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Pay for Performance is Good but Not Enough

Most of us have recently finished annual salary reviews and are now busy working on our KPIs. I am guessing about half of your organisations are taking a look at your performance management and pay for performance practices. I hope the following thoughts are therefore timely and helpful.

Let’s start with the word “performance”. This term is almost as worn out as “love” or “our greatest asset” or “passionate.” We badly need a refresh. So here’s my suggestion:

Don’t think performance… think value, contribution, impact.

Wherever you use the term performance in your management or HR conversations, consider what you mean by “performance”. Are you thinking of achievement against KPIs? Are looking back at the last review period? Or are you looking at the present or the future in terms of a person’s contribution to business performance?

I like the term contribution… like a retail or F&B company, the term “contribution” is often used to refer to branch/store profit, i.e. its contribution to the profit of the region or district or brand profit. A person’s performance is ultimately their contribution to organisational performance. If we forget that, we have lost sight of the purpose behind performance management.

Talent Value

Two large multinationals I have spoken with recently—one based in Tokyo and one based in Manila, Philippines—are using the term “talent value” in place of, or in addition to, performance. Talent value is a good term, as it gets outside the box of KPI achievement in the past. If you ask an investor which investments have had the best past returns, they can easily tell you. But ask them which are their favorite investments today, and you will get a different list. Missing from the “favorite today” list will be investments that had great past returns but have gone into decline or have inflated PE ratios (price to earnings, i.e. they cost too much for what they give you). Their favorite investments today, however, would include some lesser-known companies with low PE ratios (good returns compared to their cost.) In speaking with the HR leaders using the concept of Talent Value, they are thinking of people much the same way as the investor would talk about their favorite current investments.

Finally, do we pay for performance, or do we pay to retain high performers? We should consider whether our reward philosophies are “pay for performance” when we are actually paying to retain people with needed talent value, part of which is performance.

And what is the best predictor of talent value, or contribution? Yes, past performance against KPIs is an important part of it (so to that extent, I don’t mind continued use of ratings..) but going forward it is competence that makes a person valuable over the span of a career. Competence is what a person brings to your organisation and it’s there whether KPIs are easy or difficult, or whether the manager review is fair or unfair. Competence–relevant to the work to be done, the problems to be solved–is what best represents value.

Let’s continue to train managers to manage performance. But let’s also teach managers to define needed talent value in terms of relevant competencies – what the role requires in terms of knowledge, skills and attitudes and traits. Yes, this gets into industrial psychology, and competency frameworks take a lot of work. But we must, in my opinion, make the term “competency” just as common as “performance” in our business vocabulary.

Business performance is ultimately measured in dollars. Talent value, however, starts with competency and ends with individual performance, i.e. individual contribution to organisation performance. We in HR are in the business of creating business value through talent value. Managing performance is the manager’s job, as the manager is accountable for his/her area’s results. But in HR we are on point to acquire, develop and retain competency, and to equip managers to develop it and turn it into performance.

Let’s also teach managers to be coaches. Outside coaches are really helpful for top leaders, but too expensive for the mid-levels. We therefore must equip all management to lead and coach others.

As for HR, let’s select and promote on competence. If we can identify, for a role, the necessary competencies and then ensure goals and performance are being managed for accountability, then we are getting close to managing talent value.

Pay for Performance

So what do we do with our merit matrix? It is a beautiful creation, perfectly allocating scarce salary budgets to the right people. Do we seriously need to question use of a salary increase guideline with performance rating down the left side and range position (compa-ratio) across the top? Should we abandon these fantastic tools with percentages managers are advised to give their employees, to help ensure a strong link between pay and performance, and to improve what we call internal equity? My answer: Yes, if we can create something designed for retaining talent value.

When expanding the pay philosophy to pay for “talent value” or past/present/future value or contribution or impact.. we must rethink the traditional performance matrix, or rather get beyond it. It could be as simple as using the merit matrix (backward looking performance) as step one, then advising managers to apply a forward looking lens to determine talent value. Instead of rating, I suggest the following scale:

Top – business/mission critical talent. Must retain. Business would be negatively impacted without this person. These roles tend to be higher level, single-incumbent roles, but could also be members of small but highly important teams.

