What's up with that, I wonder? Is gender equity suddenly that big a topic among compensation professionals?
I remember, back when it was published (and given a cover feature), a local colleague and friend asked me "why would you even write about that?" Because it was a topic that interested me, I countered, and because there were implications to "forcing" gender equality that people were overlooking or ignoring. Because the topic was drawing little attention from the compensation community and I felt it needed to be on everybody's radar screen.
And because it was a fun collaborative exercise. To shake it up, Jim took the female-friendly "pro" argument and I took the "con."
Alison sub-titled her column The Usual Suspects and Some Surprises. I suspect our article's appearance in the number one slot was one of the latter.
The use of sign-on and retention bonuses appears to be at an all-time high, according to a recently released WorldatWork survey on Bonus Programs and Practices. The research, which highlights the practices of 713 organizational participants, is the fifth iteration of a series that dates back to 2001.
Among other things (like the volatility of today's labor market), these findings tell us that an increasing proportion of the reward dollars needed to attract and retain talent are being channeled into things other than fixed base salaries.
Take a look at these trend lines. Note in particular that the use of retention bonuses has nearly doubled since 2010!
Some notable outtakes from the research - beyond just the trends in use - include the following:
-More organizations are giving flat dollar amounts (greater than three-fourths) than in 2010 except for executive roles.
-Generally speaking, it looks like not only are there more organizations offering sign-on bonuses, but they are also paying out at higher rates with executives being paid the most (41% receive greater than $50,000).
-Most organizations (seven of every ten) base the decision to award a retention bonus on discretion. The remaining minority (30%) base decisions on formal eligibility criteria and guidelines.
-Participants report that most employee groups are eligible to receive retention bonuses. Clerical employees are the least likely, but still eligible at nearly half (49%) of the participating organizations.
-A lump sum payment (versus regular intervals or a progressive timeframe) remains the most common practice for delivering retention bonuses, used by roughly two-thirds of organizations.
More information on the research here. Comments? Observations?
There are a number of movements afoot in the world of work that promise to impact the way we pay people. Two in particular may well converge to provide the final straw that breaks the back of merit pay.
Let's begin with Exhibit 1: The "Open Salaries" Movement. Pay transparency is coming. While it is unlikely that we will reach a point where every organization opens up all compensation information for every employee, I believe that the momentum and spirit behind the pay transparency movement will lead many employers to eventually embrace it, drawing back the curtain to reveal the details of their pay programs and practices.
This may or may not produce all the "benefits" that the movement's proponents claim. "Open" pay won't automatically be more "fair" because fairness is a subjective, complicated and highly personal thing, ultimately a slave to our collective inability to objectively gauge our own contributions. Transparency will, however, change the way compensation is designed and pay decisions are made. As with any change, there will be both intended and unintended consequences. Will more openness cause managers to be more cautious and risk-averse in their pay decisions? I've had more than one public sector compensation specialist -- a pay pro already working in the world of open salaries -- suggest that transparent systems drive managers to pay everyone the same, avoiding differentiation that favors high performers/high potentials because those decisions can be hard to explain and defend.
Enter Exhibit 2: The "Blowing Up Performance Appraisal" Movement. Adobe has been in the news lately, the most recent of some prominent organizations that have decided to ditch performance appraisals in favor of a more forward-looking process featuring feedback and coaching over look-back assessments. As few organizations believe their performance management process is working ideally, many eyes are on these pioneers to see what lessons emerge from their experiences.
Pay-for-performance in organizations that have elected to kill performance ratings is necessarily different. Per the recent interview with the company's Head of Rewards at the Compensation Cafe, Adobe still allocates merit pay budgets to its managers but does not provide a formal matrix or set of salary increase guidelines to them. Managers are accountable for, but can use their discretion in, spending those allocated merit funds well.
You see where I'm going with this, right?
How long will merit pay last in a world where we're struggling to accurately appraise employee performance -- to the point where we increasingly ready to chuck the whole effort -- and where salaries/salary increases are out in the open? Not very long, I'll wager.
What will we do instead? Strictly market-based wages with "hot skill" premiums as appropriate? More emphasis on variable pay plans designed to reward specific, pre-determined individual or group metrics? Will recognition and non-cash rewards step into the void to provide the necessary differentiation for key talent?
