Retaining vs. Hiring – A Discussion on Salary

I was reading “Employees Who Stay In Companies Longer Than Two Years Get Paid 50% Less” in Forbes. One of the questions the author asks is: “Why are people who jump ship rewarded, when loyal employees are punished for their dedication?” While I think that implies intent to “punish” employees that I don’t believe is actually there, it does hit on a real question that has an impact on engagement and retention: “Are we over-prioritizing new hires in an unfair way? If so, why?”

The Greener Pastures Equation

Let me start by addressing why you are able to, often, command a higher salary by jumping ship. The company posting a job is feeling a very distinct pain in their organization that drove them to open a requisition. There is a sense of urgency to address it and a budget has been set for the role. Other employees are investing time they could be spending on another task in filling the requisition (your recruiting/hiring team) and/or potentially doubling up on their duties while the role is unfilled. This creates momentum behind the effort to add someone. So long as the role sits unfilled, it’s costing the company in some way. That’s an important motivating factor.

Early in the process, the recruiting team narrows in on people who match their target for skills, salary and start date. This is the company’s biggest leverage play – if you don’t fit, you aren’t moving on in the process. But once they find a candidate who fits, the leverage shifts a bit. It’s the candidate who decides the terms under which they’ll join the organization. The company must weigh the cost of continuing the search with being flexible in salary. It makes sense that this results in a higher level of compensation than an internal adjustment – a candidate isn’t often willing to assume the risk of a new organization without getting something in return.

It’s easy to forget in the overall equation that there is a very real cost (money and time) to candidates on the market. Candidates invest time sending resumes, networking, interviewing and researching – time that they could be spending on something else. They risk their current workplace finding out and need to prepare themselves for the emotional rollercoaster of pursuing jobs you like but don’t get. The search still isn’t guaranteed to result in an increase in salary. Heck, in many cases, the search doesn’t pay off in a meaningful way and the candidate abandons the search and sticks with their current company and hopes for an adjustment there.

The Devil You Know Equation

That header is hyperbolic, for sure, but let’s dig into the truth of it anyway. There is something to be said for any potential jobseeker staying in an organization they know and are comfortable in, instead of taking a risk on an unknown and ending up in a nightmare. I would argue that most people staying in a current job are actually getting something in return that has value to them. Maybe it’s the commute, benefits, work, pain of finding another job or their amazing co-workers. Each person assigns their own monetary value to that stability when deciding whether to go to market with their skill set; everyone’s risk tolerance is different.

So let’s talk about why it’s easier to get a 5% or 10% increase by leaving an organization than by staying – it all goes back to an organization feeling pain. When there is an open seat, work is just not getting accomplished. Progress is stifled. It comes up in leadership meetings and sometimes board meetings. Metrics are impacted and people are focused on fixing the issue ASAP. This gets a manager in with finance, where they can make a case for additional budget based on the current market rate for the role. And, voila, a role is open at a competitive rate.

A lot goes on in running a company, and it’s easier to focus on issues causing pain when you have limited bandwidth. A failed marketing campaign. A broken product feature. There is nothing more nefarious at play when new requisitions receive priority – it’s distinctly human. If you see a broken limb, you are more likely to go to the ER. Your high cholesterol could actually be a much bigger risk to your health, but you aren’t feeling it in the moment and we’re just not as good focusing on preventative measures, right?

Employees who are on board are performing a role. They may be feeling pain or the itch to hit the open market, but management isn’t feeling it, so management’s focus is elsewhere. After all, there is a process to look into salary regularly. It’s difficult and reactive to treat every single employee’s comp like a burning fire daily – you need to have some visibility into how changes as a whole will impact a business. But if there’s a lack of clear process and philosophy on compensation, you run the risk of employees wanting to leave.

The article I linked seemed to imply that companies keep salaries low because they can. I don’t think that’s the case. Compensation is really hard to balance and get right. I like to look at it like putting together a winning sports team. Your goal is to achieve great things, but you only have a certain pool of money to do so. Some companies have short term goals – they have a bunch to spend and need to succeed almost immediately. They’ll pay at the top of the market for other teams’ free agents and want “sure things”. Some others look long range and expect that if they are doing things correctly, they will lose people to free agency. But they focus on balancing it with bringing in the right free agents, retaining solid talent and drafting high-potentials that may be hit or miss (and may leave for another organization).

Neither is the wrong strategy, but it is felt differently on the employee level. Teams – and companies – are more apt to look at market data when a position is open and they need to compete with others to fill it. That doesn’t mean that there isn’t a way to incorporate revisiting the market annually for non-open roles in a fiscally responsible way. But it’s neither practical nor prudent to pay at the top of the market for every role across the organization. And employees sticking around are receiving something worth trading off a higher salary for, or most wouldn’t be sticking around.

Wrapping in a Sentence (or Three) …

It’s a tough balancing act for both sides; each is trying to balance risk, short-term gains and long-term stability. The best companies straddle the line enough that there isn’t a steady stream of defections that impacts profitability; the best employees leave when they feel the mix of salary, growth and other benefits no longer matches their needs. It doesn’t, in and of itself, mean either side is wrong or disloyal for the tactics they’ve selected – it’s just sound business for both sides.

Employee Engagement – Addition by Subtraction

Employee engagement is a hot topic these days. New tools and technology platforms are being released to help companies monitor real-time engagement levels and make recommendations on how to improve. Companies are investing out the wazoo to make a meaningful impact with the hopes of driving recruitment, profits and productivity. And, yet, literature keeps being released indicating that Americans are not that engaged with their work.

I’ve struggled with how to keep engagement high in the tech industry. It’s really easy, in my opinion, in small organizations. Or in organizations that are innovating and doing really cool things. People organically feel they are making real contributions to something that matters to them. But as you get bigger, it gets harder. As you stop playing on the cutting edge, it gets harder. Why?

In the rush to keep up with the Google’s of the world, I think companies have spent more time adding perks and benefits than anything else – I’ve certainly been guilty of thinking this way. The kicker is that data shows these sorts of additions don’t increase engagement. These ‘nice to have’s’ certainly are capable of bloating the budget and sticking around for a while, though. When I reflect on my two or three most engaged moments in the workforce, here are the commonalities (hint: they aren’t perk-related!):

  • I was given a huge piece of work with little direction on how to do it, but plenty of cover and support from my manager. (Autonomy)
  • It was clear to me and those around me that this work was my clear priority. People understood the consequences of a missed deadline. (Permission to say no to other things)
  • Financially, my needs were taken care of. I wasn’t rolling in dough, but I was making ends meet and able to save. (Self-explanatory)
  • The projects were impactful to the business. (Purpose)

So these last few months I’ve been thinking about ways to create a workplace where people are highly engaged with a limited budget. Maybe the problem in the US isn’t that we haven’t added the right thing to the mix, we just haven’t really figured out how to effectively remove what holds people back from connecting to their work. Here are some ideas:

Meetings. I hate when my weeks are carved up dashing to ineffectively-run meetings  where it’s not even clear that I’m needed. There are certainly incredibly valuable and productive ones, but they seemed to be in the minority many weeks. When I was most engaged in my work, I had permission to decline all but the most essential meetings. And guess what? The business kept running. People sought me out when they needed my opinions. And I had larger chunks of time to dedicate to my project (which resulted in both a happier me and better work).

If we want a more engaged workforce, let’s explore a new level of discipline with meetings. Scope out the agenda, attendees and time needed. Let’s understand the politics at play that tend to inflate the number of attendees, and also work on our communication channels so we aren’t leveraging time together strictly for status updates, and are instead using it for important discussions and decisions best made collaboratively.

Micromanagement. To have a workforce committed to their work and invested in our goals, we need to give them skin in the game. They need to know they can make an impact. Provided you’ve hired the right team, your people will want any given project to be successful and want to take ownership of it. As managers, we tend to get in the way of that happening (usually unintentionally). For one, we may have a similar, but not identical, idea of how to execute – we just don’t have the time to do it ourselves and decide to ‘delegate’. It becomes very easy to give someone an idea to execute and become overly prescriptive in how it’s accomplished. Unfortunately, this removes some of the more engaging aspects of a given project.

Give your team clear goals and objectives and flush out strategy to take on the project. Once you are clear about the end result, and understand their approach, try to remove yourself a bit from the situation and let them do their thing. Check in regularly. A helpful trick for me is to make sure I’m asking more open-ended questions than making statements in check-ins on the project. Framed well, your questions can help coach. If the project is too big to allow failure and you need to be really involved in it, consider explaining that upfront: “Hey guys – I like to give you autonomy, but the Board is watching this one closely, so we’ll need to do it a little differently. Just bear with me on this one.”

Busy work. Every time I rolled out a new process or initiative, there was a certain amount of ongoing work to support it. Before I knew it, it felt like my team spent more time caught in the weeds with maintenance work than doing forward-thinking projects. That’s tough to remedy, and I’m not sure I have the answer other than it’s worth periodically looking at where your team is spending their time and assessing if there are things that can be eliminated.

Look at the purpose of your organization and team. If something doesn’t tie up to that or the basic function of running a business, it should be a candidate for review. This may mean a shift to automation, or empowering others to do the task without leveraging your team, or deciding to drop a task altogether. Make sure your team has time to do more than just busy work. And contextualize the less glamorous parts of the job by tying it up to company purpose or goals. People want to use their brains and not be on autopilot all the time. As managers and leaders, it’s our job to strike the right balance.

I think all of the above can truly impact the engagement of your team and give you a leg up on recruitment and retention. None require a real financial investment, but do require a much harder shift in thinking and management. Frankly, adding a beer fridge or foosball table is much easier to sell and execute. And the difference is noticed immediately. But none of that will keep your employees coming back for more and producing at a highly-engaged level.

 

 

AI and HR – Friend or Foe?

Artificial intelligence has been on my mind a bit, as its implications on our workforce and society are staggering. Our economy is moving towards automation – first came the programmable tasks, drastically impacting our manual workforce; now AI is replacing other jobs – whether it’s fund managers (for investment portfolios) or answering questions in customer service chat windows. Heck, with the rise of Siri, Alexa and similar products – the technology is going out to consumers in a way never seen before.

Several years ago, I saw a presentation of IBM’s Watson and potential HR applications. I’ll admit, it scared me a bit. With an HR bot able to handle a large chunk of questions, and automation/self-service taking up other aspects, that means a lot fewer HR jobs out there as technology penetrates the market. I felt defensive of my profession, and that a bot was incapable of duplicating the experience of a live human.