Mid – Important or enabling talent. Individuals could be replaced but not easily. Loss of these individuals would be disruptive but have little or no long-term effect on the business overall.

Low – These people are useful, steady workers in enabling roles that could be outsourced or performed by contractors, or are otherwise non-essential to business success. Talent value focuses on short-term productivity, quality of work and general attitudes.

The above ratings are not performance ratings, but are in terms of importance to the business and impact of separation, i.e. importance of retention. Pay and retention are directly linked. Higher pay retains talent, all other factors being equal. Paying at a higher market level such as 90th percentile means that other employers cannot match their salary, and the incumbent would need to take on a much bigger role elsewhere to make the same money he or she is currently making.

Put simply, let’s replace “pay for performance” with pay for talent value, or pay for retention, at least in our pay system designs. As for labels and optics, pay for performance still sounds good and sends the right message. But the reality is that we need to consider more than performance.

For more, see my other blogs on this topic, and check my Training Calendar about my classes on Transforming Performance Management or Managing Performance Without Ratings.

It’s about management, not performance management

If an organization has a vision, a mission, a strategy and a business plan, then the 1st priority of all those employed is to help fulfill these. The leaders’ role (as many leaders as there may be) is to keep everyone—including the growing number of part-timers, FTCs (fixed term contracts), vendors and partners—moving in the same direction, and devoting their hearts and minds to organisational success.

I am coming to some conclusions concerning “modern” performance management, i.e. mutually-agreed SMART goals and KPIs/objectives, and annual performance reviews involving forced distributions/curves and calibration meetings.

Conclusion #1: Managing performance is the job of every line manager. If a line manager received a promotion, more money, for taking the job of manager, but does not effectively manage team performance, the manager should not receive a higher rating than his/her team. In fact, if the team is not performing, the manager is not performing. It’s that simple. If the manager was promoted due to being a top performer in a non-management role, shame on HR for failing to match the person to the job of manager.

Conclusion #2: HR should help managers do their job. It is not the job of HR to handhold managers, personally making sure every individual has KPIs, a midyear review, does a self-assessment and gets a manager review that is calibrated and “fair.” This not what employees want! Accenture surveyed their roughly 250,000 millennials and they said they wanted real time feedback (read about it here.) Employees want a real manager who will help them see the big picture, identify their strengths and coach them on an ongoing basis to solve their own problems, stretching them to grow and succeed. We must let (and help) managers do their job, and help their managers hold them accountable for it. But we must stop doing the managers’ jobs for them indirectly by orchestrating the “annual PM process.”

Conclusion #3: Following the herd is not adding value. HR, I am speaking to you. If 80% of companies decide to continue using performance ratings, conduct calibration meetings, etc., this is not to be used as an excuse to ignore the headlines and comfort yourselves. Movement away from ratings is not the point. Dropping the use of ratings is a wake-up call for all of us. What is happening is a movement back to managers managing their people. Back to the way it is supposed to be. If the majority of employers think it’s ok for HR to do the manager’s job (deciding on what salary increases should be given and giving them the talking points to ensure they say the right things and not the wrong things,) that does not mean you should do the same.

Movement away from ratings is not the point. Dropping the use of ratings is a wake-up call for all of us.

Conclusion #4: The best contribution HR can make to performance management is better selection and development of managers. If you have the wrong managers, or if your managers have not been developed into good people managers, our role in HR is not to mainly to be a safety net to make sure everyone gets a fair review. Our main role is to help poor managers become good managers, and if they cannot, to replace them. If we wish to add value, let’s help create good management through good selection and development. Let’s not assume working ourselves ragged in Q1 means we are adding sufficient value. Better if all the managers do their jobs year round. Then, when it’s salary review time, they will know what to do with their budgets.

And more importantly, managers will manage performance. It’s their job as managers.

Agree?

