What Just Happened Here?

I’ve worked for a lot of great companies over my career, but not always for people that had the greatest insight into rewards and compensation. Sometimes that’s the HR leader, but more frequently it’s the CEO, or as I affectionately call him, the Chief Compensation Officer (CCO).  That could take the form of responses such as:

“We need to make decisions that will enable us to save on expenses.”

“I don’t hear a whole lot of negative feedback, it must be working.”

“Turnover isn’t a problem so compensation must be OK.”

“The Executive Committee needs to decide on our funding priorities.”

I’ve just experienced something like that again, but this time indirectly as a potential client was unable to move ahead because the CEO didn’t want to make the changes… to the compensation plan… that he had designed…

As part of what you’d expect any good HR leader to do, you look at your business plans, strategies and values and come up with HR strategies and objectives that will enable business success.  But what if you are working for the CCO?  Here are some specific steps you can still take that while not optimal for your original plans could at least help to prepare for a time when you get the go-ahead to move forward.

  1. For incentive plans and equity, review your plan documents.  Look at those specific areas where you’ve observed some friction or perhaps where errors exist.  For example, does your sales plan describe credit splits as 50/50 while commissions is paying 100/100?  Do you have new pay grades eligible for the company bonus plan, but haven’t updated the appendix where eligible grades are listed?  Go after those areas that may only affect a small portion of your population but could cause a big headache when challenged.
  2. Spend some quality time with finance.  It’s fine to try to engage with finance on the fly during a design project, but so much easier to have already established roles and responsibilities, and in some cases, educating on design principles and such when there’s no pressure or deadlines involved.
  3. If plan funding is the issue why you can’t move forward, invest some time in looking at all of your labor cost data, not just the incentive or bonus element.  Most CFO’s are willing to discuss if the company pays out cash in fixed or variable form, but they really care about the total going out the door.  When you look at things like employee distributions in grades, management spans and the like, you start to uncover elements of total labor costs that may help fund future programs for the broader work force.
  4. On the administrative side, when was the last time you poked at your administrative processes and payment mechanism?  If you’re lucky you have this well in hand, but most of us have opportunity here either to re-ask why we do things a certain way, whether we are compliant with our own policies, and if plan payouts are being calculated and paid correctly.  For example, if your sales plan is supposed to pay incentives against a year-to-date quota, is that really happening, or is there a spreadsheet error somewhere paying every month independently?
  5. Even though you didn’t get the opportunity to design and execute the plan you wanted, you can still spend time testing different approaches and ideas.  Sometimes the best socialization approach with a CCO is a slow drip of the concepts rather than quick change.  This works especially well when you can run your idea in parallel to the current plan and show any differences.
  6. To take #5 a little further, ask to run a pilot.  That may not be something you are used to doing, but why not gather the experience in real time before taking something live for everyone?  It may even create a little “buzz” in the rest of the work force.  I had this happen recently where executive support existed for a change in an employee compensation program globally but IT and HR leaders couldn’t figure out how to support it.  A brave HR leader of a large organization volunteered to run a pilot in part because she saw the opportunity to make significant inroads for employee engagement and greater simplification of existing programs.  It was a tremendous success and we had other organizations clamoring to get in, creating the “pull” needed to overcome the barriers.

I have an axiom I’ve followed for many years in compensation, and easily applies in HR as well.  You may have seen this written in different ways, but it basically goes like this:

“There is nothing more difficult to take in hand, more perilous to conduct, than to take the lead in the introduction of things, because the innovation has for enemies all those who have done well under the old conditions and lukewarm defenders in those who may do well under the new.”

Remember, it probably isn’t personal — so once you get past the surprise, find a productive way to move ahead.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *