Throwing in the Towel: Are Employers Resigned to Impending Departures?

60% of employees intend to leave their current employer in the next year, according to a survey of more than 900 workers by Right Management.

When asked "Do you plan to pursue new job opportunities as the economy improves in 2010?"...

60% said yes, I intend to leave

21% said maybe, so I'm networking

6% said not likely, but I've updated my resume

13% said no, I intend to stay

In an unhappy parallel to these results, a recent BLR.com poll shows that half the employers surveyed believe that the top factor keeping their highest performing employees from leaving is the simple fact that no one else is hiring.

Not much of a talent retention strategy, is it?

Certainly the past year has been filled with bad news about layoffs, furloughs, pay freezes and reductions. For many organizations, these steps have likely been unavoidable.  At least a few employers have approached them in an open and honest manner, working hard to honor their values as well as the principles of transparency and shared sacrifice.  Others, as Margaret O'Hanlon notes in her post today over at the Compensation Cafe, appear to have simply thrown in the towel with respect to employee commitment.

As Margaret notes, it is unrealistic to expect employee satisfaction to be riding high during times like these.  But it is also true that the past year has presented leaders with a challenging but real chance to forge trust by the manner in which they shepherd their organizations through tough times.  Some have stepped up to the plate.  Many have not.

And the consequences are apparently on their way.

The Teeny, Tiny Merit Increase Series: Doing Well with (Very) Little

Struggling with how to get the most out of a very limited salary increase budget?  Well, besides the (limited) comfort you can draw from knowing you have lots of company, help and guidance is now available!

Check out the Teeny, Tiny Merit Increase Series, a selection of three posts by Compensation Cafe's Margaret O'Hanlon, which serves up some solid advice on how to get the most from those limited dollars.

In What a Relief! 10 Different Ways to Slice a Teeny, Tiny Merit Increase Budget, Margaret highlights 10 approaches for prioritizing and distributing scarce salary dollars.

In 10 Tools for Communicating a Teeny, Tiny Merit Increase Budget, Margaret walks us through 10 different techniques for handling the difficult pay messages behind this year's skinny increase budgets.  Some of the best pay communication advice out there - no kidding!

In 10 Things Your Managers Must Tell Employees About Your Teeny, Tiny Merit Budget, she highlights the 10 tough and emotional questions employees will likely to pose to their managers about their salary increase in this tight year and urges you to help position managers to answer them appropriately and consistently.

And while you're at it, add Compensation Cafe to your reading list and get subscribed today.  Besides Margaret and me, we have a solid team of compensation professionals bringing you straight talk, original thinking and caffeinated discussion on a wide range of reward topics - punctuated by some talented guest bloggers who weigh in from time to time.  Join the conversation!

Image: Creative Commons Photo "wealth of pennies" by r-z

Pay Communication: Is Our Objective Transparency ... or Clarity?

What exactly should we be shooting for in our pay communication efforts?  Is it transparency ... or is it clarity?

In a post today on his Harvard Business Publishing blog, John Maeda (President of the Rhode Island School of Design) makes the point that these are two very different things, and that we must take care not to confuse them. 

From Maeda's post:

Full transparency is access to all the facts.

But only selective transparency is actually attainable, especially in recessionary times when unpopular decisions need to be made. If you promise full transparency, when you make even one aspect of your business non-transparent — which is often legally and emotionally necessary, especially with personnel matters — people question your credibility.

Often the facts are too complex for those far from the decision to understand. I have found on countless occasions that even with an MBA and years of statistical training as an engineer I scratch my head about some of the numbers I have to manage. Thus to offer a set of raw data to any constituency opens the door to selective interpretation. There is clearly a wide gulf between having access to the facts themselves and having access to an understanding of the facts.

There are solid implications here for those of us involved with reward programs.

If full transparency is access to all the facts, then full transparency is neither appropriate nor is it likely in the cards for your organization's reward program.  This is because the facts which legitimately impact compensation include not only pay program details and not only employee salaries themselves, but also information on each individual's education, certifications, work experience and performance appraisal results and ratings.

Not gonna happen, in all likelihood.  Nor should it.  Nor would full possession of all this information necessarily lead to understanding because, as Maeda points out, the wide gulf that exists between having access to the facts and truly understanding what they mean.

Full clarity, on the other hand, is access to a full understanding of the facts (borrowing Maeda's definition).  This makes more sense to me as an objective:  a full understanding of the facts as they apply to how an employee is paid.  This is achieved through disclosure and explanation of the purpose and mechanics of the pay program and - specifically - how they apply to a particular employee's situation.

Full clarity ... rather than full transparency.  What do you think?

Image: Creative Commons Photo "Industrial Window Study 3" by greeblie

The Last Word on Pay Range Secrecy

I am blessed with great readers, many of whom are way smarter than me, which often makes for terrific discussions in the comment streams.  In some cases, I simply can't resist lifting their thoughts and giving them their own post.  As I do here.

From E. James (Jim) Brennan of Economic Research Institute, the last word on pay range secrecy:

There's no requirement to give detail, but the act of volunteering such detail is indicative of management confidence in the correctness of its discretionary decision while secrecy implies guilty conspiracy to defraud.

Right on, Jim!

Pay Range Secrecy Persists ... and the Approaching Window for Addressing It

I was struck by a particular statistic in a recent WorldatWork research report ("Alignment of Business Strategies, Organizational Structure and Reward Programs" coauthored by Dow Scott, Ph.D. of Loyola University and the Hay Group - members click here to access):  Only 41% of responding organizations indicate that their employees know the pay range for their own position.  This shouldn't surprise me, as it is consistent with findings in earlier research, yet I admit it still does.

As I try to get my head around the persistent nature of pay range secrecy, two questions come to mind:

Why?

For how much longer?

Let's start with the why.  First, know that this can't be written off as an issue of smaller, less sophisticated organizations without formal pay programs or professional HR staff.  The vast majority of participating organizations (86%) have more than 1,000 employees.  More than half of them (54%) have over 5,000.  These are big companies, not emerging businesses or "Mom and Pop shops".

That being the case, I would suggest there are three reasons that pay range secrecy exists in these organizations:

1. Some organizations are simply enshrouded in a culture of secrecy, and pay range secrecy is merely one example of how this plays out. 

2. Management does not believe that pay ranges and pay range assignments are defensible

3. Management does not believe that actual employee pay levels within their assigned salary ranges are defensible

None of these seem like good reasons to you?  I'm hard pressed to disagree, but I also appreciate that this (particularly #2 and #3) is the reality many organizations are faced with at present ... and there aren't currently a lot of discretionary pay budget dollars floating around which can be used to fix problems.

How much longer? 

As the recession bottoms out and the labor market begins to turn, which it will (particularly in critical skill areas), employee expectations and demands will rise accordingly.  In this age of information and transparency, and given the increased pressure and regulation around pay discrimination, it is difficult for me to believe that pay range secrecy is a tactic that employers can hold onto in the long run.

But as the economy turns, we will see plenty of churn and adjustment as the labor market (and market pay values) adapt to the reality of the other side.  This presents all of us with opportunity and (frankly) cover for getting our pay houses in order.

If you are one of the 59% of employers who does not reveal personal pay ranges to employees and the reason is a lack of confidence in your pay program and practices, you have a distinct window for addressing this approaching on the horizon.

I hope you take advantage of it.

Image:  Creative Commons Photo "Secrets" by stevendepolo

If Transparency be the Path to Fairness, What Else (Besides Pay) Must We Reveal?

Would pay transparency (sharing pay details) make pay more fair?  Respondents to the recent KnowHR pay transparency survey were almost evenly split between answering "yes", "no" and "maybe".

As I am being made to understand it, revealing employee salaries is expected (by those answering "yes" and "maybe" above) to lead to fairness by virtue of the fact that employees will then have the information they need to judge the equity of their own paychecks compared to what others receive.

Or will they?

Education, experience and performance are among the factors that legitimately affect compensation, according to the Department of Labor.  Will employees, armed with information on their coworkers' salaries and seeking to judge the fairness of their own compensation relative to others, also have access to the details of their peers' education, certifications, work experience and performance appraisal documentation?  How else can they be in a position to judge the appropriateness of others' pay compared to theirs?  Or would we simply turn them loose armed with half of the relevant information and let them draw their own conclusions about the other half?

Where, exactly, would we draw the line here?  I'm just asking...

Image:  Creative Commons Photo "Magnifying Glass" by Tall Chris

The KnowHR Pay Transparency Survey Results are Out!

Over 600 people responded to Frank Roche's brief pay transparency survey at the KnowHR blog.

His Part 1 post provides a rundown of the responses themselves - here's a recap:

Question 1

 

Question 2

   

Question 3

 

Question 4

 

In his Part 2 post, Frank shares just a few of the written comments respondents shared - which helps shed light on the thoughts behind some of the responses to the survey.

It is interesting to see that some of the patterns revealed in earlier research conducted by Ceridian show up here as well - although the specific questions asked are different.  One similar finding:  We are reluctant to have our own pay information shared.  The KnowHR survey finds that 75% of respondents don't want their personal pay details shared beyond their close friends, or at all.  This confirms one of my concerns about the issue of pay transparency - whether employees have some right to privacy around their personal pay information.  

