Have you ever painted a room?
I know when I first painted a room, I was young, it was all about speed, I just wanted to get it over with. I had seen my Mom paint before, and I always wondered why it took so long. I need to mention, she was really good at it. She was so precise and put a lot of thought and effort into it (not to mention she was a master of wallpaper which is a whole different level).
I was tasked with painting the ceiling, yes, the “popcorn” ceiling, in our family room. Nothing says “mess” more than that. But I was naïve about that and figured I’d just put a few drop cloths down and get rolling. By the time I was done, I had what I thought was a nice-looking ceiling.
And it was – until I looked at the floor, the furniture and the walls.
Drips everywhere! I spent hours cleaning, as best I could, all the random globs of paint that seemed to find their way around my haphazardly placed drop cloths. And the walls – it never occurred to me – that when you paint the ceiling, pieces of the paint-soaked popcorn can break loose as you paint!
For the next year, my Mom was discovering dried paint on the ones that escaped me, which there were many. She spent a lot of time cleaning up the mess because I didn’t really take the time to understand the scope of what I was undertaking and what was needed to properly prepare for success.
Prep Work Doesn’t Sizzle
As a Human Resources and Compensation professional, saying it’s challenging to get your leaders to work on compensation outside of the urgent “I need to hire someone right now!” situation, is a big understatement.
As I like to say, they have to do their whole job which sometimes means, you have to do the boring stuff that results in things like:
- Competitive offers that result in attracting the best talent
- Confidence when giving an outstanding performer a raise
- A focused and motivated colleague who believes they are being fairly compensated for their contributions to the business.
How do you set yourself up for success when talking compensation with your team? What does the organization need to do to provide their leadership with the tools to attract and retain talent?
In other words, it’s all in the prep work!
I. Core Compensation Structure
As your business has grown, have you created an understandable, scalable compensation structure.
Grades and Bands are a popular and traditional way of building out Compensation Structures. These are outdated and challenging to understand and even more challenging to update as the needs of the business change from growth to retraction and everything in between.
The key question you need to answer for your company is:
Can your compensation structure be understood from the C-suite to the front-line colleague?
If it can’t be, you have a trust problem. If you have a trust problem, you have a leadership problem. If you have a leadership problem, you have a performance problem.
How are you training your leaders to clearly educate their teams on how their compensation is determined?
II. Job Descriptions
I had lunch with a friend and colleague from the Human Resources industry recently. When I explained to him how critical job descriptions are to accurately market pricing jobs, he was not surprised. What did surprise him was that it still was a struggle to get good job descriptions!
If your job descriptions are poor, inconsistent and don’t clearly delineate the responsibilities, skills and performance requirements of the position, you are most likely incorrectly market pricing your jobs.
If you can truly say there is no guessing or assumptions about the job when you market price jobs, you have a much better chance of success.
III. Reliable Data
Recently my team and I attended a Human Resources event where Total Rewards was discussed. As a takeaway, everyone was given a list of resources they could use to market price jobs. We were all shocked at some of the resources that were cited. Some tips:
- Avoid crowd sourced data – generally it’s an exaggeration of the real value or, in some cases, completely fake, put out there by someone random.
- Ranges posted on websites – with pay transparency being implemented in many states, companies are forced to put ranges on any job listing in those states. Ideally those ranges reflect the true market data but many also reflect an attempt at just satisfying the law and they are much wider than the true range.
- Utilize professionally gathered salary survey data that is submitted through a vetted process by the vendor.
- Pick the salary survey that best fits your business. Depending upon your industry, type of jobs and geographies you need to assess what is the best fit for your business.
- Cost – I prefer to call it Investment. If you’re struggling to get budget approval, consider this: a single compensation mistake could cost your company five or six figures—often more than the investment in a reliable survey.
IV. Goal Setting Framework
Goals and reviews should be used as a tool to help your employees learn and grow and to help your company thrive. The clearer you are about goals and how they will be measured, the better the process will be for your team, leading to overall business success.
One of the biggest drivers of discretionary effort is employees’ ability to align their individual goals with larger organizational success; 52% of employees report their understanding of organizational goals and the link between those goals and their day-to-day responsibilities increases their discretionary efforts.
Goals should be on-going job responsibilities and any new projects, assignments, priorities, or initiatives that are specific to this performance cycle. Goals should be high-level enough to encompass the core outcomes for which you are responsible, but specific and clear enough so you will be able to measure success.
So whether you use SMART goals or CRAVE goals (our preference – Concrete, Results Driven, Aligned, Verifiable and Energizing) there needs to be a clear connection between achieving those goals and compensation. They are not the whole picture but they are critical when coaching and growing your colleagues. If there is no organizational discipline around this process, you once again are eroding trust.
Your leaders need to be invested in their colleagues’ success. Goals are not “set it and forget it” they are a commitment from BOTH leader and the colleagues they manage.
Easy, Right?
Goals and reviews should be used as a tool to help your employees learn and grow and to help your company thrive. The clearer you are about goals and how they will be measured, the better the process will be for your team, leading to overall business success.
One of the biggest drivers of discretionary effort is employees’ ability to align their individual goals with larger organizational success; 52% of employees report their understanding of organizational goals and the link between those goals and their day-to-day responsibilities increases their discretionary efforts.
Goals should be on-going job responsibilities and any new projects, assignments, priorities, or initiatives that are specific to this performance cycle. Goals should be high-level enough to encompass the core outcomes for which you are responsible, but specific and clear enough so you will be able to measure success.
So whether you use SMART goals or CRAVE goals (our preference – Concrete, Results Driven, Aligned, Verifiable and Energizing) there needs to be a clear connection between achieving those goals and compensation. They are not the whole picture but they are critical when coaching and growing your colleagues. If there is no organizational discipline around this process, you once again are eroding trust.
Your leaders need to be invested in their colleagues’ success. Goals are not “set it and forget it” they are a commitment from BOTH leader and the colleagues they manage.
Coming soon … TRUST PART III: Leadership Through Compensation – The Pay Determination Model and Compensation Conversation
We will be sharing a tool to help you visualize and clearly communicate the “why” behind pay decisions for your leadership. This will help facilitate a healthy conversation between leaders and their team about compensation. It is the most sensitive subject (outside of letting someone go) you address with your colleagues on an ongoing basis. Remember, if they understand it, they trust it.
Let’s get it right!