What does your crystal ball say?
Creative Commons Image: "Converging Footsteps: My Father and Stepmother" by CarbonNYC
Is "making teams better" the new holy grail of performance analytics?
Fresh from the annual MIT Sloan Sports Analytics Conference, HBR blogger and MIT Research Fellow Michael Schrage notes that one of the top themes of the event was how to move beyond the Moneyball-like era of predicting and assessing individual performance and focusing on teamness.
More quantitative attention is being paid to how well players improve the in-game performances of their teammates. Are their particular game situations where their positive—or negative—influence is statistically pronounced? Can that impact be meaningfully correlated with psychological attributes or other behavioral characteristics? Indeed, how can the coaches improve the TQ—Teamness Quotient—of their players’ performances?
Or, as former Chicago Bulls coach Phil Jackson puts it: “The next step in analytics will be how to build chemistry.”
Not surprisingly, MoneyBall author Michael Lewis already had a bead on this teamness phenomenon back in 2010, when he wrote The No-Stats All-Star for the New York Times. The article featured NBA player Shane Battier of the Houston Rockets, who presented (as Lewis pointed out) an intriguing statistical anomaly. "His greatness is not marked in box scores or at slam-dunk contests, but on the court Shane Battier makes his team better, often much better, and his opponents worse, often much worse."
From the article:
It was, and is, far easier to spot what Battier doesn’t do than what he does. His conventional statistics are unremarkable: he doesn’t score many points, snag many rebounds, block many shots, steal many balls or dish out many assists. ...
He may not grab huge numbers of rebounds, but he has an uncanny ability to improve his teammates’ rebounding. He doesn’t shoot much, but when he does, he takes only the most efficient shots. He also has a knack for getting the ball to teammates who are in a position to do the same, and he commits few turnovers.
When it came out, the article prompted some interesting conversation around our dinner table. My husband Keith worked with Lewis during his Liar's Poker days at Salomon Brothers and also coached youth hockey for nearly two decades. The Battier story had a parallel in Keith's coaching career, where he realized early on that the key statistics for his players were not "goals" or "assists" but rather their "plus-minus." Individual players' plus-minus stats get increased by one every time their team scores an even-strength or shorthanded goal while they are on the ice and decreased by one every time their team allows an even-strength or shorthanded goal while they are on the ice. As Keith will point out, it is the best metric for how an individual player really contributes to the success of the overall team.
As data and analytics bring increasing sophistication to our understanding of employee and organizational performance, will we be able to identify the plus-minus statistics for our teams? Will we discover metrics that capture the essence of successful team chemistry and provide insights into which individuals and efforts (while seemingly unremarkable when measured alone) help make the team and the organization better by their mere presence in the game?
And - perhaps most important of all - having quantified it, will we be able to encourage and reward teamness without undermining and ultimately destroying it?
Creative Commons image "2013 01 18 McFarland youth Hockey at UW game (3)" by Elliott Connor Photography
Is our obsession (particularly in the U.S.) with being special and unique bringing a dark side to our workplaces? Do people with issues and ideosyncracies make good leaders or bad ones? Are we all worrying about the wrong stuff?
Organizational psychologist and behavioral finance consultant Doctor Daniel Crosby tackles these and many other interesting examples in his TED video You're Not That Great! A Motivational Speech.
What lessons can those of us in HR - and particularly in the rewards field - draw from Dr. Crosby's talk?
Once again and continuing a long tradition here at the Force, I am happy to share the latest turnover rates by industry, provided to us by CompData Surveys. The information in the following charts - both voluntary and total turnover rates - has been drawn from CompData's 2013 edition of their annual BenchmarkPro Survey, which features data submitted by 40,000 organizations.
And a little historic perspective, going back to the first data set we featured here in 2008.
Our special thanks, once again, go out to our friends at CompData Surveys for sharing this information.
Note to Readers: A couple of errors were discovered in the CompData numbers reflected in the above tables following the publication of this post early this morning - they have all now been corrected. Apologies for any inconveniences this may have caused.