Would pay transparency make pay more fair?  Respondents are almost evenly split between "yes", "no", and "maybe".  More thoughts on this question in an upcoming post!

Instilling Communication into Your Compensation Philosophy

Mike Haberman and I had a recent off-line discussion about a communique from SHRM that touted the importance of "a well-documented compensation communication philosophy".

While the phrase itself is a bit unwieldy, I have to say that I like the concept.  With all the debate about pay transparency following recently enacted and still pending pay legislation, I think the idea of addressing this head-on and proactively is a smart one.

To my knowledge, there is no universal standard for a compensation philosophy, there are some elements that many of us in the field have traditionally considered important to cover.  These include (but are not limited to):

• Overall compensation objectives: What must your compensation program do if it is to support the success of the organization?  (And please, please try to drill down beyond the standard "attract, retain and motivate" to identify the specific things critical to your business mission and strategy.)

• Market positioning: What is your labor market for talent and how do you intend to position your program in relation to that market? (Note that your labor market is different than your customer market, and that there may be different labor markets and positioning strategies for different employee groups.)

• Pay roles and mix: What is the respective role of each of the different components of your compensation program (e.g., base salary, annual incentive, recognition, etc.) and what will be their proportionate "mix" in your compensation program relative to the market? (For example, do you intend to pay lower salaries but provide an "above market" incentive opportunity?)

• Job valuation approach:  On what basis will you establish the relative value of - and pay opportunity for - the different jobs in the organization?  (Will you use an external market based approach or rely on an internal job content methodology like a point factor system?)

Add to this now a paragraph for Pay Communication.  A number of my clients already have done this with their compensation philosophy statements. 

Given where we find ourselves today, I think it wise to go on the offensive here and ensure that all our compensation philosophy statements - which should themselves be communicated to employees - also address what pay information will be shared (and what will not).  This provides employees with a clear, unambiguous signal on the organization's position and policy, and helps ensure that information sharing happens consistently across departments and managers.

How Do *YOU* Feel About Pay Transparency?

How much pay transparency would you like to see at your employer?

Pay transparency is a big issue these days, particularly in connection with recently passed and pending pay equity legislation.

Communications guru Frank Roche has created a brief survey over at his blog Know HR.  Take a minute, click through and share your thoughts. 

I am looking forward to the results - how about you?

Pay Transparency: (Not) The Solution to Pay Discrimination

In this week's Balancing Act column in The Miami Herald, Cindy Krischer Goodman quotes me and others in her examination of fair pay legislation.  One of her key points: That salary secrecy contributes to pay discrimination.  She quotes financial analyst Suze Orman who is a big proponent of open discussion of salaries and who believes that access to salary information would empower and protect employees.

It sounds good in theory, I admit.  I don't believe it would work out quite so smoothly or easily in real life practice, however.  John Hollon, Editor at Workforce Management/author of The Business of Management blog, and I had a recent exchange on this topic, which he posts on here.  I find myself agreeing with John's take (as a longtime manager) on the issue, which is "nobody wins when workers know what everybody else makes."

One of the biggest problems with this "transparency doctrine" is that comparing salaries and drawing conclusions about their fairness requires a measure of independence and objectivity.  I have had many, many one-on-one conversations with employees about their pay over the course of my compensation career, and this experience has convinced me of a basic truth:  We simply cannot be completely objective about the value of our jobs and the work we perform.  Nor can we be completely objective when comparing our jobs, our work and our pay to others.  Can you say inherent conflict of interest?

Somebody would need to convince me of how the positive consequences of open access to salary information would outweigh the potential negatives - as John puts it, "bad feelings, bad blood and bad karma."

What's more, employees themselves hold a bit of a double standard in this regard.  According to recent research by Ceridian, while 46% of employees are interested in learning the salaries of colleagues, 89% are reluctant to have their own salary information shared with those colleagues.  That tells me that there is a privacy issue at stake as well.

I don't mean to get employers off the hook for transparency, though.  While I am not in favor of sharing the what (employees make), I am a big proponent of sharing the how and the why:

• The How is about the mechanics of pay in your organization; how jobs are valued, how increases are determined, etc.

• The Why is about your organization's pay strategy, the objectives management is seeking to achieve and the rationale underlying the pay program.  This includes questions like how the organization defines its competitive market for talent and the way in which performance influences an employee's pay.

To empower employees, to assure them that they are being treated fairly and to make clear the standards to which they should hold us accountable in that fair pay treatment, we must provide them with the information they need to put their pay situation in as objective a context as possible.  As I've said before, without this proactive communication employees are left with no choice but to draw their own conclusions about the organization's intent and practices.