The Truth about Compensation Communications?

Want to have a lively discussion with a colleague at this point in our economic travails? Bring up the topic of compensation communications. At least that was my experience this week at the Bay Area Compensation Association. “The Truth about Compensation Communications” was the title of the program. The membership requested the topic, and here are some of the lessons that participants told me they’ve learned in the past few months.

Underestimate the power of your organization’s culture at your peril. It’s unrealistic to expect managers to differentiate merit increases if your organization’s culture says, “Don’t rock the boat.”  True, most of us are uncomfortable conducting pay for performance discussions, but that’s only part of the challenge that HR faces if you are in a culture where people shrink from speaking candidly. When you’re designing your compensation practices, be sure that they’re more than a good idea. Be realistic about whether your managers can pull them off.

Just because people understand, doesn’t mean that they act. HR tends to do a pretty reliable job at explaining how our compensation practices work, but that doesn’t seem to be enough to move managers or employees out of their comfort zone. Let’s take a lesson from our work on Wellness. Have you noticed that it’s easier to entice people to read about losing weight, working out, stopping smoking, than it is to get them to do it? If you want to encourage people to act, you can’t be passive yourself – sending emails and showing PowerPoints. You have to recognize:  The need for discussion so people can internalize new ideas; the challenge of finding out what motivates those specific individuals to act; the insight and commitment it takes to help them stay engaged.

Our people are just glad to have their jobs – and that makes us worried. I’ve run into the following contradiction, “Our employees didn’t complain about their increases.They’re just happy to have a job. But research shows that upwards of 30% of them want to leave as soon as the job market opens up.” (Sometimes I wonder whether it’s the HR practitioner who actually wants to exit, but no matter.)

Here’s my take. If this is the mood in your organization, why aren’t you working to get all those employees reengaged? I’d encourage you to turn this into a pressing initiative which actively involves managers. Otherwise, all those employees may want to leave because they know something you won’t admit – the organization is running out of steam.

We’re not, but I thought we were supposed to be (trying to be) transparent. People are worried about the concept of transparency when it comes to compensation. I say that’s a good thing. To make my point, we talked about the example of the IRS. They seem to strive to be transparent, writing copious notes on hundreds of regulations. And yet few would give the IRS a communications award.  Compensation is difficult to understand for many reasons. Working for clarity – rather than providing information on easily misconstrued technicalities – is what the Compensation Café team has been encouraging.

Margaret O’Hanlon is founder and principal of re:Think Consulting.  She has decades of experience teaming up with clients to ensure great Human Resource ideas deliver valuable business results.  Margaret brings deep expertise in total rewards communication to the dialogue at the Café; before founding re:Think Consulting, she was a Principal in Total Rewards Communications with Towers Perrin.  Margaret earned her M.S. and Ed.S. in Instructional Technology at Indiana University.  Creative writing is one of her outside passions.

Comments

[Laura Schroeder]

What a great point about culture! Even people who understand the big picture will act in their own best interests, especially if they fear getting fired or reprimanded. If you want people to move out of their comfort zone, you have to offer them something more compelling than comfort.

[Margaret O'Hanlon]

Laura, what was so interesting in our conversation was the HR practitioner didn't notice the contradiction between their culture (don't rock the boat) and their philosophy of pay for performance (make your results better, and distinguish the employees who have achieve results that are better than others). To make the pay for performance program work in this setting, leadership would have to acknowledge that it involves a transformational change in the organization and plan to move out of everyone's comfort zone. Otherwise, employees may become skeptical about management's abilities (well they can't pull this one off, can they) or angry at management's insincerity (they say this is important, but they aren't willing to make this work). This can be quite damaging to employee trust in their leadership.