After years of stories about the incredible worker perks, the "don't be evil" corporate mottos and the higher brand of capitalism practiced by some of Silicon Valley's most celebrated companies, a darker side has emerged. Roughly 60,000 Silicon Valley workers have gained clearance to pursue a class action lawsuit accusing Apple, Google, Adobe and Intel of conspiring to hold down wages through secret agreements not to poach one another's staff - in violation of the Sherman and Clayton Antitrust Acts.
Mark Ames at Pando, in his article Techtopus: How Silicon Valley's most celebrated CEO's conspired to drive down 100,000 tech engineers' wages, provides a detailed timeline and description of the events and players involved in the secret arrangements, even showcasing some of the emails involved. The philosophy underlying the conspiracy actually dates back to George Lucas, who is quoted in 1986 court documents at the time he sold the computer animation division of Lucasfilm, Pixar, to Steve Jobs explaining that companies should not be directly competing for computer engineering talent because "we don't have the margin for that sort of thing." The story about the actions underlying the lawsuit, however, had its real beginnings in 2005.
From Ames' article:
In early 2005, as demand for Silicon Valley engineers began booming, Apple’s Steve Jobs sealed a secret and illegal pact with Google’s Eric Schmidt to artificially push their workers wages lower by agreeing not to recruit each other’s employees, sharing wage scale information, and punishing violators. On February 27, 2005, Bill Campbell, a member of Apple’s board of directors and senior advisor to Google, emailed Jobs to confirm that Eric Schmidt “got directly involved and firmly stopped all efforts to recruit anyone from Apple.”
Later that year, Schmidt instructed his Sr VP for Business Operation Shona Brown to keep the pact a secret and only share information “verbally, since I don’t want to create a paper trail over which we can be sued later?”
These secret conversations and agreements between some of the biggest names in Silicon Valley were first exposed in a Department of Justice antitrust investigation launched by the Obama Administration in 2010. That DOJ suit became the basis of a class action lawsuit filed on behalf of over 100,000 tech employees whose wages were artificially lowered — an estimated $9 billion effectively stolen by the high-flying companies from their workers to pad company earnings — in the second half of the 2000s. Last week, the 9th Circuit Court of Appeals denied attempts by Apple, Google, Intel, and Adobe to have the lawsuit tossed, and gave final approval for the class action suit to go forward. A jury trial date has been set for May 27 in San Jose, before US District Court judge Lucy Koh, who presided over the Samsung-Apple patent suit.
The companies involved not only agreed not to recruit one another's employees, but also allegedly shared salary data with one another in an effort to coordinate pay practices.
In the court documents, the plaintiffs in the class action suit explain that by eliminating the competition among themselves that would normally exist in a "properly functioning and lawfully competitive labor market" through the prohibition of "cold calling", the defendants reduced both employee wages and mobility:
Most directly, Plaintiffs allege that the practice of cold calling provides the recipient of a cold call with opportunities to secure higher wages either by switching to a rival company or by negotiating increased compensation with the recipient’s current employer. Id. ¶ 46. Plaintiffs further allege that the compensation effects of cold calling are not limited to those individuals who receive the calls. Rather, Plaintiffs allege, the effects of cold calling (and the effects of eliminating cold calling) have a broader, common impact on Defendants’ salaried employees, especially their technical employees. Id. ¶ 50.
For those still toiling away on international salary increase budgets, guidlines and policies, the infographic below is brought to you courtesy of Hay Group. The data, which covers 2014 projections for over 70 countries, is drawn from their PayNet data base of 15 million job holders in 22,000 organizations worldwide.
Note that while Hay has separated countries into high-speed (fast growing/emerging, shown in red) and low-speed (mature, shown in blue) markets, the firm also points out in its accompanying press release that salaries across the world are in decline. While salaries globally are set to increase by 5.2% on average, the rises for 2014 are expected to average 0.3% less than last year s forecasts (which was 5.5%).
To learn more, or to get a clearer look at the data in the infographic, visit Hay Group's atrium.
More Info Here Compensation consultant Ann Bares is the Managing Partner of Altura Consulting Group. Ann has more than 20 years of experience consulting with organizations in the areas of compensation and performance management.