Recently, I read “The Future Of Work: The Intersection Of Artificial Intelligence And Human Resources” in Forbes. It helped reframed the debate to me from either/or to a partnership or an if/then situation. I’ll be honest, I hate the majority of paperwork associated with my job. It’s brainless work that’s less impactful to the business and its people. It doesn’t energize or engage me, but it needs to get done to provide a great experience for employees. Similarly, there are a ton of simple questions that get asked fairly often.

If we had an HR bot embedded in HipChat at Buildium, what would have been the impact?

  • I could have programmed reminders for deadlines, nominations and surveys to go out at specific times of the month or year. This would remove the possibility of me or my team sending it too late because of bandwidth issues.
  • We could have programmed the bot to answer questions about benefit eligibility and enrollment, rollover, time off, holidays, raises, perks and payroll. People would get these real time versus waiting for an email response or for someone in HR to be available to answer.
  • My Ops folks could have programmed answers about security codes, requesting travel, expense reports, ordering equipment, company events, etc.
  • Onboarding reminders, check-ins and surveys could have been automated. After a week, we could remind you to review the interview process on Glassdoor. After three months, we could ask you to review the company.

There is a defensive way of thinking about that … it costs a job on my team. We budgeted plenty of time each quarter for responsive tasks. Many of these would be replaced by a bot. However, because there was so much time allotted to customer service (our employees), many larger projects or initiatives never got launched because there wasn’t enough time. Others ran late because reminders or the process was manual.

If we had a bot able to handle even 50% of these tasks and questions, we could have kept our performance management process regular and innovative. We could have spent more time on figuring out career development and finding a learning platform that supported employee and business needs. We could have scaled some of the personal touches we had to eliminate because we just didn’t have enough time. We could have not missed opportunities for feedback. Training and onboarding could have been markedly improved!

Progressive companies will still want that work done, so the HR profession will endure and free up more time for professionals to focus on the big things. In this case, it likely would have drastically increased the productivity of my team in meaningful work. Their engagement and job satisfaction would have been higher. I see two downsides. One: Those drop-in interactions when people have a question are a great way to check in with how people are doing. HR needs to foster great relationships throughout the organization to be effective. Two: Companies that don’t see HR or People Ops as strategic will use it to cut costs.

I think I land in a place where I think bots could help increase the efficacy of the function, and increase the time spent on meaningful and potentially innovative work. HR will need to be more deliberate about finding other ways to have informal interactions with their employees. Personally, if it helps free up my time to think about and experiment with better approaches to improving the workplace, I’m all for it.

“The Power of ‘Why?’ and ‘What if?'” Applied to Performance Management

I recently read a great article in The New York Times called “The Power of ‘Why?’ and ‘What if?’“. The gist is that businesses need more people asking questions . Doing so may help us be innovative and solve problems better. I’ve been spending some time (on my couch, obviously) thinking about performance management. Almost universally-hated, people are finally taking a closer look at the system and solutions. This seems like a great system to attack the problem.

Why do we do performance management (in its current form)?

  • To help inform compensation decisions
  • To promote and coach growth
  • To address performance issues
  • To give feedback regularly
  • Because we’re supposed to do it
  • It helps “rank” employees
  • To “document” issues (HR made us do it!)
  • To review goals and progress

Why do people hate it so freagin’ much (in its current form)?

  • It takes too much time
  • Too much negative feedback
  • It’s demoralizing
  • Ratings or stack rankings (when used) suck for all involved
  • It’s not the full picture – often there isn’t input from those closest to performance
  • Comp decisions tend to overly-emphasize the most recent quarter’s successes and failures
  • The process isn’t a balanced two-way exchange of feedback
  • Feedback isn’t delivered in a timely manner – it’s coming way too late
  • Annual, in particular, is really tough
  • It seems like the review is structured to justify the compensation change to the employee
  • Pressure on managers to use the review to justify compensation changes they may not agree with

What if we … ?

  • Tied compensation to market data and trusted managers to put people within a market-based range depending on performance?
  • Looked at compensation more frequently?
  • Decoupled compensation and performance conversations?
  • Pay people a lower base plus regular discretionary bonuses based on performance or completion of projects?
    • What if this pushed under performers to self-select out?
  • Tied reviews to projects or initiatives wrapping up instead of to a quarter or annual schedule?
  • Let employees drive the process and ask for general or specific feedback when they want?
  • Focused on utilizing people’s strengths, versus calling out negatives?
  • Actively coached weaknesses?
  • Had regular, informal career coaching?
  • Judged managers/leaders by how much they helped their employees grow and develop?
  • Had managers receive coaching and feedback from their teams regularly?
  • Did away with the manager altogether and relied on peers and mentors to provide feedback?

It’s encouraging that some tech companies seem to be looking at the problem of performance management (and connected issues) differently and are building tools for a different type of solution. Similarly, it’s awesome to see companies looking at the data and impact of the “old” way of doing things, and using that data to drive changes. Adobe’s switch to Check-ins being a rather high-profile example.

What are your thoughts on performance management? Or, rather, what are your questions surrounding it?

An HR Reaction to the Viral Uber Sexism Blog

Forgive me for the rambling nature of this post – it’s a little bit of an exercise in venting.

If you haven’t seen it already, a former Uber employee blogged about her experience working for the company, including harassment, threats of termination and ridiculous politics. Frankly, I’m not surprised, but it still pisses me off. As a human. As a woman. As an HR professional.