Horseless Carriages are “Cars.” Ratingless Performance Management is now…

So much talk about performance management and doing away with ratings. When cars were invented, they were called “horseless carriages” because the absence of horses was so shocking at the time. Wifi was first called “wireless LAN” since LAN cables were no longer needed. Telephones were called telephones until wireless phones appeared, which were called cordless or wireless at first, then they were cell phones, then smart phones. Today, we just call them phones, because smartphones are the norm.

Today, we talk about driverless cars. What will they be called in 10 years if driverless becomes the new norm? We will probably call them cars, no longer referring to what is missing (drivers and horses.)

So in 5 years, what will we call performance management without ratings?
Will it become simply “performance management” again, with no reference to what is missing?

Maybe. It would be useful to find a new label, to break the associations hired-wired in our brains from 3 decades of practice. Come on now, admit it: when we think of “performance management,” our brains immediately associate it with goal setting (which 30% of our managers suck at), ongoing coaching (which at least 70% of managers suck at), and “pay for performance” which triggers thoughts of SMART goals and KPI achievement the last 12 months, self-ratings, manager ratings, calibration sessions and a forced distribution curve, resulting in a merit matrix and bonus formulas that work because ratings can be used in Excel formulas.

Neuroscience research* shows we cannot unwire our brains…we cannot unlearn what we have done for 10 or 20 years or more, like some kung fu movie where the student is asked by his new master to unlearn his bad karate. It is hard-wired. So how do we change our performance management mindset and still call it by the same name?

My suggestion: let’s talk less about performance management, and instead break it down into its components, which do not require HR to “manage performance.” Here are the four components I feel need to be unbundled and re-positioned as separate disciplines:

  1. Accountability – employees are accountable to their managers to perform their jobs to get results. Managers should not depend on HR to help them with this. Long before we had expensive software, managers were accountable for team performance and ensuring everyone knows their part. Let’s “make managers great again” and get out of their way. I truly believe managers will figure this out on their own, if we in HR stop telling them what forms they must fill out by the deadline.
  2. Development – managers, with help from HR, must learn to develop talent to maximize team performance. Here is where the L&D folks can shine. Let’s make learning happen for the sake of building organisational capability and capacity.
  3. Retention – managers, with help from HR, must know whom to retain, and how. Rewards help a lot, but we need to build manager skills and leadership ability to keep the best people.
  4. Rewards – We have been wasting a lot of money on merit pay thinking it is good behavioural psychology. We permanently reward people into the future for their KPI achievement the past 12 months. Merit pay is better than not differentiating, but let’s be clear that our merit matrices are rewarding past performance into the future. No one “earns” a raise anymore like it’s their right. Pay is (or should be) about individual retention and internal equity. Incentives are about alignment with overall objectives, not achievement of prior year KPIs.

Our merit matrices are rewarding past performance into the future.

Let’s end “Pay for Performance”

The merit matrix has served its purpose, nudging the numbers in the right direction. Unfortunately, the numbers are not getting where they’re supposed to be fast enough. Well paid average performers should get no increase if there are top performers paid low v market. Taking 1% from the former and giving it to the latter is better than giving both the same %, but it is far short of what is needed to retain key talent. Instead, managers must be trained how to allocate scarce salary budgets with the objective of retaining key talent and maintaining internal equity.

So, here’s my verdict on the term “performance management”. The concept is not the problem, the term itself is not the problem. Even ratings are not the problem. It’s ok to keep using the term performance management as long as we see accountability, development, retention and rewards as separate disciplines which depend on managers, not HR, for their alignment.

I believe the term for this already exists. It’s called “management.”

What if you allowed the term “performance management” to fall out of use? In my opinion, if you equip managers well enough to hold people accountable, develop talent to perform better, be a good boss and then leverage rewards to help you retain the best talent, no one will miss the term performance management.

And what about ratings and SMART goals and KPIs and calibration and curves? In my opinion, if you focus on management capability, and managers can coach and have crucial conversations, and can allocate rewards wisely and fairly… you can make the above practices optional, up to each business or function head to keep or stop doing. Let it go, folks. See what happens. As long as you are equipping your managers well, you can make all those rituals optional. Let each business decide.

If your managers are not ready to do their job without hand-holding from HR, then I believe you are stuck with those practices for a while. And if your culture is one of mistrust toward your managers—a belief that only those at the very top can make people decisions fairly, you are doomed to the first quarter fire drill for years to come. For some industries, achieving sufficient managerial talent may be more challenging, perhaps unattainable, given the practice of promoting from within and giving promotions to your best technical experts. In such cases, my advice is to retain ownership for performance management within HR and stick with the current practices.

Agree? I’d love to get your view!

*Read David Rock’s books on neuroleadership and how to help employees think and perform better.

 

A Milestone

My “little” freelance firm has just reached S$1 million in revenue since I began early 2013. Feeling just a little proud, and encouraged.

At first my goal was just to keep moving forward after my firm retrenched me. I thought I would put myself on the market as a freelancer to let my network know I was available at a fraction of the rates they would have paid before. I was job hunting but wanted to keep working as well. With 7 years consulting experience, I knew what to do.

Same me, at about a fifth the cost.

A hundred and seventy invoices later, ‘I’ has become ‘we.’

A hundred and seventy invoices later (and still a fraction of big firm cost), ‘I’ has become ‘we’. With the help of my Director and Advisors and Associates—including consulting partners, training/event partners, registered freelancers, informal freelancers, in-betweeners, career breakers, and a few moonlighters—I have been able to pull together teams ranging from 2 to 6 people to deliver great work for my clients, addressing rewards issues in more than 20 countries.

In addition to consulting, training is about one-third of my revenue, and I’ve had the privilege to train over 1,000 HR professionals and about 500 line managers on pay topics. I’ve created MOM-approved, funded courses and done custom in-house programmes for many organisations. I have great training partners, such as SNEF, HRMBSi, Beyond360, WorldatWork, Lighthouse, HRMAsia and others. I’ve even collaborated with HayGroup (now KornFerry HayGroup).

With help from an Associate in Indonesia, I’ve conducted two studies on “Ending the Use of Ratings in Asia”, now incorporated into my class on Managing Performance Without Ratings.

The average associate on my client teams has more than 15 years real-world experience, mostly corporate, in multiple industries. I gladly pay my associates well for their great contributions, whether they are client-facing or behind the scenes. (Hey, let me know if you’d like to do some consulting!)

Who knows what tomorrow will bring? No one really knows for sure. Peter Drucker said the best way to predict the future is to create it. For me, I only want to create a good income for my family doing what I’m best at and enjoy doing, in a place where I am happy to be, which today is Singapore.

Come meet me and my key associates and partners at our Open House event on Thursday, 25 May, after work from 6:30 to 9:30 p.m. at Royal Plaza on Scotts. It’s free, and you will be fed! Find out more about Freelance Total Rewards, a smart alternative to the big firms. Meet Fermin A. Diez, CCP, SPHR (my Director and advisor) and Dr. Mark Bussin, Chairman of 21st Century Rewards, who is my partner for compensation data and technology tools. They will be signing (and selling for $40) copies of their new book, Remuneration Handbook–International Edition. Click here for more information or to register to attend our Open House.

Well, time to get back to work!

Thank you, Singapore. A million thank you’s.

Tom

 

How to be a Comp & Ben Partner

I had coffee with a client recently, who is being challenged by her boss to make the comp and benefits function more impactful. She asked how her C&B function could be a more effective partner to the business, more consultative. I gave her some on-the-spot tips, then said I would think about it and write a blog so others could benefit as well. There is so much more that can be said, but here goes.

In summary,

Be everything your boss assumes, and more, and less.

Let me break this down.

Assumed:

Your boss assumes you are technically competent and know how to deliver C&B according to global, regional and local norms and regulations, etc. Your boss assumes you have strong analytical, communication and policy-writing skills. Your boss assumes you can handle managers and employees who are unhappy about pay matters. He assumes you can run a salary review, develop salary ranges, recommend budgets, align pay to performance in traditional ways and manage the bonus plans, maybe even LTI plans. The list goes on. Everything in your JD you should be able to do.

