Take the drama out of employee compensation

by on June 16, 2009 · 0 Comment POSTED IN: HR Info Center

Logic, truth and timing are the keys with employee compensation

If you want to get drama out of your employee compensation conversations, you got to get to a logic-based situation. If you haven’t thought through or you don’t have a foundation that is logical in nature with your employee compensation plan, it’s going to make it to be dramatic. People are going to think everything subjective and they’re going to want to question your motives on what’s going on here.

A proven plan for taking the drama out of employee compensation conversations
My strategic recommendation – the top of my list is to be boring. Figure out what the middle of the market looks like and get there with employee compensation. I worked for the most profitable corporations ever created by man and they quit trying to be at the 75th percentile.

They quit trying to be ahead of everybody else, so did AT&T, IBM, all the big companies that they always targeted, “Hey, if 50% is what everybody else is aiming for, we’re going to be at the 75th percentile.”

It was like one day they all woke up, saying, “What the devil are we doing to ourselves? We got to quit this. Man, this is just not working out.” And so, they decided to go to the middle of the market.

By the way, to differentiate with things other than employee compensation like having great career opportunities, by making it a cool environment, in a lot of other ways they tried to differentiate themselves. But with employee compensation, they were as boring as watching paint dry

I would go right for the middle of the road. Every time I’ve gotten creative and innovative with employee compensation adminstration it’s cost me. Particularly folks be careful about your bonuses because you can short sheet the bed real easy.

When you pay people for one thing and you ask them for another, it’s amazing what they do. They do exactly what you pay them for and not what anybody with common sense would know would be the right thing to do. So, when you get too creative and innovative you be careful, okay?

As Dr. Deming and the quality folks would tell you, you can easily sub-optimize. You can optimize at the individual or departmental level. And really as a whole, the organization is doing poorly.

Edited remarks from the Rapid Learning Institute webinar “How to Drain the Drama from Salary Reviews: A Conversation Roadmap” by Gary Markle

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