I’m going to focus on the last one, though. Reading through comments and discussion on the blog post, I see versions of: “You can’t trust HR”, “HR is there to cover up management’s ass”, “Why did she think going to HR would help?” I hear this all the time when people are talking about the function. Hell, I’ve had people tell me in my work and personal life (paraphrased) “HR is awful. You don’t seem to suck. What’s the deal?” It makes me angry to see bad behavior reenforce these views because so many HR teams are worlds better than that.

I get it, really. Traditionally, HR has been a function to handle administrative functions and avert risk. In many organizations it rolls up to the CFO. I can’t help but wonder if running decisions through the filter of “which action will most benefit the organization’s bottom line?” for decades has had an impact on the function as a whole.* In organizations where values are a little blurry or not emphasized enough, of course HR decisions are going to play out towards the most financially prudent business move. This may mean ignoring bad behavior from an executive or high-performer (see: Uber). Or initiating a massive inquiry when word gets out and there are worries of lawsuits, loss of customers, or angry investors on the horizon (see: Uber).

I see the HR and People Ops function evolving into an advocacy team for all employees. Our job should be to reenforce values, improve communication, and maximize performance across the organization to hit business objectives. That means advocating for interns, individual contributors, managers and executives. That’s tough, for sure. And it’s far more nuanced than risk-mitigation or protecting management. Being an advocate for all means there are times you need to advocate for management (for example, a termination), fall in between (mediate a disagreement), or advocate for employees (dealing with a bad manager). None of that is cut and dry, but it sure makes it much easier to sleep at night!

While I’m an idealist, I have a healthy dose of realism in me. I know that a percentage of HR departments are still firmly entrenched in an outdated mindset. A complaint is filed and instead of investigating the perpetrator in power, the HR team goes through archived emails to find something on the person who filed the claim. Or someone suddenly stops moving forward in an organization. Or their performance reviews are impacted. You know … retaliation. Some of those companies are betting on that employees won’t go through the long, expensive process to prove that in court. This makes me absolutely livid.

There are also a good chunk of well-meaning HR departments that are also powerless to do anything in many situations. A complaint is filed and run up the chain. The HR team advises an investigation and/or immediate action taken. They lay out the ethical and legal reasons to do so, and the retention risks associated with ignoring the behavior. And are told to do nothing. That sucks too – for the employee and HR team.

Both behaviors result in the same shitty experience for an employee looking for help and stem from an executive team that fails to hold people to an ethical standard, including treating people with respect. In this case, Uber’s CEO failed to make standards of behavior both crystal clear and a priority that people were held accountable to. That trickles down through leadership and, before you know it, is the pervading culture of the organization. A frontline employee doesn’t usually come to an organization unafraid to sexually proposition a direct report, right?! New hires observe the climate and mimic what others are freely doing. The CEO needs to draw a firm line with his leadership team on acceptable behavior and ensure a fair and safe place to work with some ethical standard. Then that will become the norm.

On behalf of HR … I’m sorry to people who have worked in organizations like this. I’m sorry if you have learned to avoid HR at all costs. I get it. I hope some of the better teams out there can win you over. We work really hard to earn trust and advocate for you. We don’t get everything right, but please know that there are plenty of us in the field who get up every morning with a passion for creating a great experience for all employees and redefining the function entirely. Lastly, know that there are plenty of us in the HR field who were absolutely disgusted by what we read – just like you.

* I don’t think all CFO’s are this way, but with so much on their plates and being held accountable for the bottom line, there certainly is pressure to either look at things this way, or a lack of bandwidth to really focus on people. I’ve also met some CFO’s who really give people the energy and strategic, long-range thinking they deserve.

Article Reflection – “Why Bosses Should Stop Thinking of ‘A Players,’ ‘B Players’ and ‘C Players’”

Check out this article in the Wall Street Journal. The crux is that we may very well be doing a disservice to our teams (and companies, by extension), by separating our employees into A, B and C players. The writer does a much better job describing the why’s, so I highly recommend reading it, but a quick overview:

  • It’s a self-fulfilling prophecy. Once we’ve dropped someone in a bucket, they are going to have a really hard time switching to a new one. We give our A-players more support, opportunities and energy in development.
  • It fails to look at the entire picture. A-players may be receiving easier tasks, more support, or be under a better-functioning leader.
  • It feeds the assumption that A-players are great at everything and opens up doors for them that they may not be the right fit for. We’re better off identifying what people are good at.
  • Perhaps on a subconscious level, it feeds the egos of leaders: “If I’m in a leadership role, it must be because I’m an A-player.”

I think, like most people in HR-related fields, I’ve spoken in terms of A-players. For one, it’s almost like a common lingo – everyone knows exactly what I’m talking about. But also, it just make sense to me. You want the best people on your teams, you want to coach people up who can be coached up, and you want to exit under-performers and replace them with really solid talent. Easy peasy! But maybe I’m not doing right by an organization or its people by blindly accepting this approach. So let’s look at the workplace from the alternate perspective.

Moneyball – The Baseball Analogy

I’m a big baseball fan and found myself completely blown away by the Oakland Athletics’ Moneyball approach as it started impacting the product they put on the field. For those who aren’t baseball (or Brad Pitt) enthusiasts, basically the A’s were a poor team that needed to figure out how to win. The majority of teams out there took the approach of trying to assemble the best collection of A-Players to fill their roster. This worked great for teams with deep pockets, but how could a small market team potentially compete?

Billy Beane, the General Manager, had to learn how to build a team differently. Leaning heavily on stats, he’d find players who most teams viewed as “average”, but were actually exceptional in certain situations or with specific skills, and acceptable in other areas. For example, instead of looking at batting average, he’d look at how often people got on base (baserunner = runs … it doesn’t matter how they get there). Because most teams weren’t looking at this, he was also able to exploit a lower demand and get these players very affordably.

His managers learned how to play people – people many other teams would categorize as “C-Players” – when the situations they were exceptional in arose. Maybe someone was better against lefties with runners on. Or maybe a relief pitcher performed best in the 8th inning on two days of rest. Beane’s staff took the time to understand what every person on his roster was exceptional at, and deployed them in those circumstances – quite successfully. The legwork to understand at this level of detail was much more time intensive. But the team consistently competed against teams with bigger talents and deeper pockets. This would seem to be anecdotal validation to understanding what people are good at and using them appropriately. It’s easier to see the weaknesses, but are your “underperformers” always bad across the board? Maybe they are exceptional at something or aren’t being assigned the right work?

My Experience as an Employee

There are things I’m really great at. There are things I’m satisfactory at. There are things I stink at. I am sure multiple managers and co-workers of mine would swear to you that I’m an A-Player and I knock everything out of the park. But I’m equally sure there are managers and co-workers who would say I’ve dropped the ball and am definitely not an A-Player.

I don’t think the reason for that is is simple as “I’m great!” or “I stink!”. There are the types of work I’ve been assigned, my bandwidth at the time, what else was going on in my life, and how I was managed throughout the work. It’s easy for me to see that in myself and even in my team. But it’s much harder to avoid falling into the trap of sometimes thinking someone is an underperformer without actually looking at them and their work situation objectively. C-Players can be A-Players in a different work circumstance (and vice versa!).

 

Going Forward

People can absolutely be underperformers across the board – even the Oakland A’s released players. Maybe a different way of looking at the situation is seeing what skills and qualities your company needs and what skills your people have. If someone isn’t exceptional in specific area or enough areas for your business needs, then it’s worth addressing. At least that forces you to look at the skills of all your players, see if they can be put in a situation at your company to be exceptional, and make decisions after that.

If we as companies spend more time deploying our staff on the things they are best at, perhaps we can get better performance and higher engagement. From a competitive standpoint, there may be some value to building a company full of generally-good people who each are exceptional at a couple of very specific things. If you are strategic about how you fill those exceptional things across the board, I wonder if the Moneyball philosophy could work in business as well.

Transparency and Salaries

Some former co-workers emailed and touched on the idea of salary transparency. My initial emotional reaction to this has always been “uh oh”. That doesn’t mean I’m against it, but it does acknowledge that there is a huge amount of risk to rolling something like this out without the right forethought, culture and strategy.

When you talk about an organization focused on transparency – whether it’s with company performance, finances or salaries – the goal is to show people that you have nothing to hide because you truly believe you are being fair and you have a sound strategy. Transparency also functions as the check/balance/accountability system to address any issues. But that removes the human element and our cultural biases from the equation. And we are all human bringing our own experiences to the mix.

The first time I looked at payroll files in a job, I was surprised to see what some people were making. In my head, I compared their performance to the money, to their peers’ salaries and to my salary. But I knew it was part of the job and I’d have an opportunity to influence compensation based on performance. But that’s not easy for everyone to do in a productive way. So why would anyone open up the books? Can it work? I think so in some places. I think these are the pieces you need in place for it to potentially be successful.

Leaders who communicate well. This is a multi-prong requirement. First, you need leaders who can communicate the why’s behind the switch – both to current employees and to candidates. Most people won’t have experience with knowing their peers’ salaries and probably will feel a little nervous about the concept. Your leaders need to be able to sell the benefits and the reasons behind the philosophy. After roll-out, be very cognizant to take note of the good its done or things you were able to fix because of the switch. You can use these as examples explaining the value you policy has to the organization to future candidates.

Secondarily, you inevitably will have more people coming to you asking about why their salary is less than someone else’s in a similar or identical role. Or a high performer asking why they are paid equal to an average performer. Your leaders will need to be capable of having very frank discussions with their teams on performance – where people are strong, weak and how they can improve to hit their salary goals.

A solid formula or philosophy on pay. This is beneficial everywhere, but there is room for more employee discontent when compensation is fully disclosed to all parties within the organization. Expect you will need to answer “why” a lot. In most organizations, it’s just “why aren’t I paid more?”. In your organization, it’ll be “why is Joanie paid ‘x’ and Andrew paid ‘y’?”

I’ve seen case studies on companies that incorporate position, tenure, performance, management and location into a formula that spits out a salary. While everyone may not be happy with the end result, it is completely understood why people receive the compensation they do. Other companies base comp entirely on market data. You may approach it however works best for your organization, but be sure you have iron-clad reasons behind the “why’s”. Use the transition to salary transparency to audit the fairness of your pay structure and address any inconsistencies. Opening up the books and having a system is probably the best lever to pull to address salary gaps you didn’t intend to create (i.e. gender differences).

Transparency (and accountability) within the organization. Trust your team to know your company goals, strategy, priorities and finances. Communicate why those decisions were made and what you hope accomplish with them. Share what other teams are doing and what their KPIs are, then share the results. Broadcast the wins and acknowledge contributions. Talk about your investments in people (compensation, benefits, perks, etc). Be open about the market rate for different roles. When your team can see the big picture and understand what everyone is doing to hit goals, it’s easier to put compensation into perspective.

Wrap up. You likely already trust your leadership, HR and finance teams with salary information, so there’s little reason others can’t learn to function productively with it if given the same visibility. But also be ready to help people through the transition by answering their questions honestly. In HR and Finance, you go in expecting you’ll know this information. Others never had that expectation and it can be a longer adjustment.

 

I think the upside to transparency is always better than siloing information – whether in pay or other areas of the organization. However, it’s also much harder and requires a much more deliberate communication strategy with leaders people trust. If you don’t have that in place, the downsides can be much worse than the status quo. Companies have become more open with some aspects of their organizations … it’s interesting to think about if salary transparency is the next wall to fall.

Super Bowl Sunday – Lessons to Apply to your Culture

Bill Belichick is known for going outside of the football world to draw inspiration for how the team is run. Whether it’s drawing from the military, grilling coaches from other sports, or playing an inspirational move – if there is an edge to be gained, he is open-minded. What can we learn from how the New England Patriots are run and apply in our companies?

Have a singular goal in mind

The New England Patriots are notorious for having one goal in mind: winning the Super Bowl. It is a big goal, but achievable. Every single person in the organization can tie their purpose to that goal. Whether it’s preseason workouts, staying late to review scout tape, working the salary cap or throwing on the pads late in the season after a sloppy tackling performance. On an employee-level, it gives a perfect filter for every single member of the organization to use for decisions. “Will this help us win the Super Bowl?” If the answer is “no”, they just don’t do it.

This singular focus is something companies aim for, but very few achieve because it’s really, really hard. First, pick a manageable time horizon; unless it’s a really purposeful goal that is easy for people to get behind (“we’re changing the world!”), you will have a hard time getting alignment if your end date is measured in years, not months. Give people ownership of their part of achieving the goals.Let them do their jobs. This creates shared purpose.

Talk about your goal all the time. If things don’t tie up to it, ask if those other things are worth the effort or pulling effort away from the most important thing. And lastly, if you hit your goal, celebrate it. Talk about all the little things that got you there. Highlight the adversity you overcame to hit it. Talk about your MVPs. Maybe even throw a parade … with confetti. And duckboats.

Simplify the task at hand

Belichick and his staff articulate their game plans very simply and specifically. While some teams may say things like “win in the trenches” or “score four touchdowns”, the Patriots staff chooses three to four really specific things that they think will give them the edge to win against their specific opponent. They do this for every single game. That may be “score first”, or “allow no yards after catch” or “stay in your lanes” (with a particularly shifty running back). But it is specific and measurable.

There is a lot of work required to filter down to the most important tasks to focus your efforts on to win. The higher level goals are much easier. So why bother? Breaking things into digestible parts serves a few purposes. It gives the players simple things to focus on – it gives them a job, so to speak. They don’t need to do everything, they just need to do these things to win. And because they know what others are doing, they don’t need to worry about the overall plan – just their role. You hear “Do your job!” all around the Patriots. This laser-like focus ensures you have the effort where you want it, and team accountability if you don’t hit your goals.

Fill your team with people who buy in

The Patriots have a very specific philosophy: winning above all else. That means individuals needs to buy into the system entirely or the entire system falls apart. It may mean a Pro Bowl player accepts a part time role. Or a defensive player sticks with the play call instead of taking a chance on an interception or sack because individual play makes the whole weaker.

The team has had to cut ties with players – both drafted and brought in – who weren’t able to buy into the team-first, all-business, no distraction culture because they weren’t fitting in and were undermining something very important to the organization. Similarly, they’ve brought in players known as trouble-makers or partiers who are now poster children for “The Patriot Way”. The difference isn’t talent. The difference is fitting into a culture and way of doing things to hit the goal.

Everyone has been in an organization with individuals playing by different rules than the vast majority. I suppose it can work, but it also undermines your strategy, culture and the heights your team can reach. With everyone after a team goal with a shared code on how to achieve things, you can weather the inevitable challenges without rocking your foundation to the core.

Have strong leaders … and know they aren’t always the people in charge

Your leaders are the people who buy into what you are doing, how you are doing it, why you are doing it and yell it from the rooftop and live it daily. They behave in a way you want all of your team to. This is different and distinct from people in leadership positions. The latter are your managers, directors and executives.

It is critically important that those in leadership positions also have leadership qualities. Most organizations elevate their highest performers. I would argue that it’s more important to elevate your leaders and invest in them. Yes, Tom Brady has long been one of the best players on the team, but you hear countless stories from people coming into the organization and realizing how hard he works and how much he buys into what the team is doing. That is what makes him a leader. If your top performer sees the value of running hills in the hot summer sun to improve conditioning, it’s really hard for anyone to complain too loudly and be accepted within the organization. There are plenty of teams around the league who have quarterbacks expected to lead a team, who utterly lack in leadership qualities.

Similarly, Matthew Slater has long been a captain for the Patriots. For those unfamiliar with the team, Slater plays a small, but critical role on special teams. While many would view such a role as a “demotion”, he has bought into his ability to help win the field position game, contribute to winning and dedicated himself fully to the role. Players follow his lead, despite the fact he’s not making the most money or in the flashiest role. You have these people in your organization. Retain them. Invest in them. Use them to help align your team and reinforce your message.

I’m going to get back to watching the parade, but thanks for indulging my fanaticism today!

The Hard Stuff – Terming Someone

I was talking with a friend the other day about a termination she had to do that she wasn’t looking forward to. Everyone with some semblance of a heart hates terminating people. It’s difficult. There is risk to it. It’s delicate. It sucks for everyone in the room. And, thankfully, it’s not something most people get a whole lot of “practice” doing – but that makes it even harder to get right. You should lean heavily on your legal/HR team, but here are a few tips I’ve shared with managers in the past.

Do: Make sure it’s not a total surprise.

When any manager has ever come to me about a performance-related termination, I ask what conversations they’ve had with the person and if/how they’ve followed up. This isn’t strictly for a paperwork-related, cover-your-ass reason. It’s more strategic and long-range than that.

If we as organizations want peak performance from our teams, our people need to be clear on expectations, if they’re meeting them, and how specifically to improve. It’s a manager’s job to drive performance and I feel strongly that there is some ethical responsibility for managers to put in a good faith effort to get everyone on their team where they need to be if there’s even a chance things can rebound. It certainly doesn’t always work out, but I think the investment is deserved.

Have the performance conversation(s), even though they are hard – you would expect the same level of candor from your manager. Give real time feedback. Follow up with an email summarizing to reenforce and create clarity on goals, strategies and timelines you talked about in the meeting. You would be shocked at the number of performance conversations where the manager emerges feeling they have delivered a ‘tough’ message, while the employee feels like they were just given some helpful development suggestions and has no idea, whatsoever, of the gravity of the situation. That is setting everyone up for a worse situation.

Keep in mind that your entire team is always monitoring you. You do not want your highest performers self-selecting out of the organization because they have witnessed and now fear a surprise termination. Even if performers agree 100% with the decision to let someone go, they will be monitoring the fairness of the process and how you treat someone on the way out.

Don’t: Say how hard this is for you to do. Or cry.

Ever. Some suggest never apologizing or admitting fault to avoid putting the company in more legal risk. That’s probably true, but not what drives this recommendation.

Research has indicated that job loss profoundly impacts people. Yes, even if you cut a big severance check and eliminate that initial financial concern. Think about it. In the US, one of the first questions we ask people is: “What do you do?” For better or worse, our jobs are a huge part of our identities. When you lose part of your identity, it can absolutely send you reeling.

I will admit that I don’t sleep well (or at all) before terminations. I get sick to my stomach for days. I usually need to go for a walk to rid myself of the shakes before and after. Most people have some level of emotional and physical response. But when you sit across from someone you are letting go, keep in mind what they are facing:

  • Income instability
  • Telling people they’ve been let go/have no job (over and over and over …)
  • Shame
  • Loss of purpose/identity is in any way tied to their job
  • Loss of relationships and interaction with co-workers
  • Loss of confidence
  • Logistics of getting their stuff and getting home
  • Shock
  • Having to explain job loss in search for new job
  • A million other things

This is a life changing event that, truthfully, some people never fully recover from. Nothing you are dealing with is in any way comparable to what they are facing. Crying or sharing how difficult this has been for you isn’t appropriate and won’t make them feel better. In fact, it could exacerbate and escalate the situation. Instead, the compassionate thing to do is to be empathetic in the room, listen to them (within reason) and try and remove or mitigate as many challenges as makes sense. If you don’t think you can hold it together, talk with HR about other options or approaches.

Do: Give reasons why you’ve made the decision to let them go.

Managers are really surprised to hear this from me. Several years ago, I was working with an HR consultant/mentor who strongly influenced my philosophy on terminations. She essentially said to me: “If people don’t understand why they are being let go, they are left to fill in the blanks themselves, they get more angry and you are at more legal risk.” When something bad happens, we cannot help but ask why it’s happening to us. For me, understanding the why helps me process, even if I disagree.

This isn’t to suggest that the termination is a time to get into the minutia of your decisions or lay it on thick. It’s not. Concentrate on two to three high level reasons why you are letting someone go that you’ve discussed with them in the recent past. Try to avoid focusing on the more emotionally-charged or subjective ones, if possible. For example, if the issues were treatment of peers, attendance and missing deadlines, focus on the later two.

For each reason, I like to have a very specific and simple example to share with them if, and only if, they ask. Depending on the tone of the conversation, it may even be appropriate to answer simple clarifying questions. However, once the discussion turns into a debate, it’s time to respectfully and calmly refocus on the reality that the decision has been made for multiple reasons and is final.

When companies hire people, I think there is an underlying agreement that both parties will do their best to make things work. This drives my desire to try and be specific about where that agreement fell apart.

Do: Summarize the conversation at a really high level.

It’s more likely than not that the terminated employee’s head will be spinning as soon as it’s clear they are being let go. They may not hear or process a thing you share with them after that moment as they start to think about all the repercussions. Account for this in your process. I prefer to send employees home with all the information we talked about.