More:

You should also be able to:

  • take a firm stand against something that is not right, that is contrary to good and fair pay principles, that undermines your company’s values or work ethic/expectations or violates the company culture—this may not be “your job” but it is your boss’s job, trust me. Seeing you step up will blow his socks off and prove you are way more than a technical expert. C&B must be the gold standard for what’s fair, even more so than others in HR at times. (I say this because HR business partners sometimes feel compelled to please their customers in ways that would be viewed as unfair to others. Really. It happens.) Here’s a great story to illustrate this point.
  • facilitate “community” problem-solving, going beyond your own expertise and tapping the thoughts of others, engaging key influencers or stakeholders to focus on an issue and share the problem solving process with you. You can invite others with knowledge of the situation even when it is clearly “not their job” to solve it. These people will gladly offer useful thoughts you would not find among those who own the problem. Sometimes a single word spoken by someone in marketing will get you thinking and BAM you have the solution. I approached an SVP expat for help with my rollout of a new (cheaper) expat policy. He openly opposed the policy in management meetings. I took the risk and said to him “I need your help”. We had a short chat about staggering costs of expat housing. I shared a little information with him. From then on, he stopped sabotaging my efforts.
  • explain the business clearly to others. “Our business proposition is to leverage our global supply chain and operating efficiencies to meet the needs of global customers better than anyone else on the planet, in terms of quality, delivery and cost.” Such statements are expected from HR business partners, but not C&B people. Albert Einstein said “if you can’t explain it clearly, you don’t understand it well enough.”
  • align rewards to the business strategy. If your business is about efficiency and low cost for customers, don’t worry about low salaries. Use productivity-based incentives or profit sharing. Maximise flexibility in your policies where possible to deliver value at low cost. Create a culture of recognition and caring. Good people will work for less in return for respect and acknowledgement. If your strategy is to have the best digital solutions, then don’t sweat it when you have to pay market P90 for developers. It’s money well spent.
  • seek value for money like you own the business. If you pay $1,500 to everyone upon their 10-/15-/20-year anniversaries, and your average length of service is 16.4 years, think about it.. What value are you getting for the jubilee/long-service bonuses? What is your overall comparatio? Do you think in terms of fixed costs structure, or do you boast that you pay “above market”. If you pay below market but have no attrition problem, do you see that as a problem? Have lunch with a finance leader and ask her how she views C&B costs in terms of business value. In the HR context, we need to help the business retain key talents and high-potentials. Make sure they are paid well and don’t trust the annual review to make that happen. I once flew to China to retain our top sales executive who had an offer for twice what we were paying him. He was already well paid, but I thought we could keep him if we gave him other things of great value to him, such as mentoring and CEO support. I called the CEO and asked him to call this guy to personally tell him how critical he was to our success in China and to offer his support. It worked. We did not have to match his offer.

Less:

