Workers Wish for Birthdays Off!

When asked for their top choice for an employer-sponsored holiday among several days typically included as "floaters", birthdays were the #1 option selected by a wide margin in a national survey of 500 adult office workers commissioned by Blumberg Capital Partners.  The holiday question was part of a broader survey examining the impact of office building conditions on worker morale, productivity and motivation.

The complete rankings of the top choice holiday selected by participants is shown below:

• Own birthday - 46%
• Veterans' Day - 14%
• Presidents' Day - 10%
• Election Day - 10%
• Martin Luther King Jr. Day - 8%
• Halloween - 6%
• Valentine's Day - 2%
• Columbus Day - 2%
• St. Patrick's Day - 2%

This comes as no surprise to me.  I have encountered the strong preference for birthdays as a holiday in a number of organizations.  The preference seems particularly strong at those companies with one or more unions in place; workers rising from union ranks to take management jobs resent the loss of the birthday holiday (which I have been made to understand is a common union benefit).

As one gentleman put it to me:  "Working on your birthday is ... well, it's unAmerican!"

Apparently he has a lot of company.

Rewarding Employees with Time Off

Days Off are the New Short-Term Incentive say Frank Roche and Sarah Chambers of KnowHR.  And I think they're on to something.

I worked a few years ago with an organization that would award a half-day off with pay to all employees as a reward for meeting certain organizational goals.  In this case, it was the same half-day for everyone; they literally shut the place down for an afternoon.  I conducted employee focus groups there about a month after the first half-day was awarded, and people were still talking about it.  They loved it.  LOVED it.  And because they all earned it and enjoyed it as a group, it was huge for the esprit de corps.

I have also partnered with a couple of clients to create a reward element that combined time off with a developmental opportunity.  Employees who performed exceptionally well, in addition to earning bigger salary increases (this was a merit pay shop), also received a day or more off with pay, along with a professional development allowance to spend as they wished (within certain guidelines).

I think what Frank and Sarah have in mind is something more fundamental than that: the introduction of time off as another currency to consider in designing incentive and other reward programs.  And the potential applications are probably limitless.  Time off is an increasingly valuable commodity in our too-hectic lives, and not just for Gen Y and Millenial workers.  A number of us time-off-starved Baby Boomers have seen the light here as well.

And if belt-tightening is in our organizational futures, time off could be a cost effective and  appreciated addition to our portfolio of employee rewards.

Why You May Be Having Difficulty Hiring Accounting & Engineering Grads

Accounting and engineering firms continue to show a lot of interest in hiring new college graduates, according to the Winter 2008 Salary Survey published by the National Association of Colleges & Employers, and they are offering some handsome starting salaries.

Based on the results of this most recent survey, the table below outlines the top employers for 2007-2008 new college graduates, along with their average starting salary offer.

One related challenge that I've encountered, at least in my regional marketplace, is that these service providers (particularly engineering, accounting and consulting services) are not well represented in general salary surveys.  As a result, our best efforts to market price the jobs where new grads in these "hotter" fields traditionally enter an organization can fall short of truly capturing what is going on in the marketplace.  For this reason, I like to pay attention to what NACE reports for these select jobs, in addition to whatever other survey sources a client of mine might typically use.

Mixed Bag: Market Pricing When Employees Wear Multiple Hats

In a variety of settings and for a variety of reasons, we see jobs that are essentially hybrids; that is, they cover a combination of functions that are more typically found on a stand-alone basis.  The Nursing Director who also serves as Director of Volunteers.  The professional who splits her time between purchasing and inventory control.  The bookkeeper who also has responsibility for sitting at the reception desk for two hours every day. 

Market pricing jobs like these - going out to compensation surveys to find comparable jobs in order to collect competitive pay information - can be a real challenge.  My experience would suggest that there isn't one best approach to doing this, but that there are a few methods to consider.  The trick, I believe, is matching the approach to the particular talent scenario you are facing. 

The most common approach to a "mixed bag" job is what I will call the proportional split.  This involves identifying job matches and collecting survey pay data for each function, and then giving the data for each function a weight that reflects the proportion of time spent on that function.  In other words, if an employee spents 75% of her time doing inventory control and 25% of her time on purchasing responsibilities, the survey data for these two functions would be weighted accordingly. 

This proportional split approach is best suited to situations where there isn't much disparity in value or skill level being straddled, where the functional areas being combined are more closely related.  A combination of compensation and benefits work probably fits this criteria; a combination of compensation and software development, not so much.

Often these "mixed bag" positions involve a job which requires a specialized skill set, let's say a seasoned chemical engineer, but also has the additional responsibility for performing another important but less specialized role, such as supervising a small group of hourly manufacturing employees.  The proportional split approach is problematic here, where its outcome would be a compromise between the value of an experienced chemical engineer and the value of a plant foreman.  If the going rate for an experienced chemical engineer is higher, as I suspect it would be, you can't "ding" the value of this role because you've added an another set of responsibilities into the mix.  In fact, there are those who would argue (and have) that you'd need to pay a premium in order to get a chemical engineer to also spend time supervising non-engineering workers. 