This includes:

  • What’s going to happen with their benefits; what and when they need to do anything about them.
  • If there is any agreement, encouragement to review with an attorney and outline a timeline for questions and execution of the agreement.
  • What their last check will cover. If applicable, if and when they will receive any bonuses due to them (it’s interesting how a $100 commission check can be the difference between someone feeling like they were treated fairly or not).
  • If you don’t intend to fight unemployment, state that and help direct them to the right resources.
  • If they have stuff at the office, their options to get it all back.
  • Appreciation for their contributions and regrets it didn’t work out.

I typically don’t cover the reasons why in the termination letter. Rather, I focus on simplifying and clarifying a really difficult process.

Wrap up.

There is a lot to think about when going into a termination. I believe that in an HR role my job is to hold both employees (through performance and behavior) and managers (through their responsibility to coach, provide clear expectations and treat their teams fairly) accountable. The termination process is walking a fine line in a highly-charged situation when that social contract falls apart. Try to treat the impacted employee with empathy and kindness, no matter how crazy they drove you. The organization is watching closely. And, really, it’s just the right thing to do.

Building a benefits package

In so many job postings for HR-related positions, I see something along the lines of “review and administer benefits plans”. Certainly, administering plans is way down on the list of exciting things to do in the profession, but putting one together is pretty friggin’ important and exciting! Strategic HR folks see it as a great opportunity. Indulge me for a minute.

You exist in a competitive market – there are other companies out there fighting for the same customers. There are companies trying to steal your customers. So you look at product market fit. You do focus groups to see where you are falling short, and what influenced your customers’ decision to select you over the competition. Maybe it’s price. Or features. Or service. You look to establish what the minimum viable product is to even be in the conversation with prospects.

Then, you do some self reflection. What are you capable of building? Is it better to go all in on one big change, or do a bunch of smaller ones? You look at your current market and how you are messaging to them in what channels. You try to understand what the most effective messages are to convert sales. Ultimately, you make some strategic decision that will impact your success in hitting your goals going forward.

Viewing HR through this business lens makes sense to me because your goals and levers are very similar. Your customers are the talent you want to attract and retain. Your culture,  business problem, compensation and benefits all factor into the “product” you are offering. Let’s flush that out with benefits.

Minimum Viable Product

You want great talent, so you need to understand what it takes in the market. Take a look at companies you’ve lost employees or candidates to and understand their benefits packages. What insurances do they offer and what are they contributing to each? What is their PTO like? Do they match 401(k)? What perks do they offer? Your insurance broker or an HR consultant can give you a pretty good lay of the land, but so can your employees and candidates. Lastly, don’t forget to take a look at the law and what you legally must do for all employees.

Putting together the right package is a puzzle. Understand the whole picture of what’s out there to give you an idea of all the pieces you can work with and to frame what the bare minimum “product” is in your market. Then you can start the process of prioritizing and eliminating options.

Understand Your Demographics and Culture

Look at your existing demographics and intimately understand the usage of your current benefits. Are there demographic differences in usage (i.e. development budget is most utilized by mid managers; entry-level folks aren’t really utilizing anything)? You may flush out some inefficiencies or a better way to allocate efforts and budget.

Next, ask what is most important to who you are as a company? Factor in your corporate culture and core values when constructing a package. If you say you are about work/life balance, your benefit package should support that. Similarly, if you talk about wanting people to grow, make sure there is a tangible perk or benefit to reenforce its importance.

Lastly, think about your growth goals and the demographics of those you are looking to hire. What benefits appeal will make you uniquely competitive in attracting the best of the best in that group? For example, if you are building a call center and want to attract and retain entry-level folks for 2+ years, a loan reimbursement program, events and in-office snacks may be more strategic to add. If, however, it’s time to build out a senior management team, you may be looking at things like flexible hours, 401(k) and a very comprehensive health plan.

Leverage Your Budget

Your goal is to deploy dollars in the best way to support your business’ growth, throughout the organization. This includes benefits on a micro and macro level. I’ll explain both.

Now you have an idea of what you need to attract talent, what benefits matter to which demographics, and what your objectives are in terms of attracting and retaining talent. Take your benefits budget and spend accordingly. This may mean cutting certain benefits that appeal to a small subgroup of employees in favor of ones with more widespread use. Don’t forget to factor in administrative overhead associated with running certain benefits when going through your evaluation.

If you make changes, communicate the why’s behind it to everyone so it doesn’t seem arbitrary. Be prepared for changes to materially affect certain employees. If these are people you want to retain, consider adjusting their compensation accordingly.

On a macro level, look at how your business is performing from a people perspective. Are you attracting and retaining the talent you need to drive your business? Are your employees engaged and satisfied with their benefits and compensation? You want positions filled quickly, limited turnover, and performers capable of doing the job. If you are seeing deficiencies in any of these areas, it may be time to look at your budget as a whole and decide if you’ve allocated enough to HR to most effectively meet the needs of your organization.

Don’t Forget Compensation

Compensation and benefits work hand in hand with one another and should be part of the same strategy. For example, if you want to pay top of market, you may be able to skimp in benefits. On the flip side, many nonprofits are able to retain great people because their benefits are outstanding. If you are a company the grants equity, you need to factor that into the equation as well.

There are a million ways to build an effective benefits program. Be strategic. Be true to who you are as a company. Understand your objectives. Use benefits (and compensation) as a lever towards hitting business objectives. Companies (and HR teams) that see the value of the right package can exploit a market inefficiency to their advantage and get a leg up on the best talent. Make how you leverage your HR levers a competitive advantage for your business.