  • don’t ask for money. Learn to be resourceful (meet your consultant for coffee!) If you want to introduce a new benefit, find the money from another C&B practice. If your bonus targets are low, don’t ask for approval to raise bonuses from one month to 10% of salary just because the survey says that’s the market number. Your proposal should include a funding solution. In this case, my normal source of funds for a bonus increase is salaries. If I want to add 1.67% to bonus targets (one month = 8.33% of a 12-month salary) to have a 10% target, I might propose a 3.0% salary increment budget for the following year instead of 4.0%. There is no law against a lower salary budget in any country I know of. As far as I can remember, all my proposals for C&B enhancements (higher life insurance, bonus increases, flexible benefits, better hospitalisation benefits, etc.) were self-funded through a specific change in another area. You should assume any change you propose must be cost-neutral. Say that out loud: “cost neutral”. Again: “cost neutral”. Good. Asking for money? Not approved. Cost-neutral. Approved. That’s how it works, folks.
  • negotiate like a salesperson. If someone wants something from you, get something from them. What can HR bargain with? Our currency is support. Do your job as a manager and we will remember you in HR as a good manager. Fail to do your job as a manager and we will remember it in HR. Managers have little idea how much power we actually have in HR. We know who the dumb managers are, and who the good ones are. We can recite on demand who the assholes are in the company. No problem. I think people know this, they just won’t admit it. Do not be afraid to tell managers what they need to do as a manager. I can still name the worst managers, and the best, at the companies I have worked for. If a manager says “that’s HR’s job” or “I don’t care what grade that job is in other departments,” do not be afraid to say “actually it is your job” or “when all the grade 10 product managers learn that your product manager is a grade 11, you will be answerable to the global head of marketing, not to me. Will you be ready for that conversation?” Get comfortable speaking with power, C&B. Being right is a commodity, spend it wisely.
  • don’t say no. In the above example, I did not suggest you tell the manager “no, you can’t make your product manager a grade 11.” I have learned not to say “no” to managers or employees. Here’s a challenge: the next time you have the urge to say (or type in an email) “No..” instead say “if we do that, most likely __ will happen.” Just spell out the likely result. People do not like being told no. Our brains are hard-wired from the age of about 3 months to dislike that word. Decision makers should never ever be told no. They want their C&B partner to give them choices. In any situation there are usually three choices: do nothing (status quo), do what the manager wants to do (they usually propose a solution we see problems with), and a third option (think of something that optimises the pros and minimises the cons.) For each option spell out the pros, the cons and the risks. Decision makers will LOVE you if you can present options to them for every situation. The next time you have an issue, break it down into these three options. Make it a habit.

Finally, one piece of advice given to me in my first international C&B role in 1992, by a great boss by the name of Gary Chicoine: “Be politically astute without being political.”

Basically, be nice to others, even if they are idiots.

I’m not promising it will happen to you, but doing the above helped me become a VP of Comp & Ben for the world’s largest hotel company, save millions in costs, attract and retain key talent, and drive better company growth for five years. These habits helped me build consulting relationships with Coca-Cola, Toyota, and other great clients.

C&B partnering is possible, and it’s way more fun than being just an expert. Good luck, my friend. I hope this was helpful. You can do it!

“Most Expensive?” Who cares?

A recent BBC article on Singapore Cost of Living raises a really good point about the cost of living in Singapore. The point is, it depends on whether you need to buy a car and consume “like an expat.”

This article exposes the irrelevance of the “most expensive” lists.

If your MNC’s regional HQ is in Singapore, you will not send your expats to another city, say, Hong Kong or Shanghai, because you read that Singapore is ranked the most expensive. You send them to Singapore since that is where your office is, probably due to low taxes, high quality of living and rule of law. Location of your offices or your customers drives where you send your managers, not news about cost of living rankings.

For your foreign talent on local contracts (locally hired foreigners, international hires, permanent transfers or localised expats), “real” cost of living matters. But the people who create COL indexes (and generate these lists 2x/year) are generally in the business of selling this information (COL indices or per diem numbers) to companies that are sending true expats on Long term assignments (LTAs) or short term assignments (STAs), respectively. But to the growing number of foreigners on local contracts, the cost of housing near Orchard Road, or the cost of cars is irrelevant, since anyone seriously looking at living in Singapore (or anywhere) would have researched the “real” cost of living locally, using PropertyGuru and by exploring the various food centres. Sure, they will use the data on “most expensive” to negotiate, but they have already discovered secretly that it is quite affordable.

Adam Food CentreI have lived in Singapore nearly 10 years, after living in the U.S. most of my life. I find Singapore to be very affordable. I can walk to Adam Food Centre and have dinner with my wife for less than $20 (about $14 USD), including the large bottle of Tiger beer. I have a credit card that includes EZ-Link auto-top up so I have nearly free transportation using train, bus and taxi.

I don’t really take these articles seriously anymore. Corporate HR depts do not pay any attention to them, in my experience. Only the expats, or those wanting to be paid like an expat, use these articles for leverage.

If you are in HR, ignore the “most expensive city” lists – they are not about every day local costs, but focus on expat-related costs, for the shrinking number of expats whose companies still believe the expat is worth 2-3 times local talent, since that is the cost ratio, typically.