In some cases, a job can be a combination of several positions that can only be market priced separately and on their own.  And it may be that giving the job credit for the highest valued of these different roles doesn't really do justice to the complexity involved in overseeing multiple discrete functional areas.  I can recall one particularly odd combination of a Manager that oversaw accounting, purchasing and customer service.  Separately, these managerial jobs were market priced at about the same level - but that didn't do justice to this unique role, so we ended up adding a "premium" of 12% (essentially this organization's midpoint differential - or differential between salary grades - kind of a "one up" adjustment) to the overall market value in order to account for the added complexity of this particular combination of responsibilities.

This, of course, is where market pricing stops being strictly a science and crosses into the realm of art.  And while we may prefer dealing in situations where we simply add up the numbers to get the right answer, we can also count on the fact that organizational needs and circumstances will throw us the inevitable curve ball.  Rising to these occasions requires combining our best data analysis with sound business judgment to identify the approach which is fair and appropriate for the organization and the employee.

Executive Compensation & the Subprime Mortgage Mess: Gas on the Fire?

Is there a relationship between executive pay and the risky financial instruments linked to subprime mortgages?  Nell Minow, corporate governance expert and editor-in-chief of The Corporate Library makes the case that there is during an interview featured in the February 19 issue of Strategy+Business.

In an excerpt from that interview:

S+B: In what ways were the boards responsible for the current debacle in the financial-services sector?

MINOW: There were a couple of precipitating factors. One is that the boards weren’t paying enough attention. They weren’t asking the right questions. And the other is that they were creating executive compensation plans that had the effect of pouring gas on the fire. You can see how it worked by looking at it in hindsight. All of the CEOs who failed got paid very well. Therefore, the pay plans had very perverse incentives. Yes, the CEOs did receive incentive compensation, but incentive to do what? If the incentive was to essentially offload risks — which is what happened, because the CEOs were pushing much of the risk off to shareholders — then this is what you get.

And further in, when the question was posed about what boards could have done to prevent executive compensation from contributing to the crisis, Minow quotes Warren Buffett:

S+B: What could the boards of financial-services firms have done to help avoid situations like the subprime meltdown?

MINOW: You can’t do better than what Warren Buffett said to the people at Salomon Brothers many years ago: “If you lose money for us, we will be forgiving. If you lose reputation for us, we will be ruthless.” You make the situation clear by stating your intentions and you back them up in the design of your compensation program. If there’s any suggestion of bad behavior, the money goes back to the company. That’s the only fair and credible way. Any CEO who won’t come in on that basis is somebody you don’t want to bet on because he is not willing to bet on himself. The moral of the story is that you get what you pay for. If you tell the CEO he’s going to get paid tremendously for short-term gains even if he has an “après moi, le deluge” philosophy, then he’s going to go for it.

While expressing dismay about the stated aspects of executive pay that she believes contributed to the subprime mortgage mess, Minow also acknowledged - in closing - that there have been tremendous improvements in U.S. corporate governance (exceptions in the financial services sector notwithstanding) and that she is particularly enthusiastic about a number of forces for positive change that are converging on the corporate governance scene:

MINOW: ...three different forces for positive change are coming together at the same time. One is majority voting. I think that’s going to be very powerful as it gets widespread adoption. Right now, under the law, a director who is unopposed can get elected with one vote because voters have only two options: to affirm a candidate or not to vote at all. Thus, it’s not very meaningful to withhold a vote. But as companies adopt the rule that a director must receive a majority of the votes cast in order to win, directors will know they can be voted out if there are a lot of abstentions. Second, the broker vote change will eventually go through so that actual shareholders, or beneficial holders, will vote for directors. (Currently, in many cases, large brokerages hold shares for individual investors and vote on their behalf without consulting with their clients; frequently, they join management in supporting their board slate and opposing shareholder resolutions.) Third, mutual funds and money managers now must disclose which way they voted on board appointments and resolutions under a ruling by the Securities and Exchange Commission.

We do a “naughty and nice” list every year of who votes for shareholder value and who does not. So that will put pressure on mutual funds to vote more thoughtfully. One way or another, votes are going to become much more meaningful. If compensation committees start getting voted out for signing off on outrageous pay packages, then I think boards will start to do a better job.

Cultivating a Sense of Accomplishment in the Information Age

In his Wall Street Journal column today, Cubicle Culture author Jared Sandberg writes of A Modern Conundrum: When Work's Invisible, So Are Its Satisfactions (subscription required).  In it, he contrasts the immediate sense of accomplishment people could get in traditional, more tangible types of work ("a chair made or a ball bearing produced") with the greater difficulty many of us face today, trying to "find gratification from work that is largely invisible, or from delivering goods that are often metaphorical."

"Not only is work harder to measure but it's also harder to define success," says Homa Bahrami, a senior lecturer in Organizational Behavior and Industrial Relations at UC Berkeley's Haas School of Business.  "The work is intangible or invisible, and a lot of work gets done in teams so it's difficult to pinpoint individual productivity."

