What do ‘Up’, ‘Cars’, ‘Inside Out’, ‘Monsters, Inc’, ‘Ratatouille’, ‘Toy Story 3’, ‘The Incredibles’, ‘Finding Nemo’, ‘Toy Story’ and ‘WALL-E’ have in common? First, they are 10 of the best animated movies made by Pixar. Second, they all follow Pixar’s “22 Rules of Storytelling.” As it turns out, these rules adapt well to the world of compensation plans and philosophy. Continue reading
How are great salespeople able to seamlessly turn every one of your concerns into a demonstration of the prowess of their product? Are they really just that convincing or is there some type of method to their success? The best salespeople personalize every discussion. The trick is years of practicing a simple process until it has become part of how to explain everything. Your recruiters, staffing professionals and talent acquisition stars can do the same with your compensation plans (and you can easily help them).
The key in the absolutely fabulous method is the F.A.B.
F = Features
A = Advantages
B = Benefits Continue reading
Before there were photographs, sailors would return from long trips and describe animals to artists who would then create “official” images. These images helped people feel like they understood what was “out there”. But, in reality, provided almost no useful information. Check out the drawing of the rhinoceros.
You get reports from the Big 4 and compensation consultants. They have pretty charts and easily digestible info-bites. You get market data from survey providers and professional organizations. They include tons of little boxes of information on enormous spreadsheets. There is enough granularity to make you feel like you have everything and can build anything new with grains of sand that are at your fingertips. You have articles from established and new media. They provide insight and new perspective that allow you stay ahead of the trends. You follow twitter and read blogs.
But how much of what you know is factual? You may be surprised.
This February, the Harvard Business Review published Stop Paying Executives for Performance” by Dan Cable and Freek Vermeulen. The basis of the article is that we do away with all executive incentive pay and replace it with high (in cases much higher) salary. Their argument is that there is no evidence that pay for performance works and some evidence that it is dangerous. Since this post is part of my ongoing “Stock Options on the Precipice” series (earlier articles: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11), I will try and focus only on that one aspect of incentive pay. Perhaps some of you will add additional information in the comments.
Note: We are not arguing that top managers such as CEOs should be paid less. That may very well be the case too, but that’s not the focus of our analysis. HBR , Cable, Vermeulen, Feb. 2016
Let’s start with the premise that pay for performance does not work. There is Continue reading
A report from 24/7 Wall St. touting the “25 highest paying companies in America” is being passed around the internet as factual news. Unfortunately, like so many compensation stories, the report is all sizzle and no meat. People love to cheer or complain about pay. The list that was provided makes it easy by using “facts” that are not really “facts”.
The report claims that Continue reading
San Francisco just became the first city in the US to ensure 100% paid leave for new parents. This covers both mothers and/or fathers. This new rule is effective January 1, 2017 for employers with more than 50 employees. Companies with between 20 and 49 employees have until January 1, 2018. While this is a great thing, is it just another reason to avoid hiring Millennials? Perhaps this is all a conspiracy to improve the long-term retention of baby boomers.
55% of parental pay was already covered by a statewide initiative. Companies will be responsible for Continue reading
Lebron James has just become the youngest person in NBA history to score 25,000 points in his career. He is not yet 31 years old. You are not Lebron James. It is an obvious fact. You are not 6’8”. You are not 250 lbs. of muscle. You cannot dribble a basketball while running faster than your neighbor being chased by a bear. You cannot leap 3 and half feet into air and gracefully land with a smile. You haven’t spent your entire life optimizing your skills and talents to be the best basketball player in the world. You know this.
Yes, you may be about 31 years old. Maybe you weigh 250 lbs. You might even be 6’8”. Even if these things were true, it would be a mistake to directly compare yourself to Lebron. Lebron is fun to watch, but at no point would you fool yourself into believing you can do what he does. Even those players who contend with him for the title of “best basketball player” don’t try to do things the way Lebron does.
Your company is also not Facebook or Google. Your product is Continue reading
We talk a lot about pay transparency. It seems like half the time half of compensation professionals argue for more and half argue for less. New Belgium Brewing is a company who does a great job at being open. In fact, they are so good that they are an example used by the media, other companies and even the U.S. Government. More importantly, they seem like great company.
Kim Jordan, the cofounder of New Belgium, has made it a priority to make sure the company is always paying a living wage. Her passion for making sure everyone at New Belgium has the opportunity to thrive is an essential component of Continue reading
An article was published last week with data from Aon Hewitt and Towers Watson that showed the annual pay raise is essentially dead (and in Towers Watson’s case, bonus pools will also be underfunded). The data apparently shows that we will deliver base pay as a flat amount going forward. Increases in pay will come from incentive plans, if they are funded. Let’s cast a fond farewell to a method of pay that has existed for as long as people have been paid.
Thankfully, we Continue reading
I just watched a great TED talk from a few years ago. In it, Todd Rose discusses the “average” in the context of creating learning environments. He provides a fascinating story about the U.S. Air Force and their path to creating effective fighter jets. Just a quick summary: The first cockpits built were based on a series of measurements for the average pilot. But, even as the jets became better and better, the Air Force experienced worse and worse accidents. In the meantime, someone decided to measure a whole bunch of pilots. Surprise! Not a single pilot matched the set of average measurements.
You probably see where I am going with this.
The Air Force took this new information and created new cockpit guidelines that allowed pilots at the extremes to be comfortable. Of course, manufacturers protested, but in the end they built to the new requirements. This necessitated innovations like moveable seats and adjustable controls (where do you think your car got these innovations.) In the end, the new planes had far fewer accidents and much happier pilots. And, everyone lived happily ever after. The end.
At least 50% of those that reach out to me start the conversation by asking, “what does everyone else do.” We all know that the vast majority of companies target the 50th percentile for almost every position. Companies want to build simple vanilla pay programs even when they Continue reading