humility, and distinguish between “I” and “we” when referring to team-based assignments.

3.      Request development. Consider areas where you might benefit from additional learning or development. Be prepared to suggest specific training or developmental activities that will improve your performance and help you to contribute in your role.

4.      Focus on results. Present accomplishments that best support the company’s key business drivers. Use objective data for support, such as delivering early on completion dates, bringing costs in under budget or achieving high customer-satisfaction scores.

5.      Stay open minded. Remember that your perception of performance represents a single, biased viewpoint. Self-assessments and performance appraisals rarely align perfectly. Use this as an opportunity to explore and learn from differences of opinion related to your performance. 

Fair, Square and on the Level

Five Tips for Using Calibration to Uncover the Truth of Your Company’s Talent

One of the chief complaints heard from employees working in a pay-for-performance culture centers on questions of fairness: “I’ll never receive the pay increase I deserve because my manager rates tougher than others.”

Sound familiar?

If only Human Resources had an Automatic Calibration Analyzer 3000. Tweak some knobs, flip some switches, and performance could be automatically measured and rewarded across the entire organization. Despite technology advances, such a concept is still a thing of futuristic talent-management fiction.

Human Resources is responsible for creating compensation and reward strategies that are fair, square and on the level in the minds of both business leaders and employees. Including calibration as part of your performance assessment process ensures that similar effort and success receive similar rewards. Follow these five tips for using calibration effectively in your organization:

1. Calibrate across units. Managers should come prepared for the calibration meeting with preliminary ratings and merit recommendations for each of their direct reports and be prepared to defend, or adjust, their decisions against the scrutiny of their peers.

2. Use a facilitator. An unbiased facilitator, such as an HR professional experienced in calibration techniques, keeps the discussions of performance objective, balanced and constructive to the overall process.

3. Dig deep. Insight gained from calibration should extend further than stamping a performance rating on each employee. Take this opportunity to discuss leadership readiness, developmental needs, and explore potential talent gaps or retention concerns.

4. Make it known. Don’t shroud the calibration process in secrecy; keeping the process a mystery only adds to a perception of unfairness or distrust. Make employees aware of the calibration process; yet assure them that any discussions regarding individual performance will remain confidential.

5. Own the results. Since the intent of the calibration discussion is to ensure a level playing field of performance assessment across the organization, adjustments to managers’ initial ratings or merit-pay recommendations may result. Establish ground rules early on asking that managers take full responsibility for communicating appropriately with their employees.

Forget fancy futuristic gizmos; instead, use proven performance calibration techniques to uncover the truth about your organization’s talent.