She says information-age employees measure their accomplishments in net worth, company reputation, networks of relationships, and the products and services they're associated with - elements that are more perceived and subjective than that field of corn, which either is or isn't plowed.

No wonder performance management is increasingly difficult to do effectively.  And yet this article makes the point, I believe, that measuring and recognizing work done well is as important as ever - not only for today's organizations, but also for the people who work in them.  As workers, we want to know that our efforts make a positive difference.  Employers, at a macro level, and individual managers, at the micro level, who can help employees see and appreciate the impact of their work - through coaching, feedback and appropriate goal-setting - will have an advantage in the competition to attract and retain knowledge workers.  Not to mention an advantage in accomplishing the knowledge work itself.

2007 Turnover Rates by Industry

As part of the 2007 edition of its Compensation Data Survey, CompData Surveys publishes voluntary turnover rates by industry, an excerpt from which is shared below.  The average turnover rate across all industries is 12.3%, but the rates range widely from a low of 6.5% in Utilities to a high of 21.3% in the Hospitality industry.

2007 Voluntary Turnover Rates by Industry

• Hospitality: 21.3%
• Healthcare: 15.5%
• Real Estate/Construction: 15.4%
• Distribution/Warehouse: 15.3%
• Other*: 15.1%
• Services: 14.7%
• Not-For-Profit: 13.7%
• Financial Services: 13.3%
• Technology: 10.6%
• Manufacturing: 10.2%
• Utilities: 6.5%

*Other includes organizations not otherwise classified, including retail, landscaping, newspaper and other organizations involving communications/media.

Executive Equity Awards Increasingly Tied to Performance

An increasing trend toward tying equity awards to performance appears to be underway, according to new research from Equilar, Inc.

Among the findings from its recent study on Q4 CEO equity awards at Fortune 500 companies, Equilar reports that the percent of shares (including outright stock grants as well as options) awarded with performance-based vesting criteria has nearly doubled over the past year, increasing from 8.2% of all shares awarded in Q4 2006 to 14.7% of all shares awarded in Q4 2007.

Pearls of Reward Wisdom

Ryan Johnson, WorldatWork's Director of Information Development and Public Affairs, and the author of the WorldatWork blog recently returned from the Chartered Institute of Personnel & Development (CIPD)'s reward conference in London and posted on a few of the presentations he attended there, including a presentation by Duncan Brown (former Assistant Director-General of the CIPD, now with PricewaterhouseCoopers) on Optimising the Strategic Benefits of Reward.

In his post, Ryan shared a couple of "pearls" from Brown's presentation that struck him, and I found them so compelling that I wanted to share them here as well (which I do below, based on Ryan's descriptions since I don't have the actual presentation materials).

• Simplicity.  Brown argued for simple reward systems, because design isn't the hard part, implementation is.  This is the absolute truth, and we often compound the problem by investing all our energy in design and then taking only a tired run at implementation. 

Post-script: A couple of my smart colleagues have challenged this point (see their remarks in the comment string); particularly the part about design being the easy part.  I don't mean to underrate the importance of a sound design, and I appreciate their pushing me to clarify this.  What I mean to address (and my apologies to Ryan and Duncan Brown if I am taking their points way out of context) is the over-reliance on design to solve ALL performance problems, which leads to complexity and loss of plan focus, and the imbalance I often encounter between design and implementation efforts.  One of the key lessons from CARS incentive plan research:  Design the plan well, but do a GREAT job of implementation.

• "Best Fit" rather than "Best Practice".  Simply brilliant.  Because effective rewards are relative and situational; what works "best" in one organization can be a disaster when force fit to another.

Duncan Brown.  My new hero.  I'll be looking for more on him to learn from and share here.

The 70% Rule: A Guide to Market Benchmarking

When working to match an organization's jobs to published compensation surveys, and especially when involving line managers and supervisors in this matching process, I have found it helpful to use something I call "the 70% rule". 

The rule works in this way:  When trying to assess whether or not a survey job description fits, or matches to, one of the organization's jobs, we use 70% as our guidelines.  If the survey job description appears to capture 70% or more of the job content, then we call it a match.  If it doesn't meet the 70% criteria, we don't use it. 

I am a fan of involving line managers in survey matching for the jobs reporting to them, and I find that this rule of thumb helps managers with that fuzzy, challenging  and sometimes disconcerting task.  Of course, it also helps to remind them that the benchmark jobs found in surveys are not "real" jobs, but rather common roles that exists across many organization.  For this reason, survey job descriptions are purposefully brief and generic.  They must be defined broadly enough that they can provide comparisons across a range of organizations, so that a critical mass of pay data can be collected.  If they were defined in a way that exactly matched the jobs in your organization, the likelihood that any other employer would see them as matches and provide data is pretty slim.  Then you have a perfect match - but no competitive pay information.  So, yes, at the end of the day, the act of market benchmarking must involve some compromise.  And because this involves art as well as science, it helps to have a guideline like the 70% rule to help us make the calls.

Note that there are multiple versions of this rule floating around the rewards/compensation profession, including "the 75% rule" and "the 80% rule".  The concept is the same, the percents vary slightly.  I was raised on 70% and that works for me.