Here’s a Study by NUS that is more helpful, as it exposes the huge difference between expat and local costs of living. Singapore is ranked #48 for ordinary people.

Ignore the “most expensive” articles. They answer a question no real person is asking. Instead, go have dinner at your local food centre, raise a Tiger and enjoy complaining about the best place you’ll ever find to live.

(special thanks to my friend Mack Moey of SNEF for inspiring this blog!)

AI, MBSO, Reward Cycle… whatever you call it, it’s Salary Review time!

It’s late March, and every C&B manager is performing their sacred duty right now: making sure hundreds, thousands, maybe tens of thousands of employees are considered for a raise, and hopefully a bonus.

So busy lah!

Yes, but I don’t want to talk about us. I want to focus on the one with the most difficult job in all of this: the manager.

Now this might seem counter-intuitive to my fellow C&B friends who have devoted anywhere from 200-500 hours in recent months verifying data, conducting market analysis, updating ranges, calculating compa-ratios, developing manager worksheets (or online systems), chasing PM ratings, and revising salary increase guidelines to align with salary budgets. But the job of a manager–telling their subordinate what their pay increment will be, based on their performance, salary inflation or other considerations–is, in my opinion, the harder job.

Consider…

  • In a matter of minutes, a pay conversation can tell an employee whether they are really valued by the company, or simply “meets expectations” which may not inspire future effort
  • An employee who has read in the local paper that the government is giving 4.1% raises and is told by her manager that she is a valued employee and getting a 3.8% increase because of the curve… is likely to drop about 10 points in terms of her engagement
  • A manager who had to give one key team member extra money, skimming dollars from other team members, has to have several very difficult conversations in order to deliver enough of an increase to send a “please stay with us” message to the key member

Hats off to the C&B professionals who make every possible effort to provide line managers great tools for reviewing and planning salaries and bonuses. Double hats off and highest regard to the line managers who must deliver pay-related news to their staff and keep them engaged.

 

We are Getting Better

In my recent reflection on 2016, the first good sign I listed was our ongoing development as a profession, referring to those of us in the global total rewards (comp & benefits or global mobility) profession. We are advancing in our credentials, our practices, and most of all, the way we think. Let me elaborate.

Better Credentials

Our credentials are improving. Currently, WorldatWork–the gold standard in rewards certification–lists 291 Singaporeans among the exclusive ranks of Global Rewards Professional (GRP) certification holders. Of these, 31 also hold the Certified Compensation Professional (CCP) designation, which means they are qualified to manage compensation in the United States, with highly complex laws and regulations surrounding non-discrimination, overtime pay, etc. Outside of Singapore, certification is gaining increased recognition with 235 certified rewards professionals in China, 195 in Hong Kong and many others in Indonesia, India and Malaysia (although the certification price tag is somewhat prohibitive in these and other locations.) Check the SNEF schedule for GRP and CCP courses for 2017.

Rewards professionals are attending my Comp 101 and Comp 102 classes in large numbers. Offered in partnership with SNEF (Singapore National Employers Federation), these courses cover the principles and practices (Comp 101) and essential hands-on skills (Comp 102) needed by todays C&B specialists. We’ve had about 100 participants since introducing these professional-level courses about a year ago.  We are excited to announce Comp 103–Annual Incentives will be introduced 20/21 April 2017 through SNEF.

I should mention corporate in-house training here as well. A large pharmaceutical company is investing in their regional rewards and HR business partners by engaging Freelance Total Rewards to deliver both certification and non-certification rewards training. Professional associations in Singapore and Indonesia have also engaged us for custom professional development programmes.

Another area of increased capability is flexible work arrangements, or FWA. Ministry of Manpower statistics now indicate more than half of Singapore employers offer FWAs to meet business needs for talent, with workers expecting and demanding more flexibility, and employers focusing more on outcomes than “face time” at the office. I will be teaching Implement Flexible Work Arrangements through SNEF 16/17 February. Come find out how Singapore employers are meeting business and staffing needs by taking a more flexible approach and managing it effectively. The course includes five real case studies and open discussion, to help you define an approach for your organisation. Here’s more information on the FWA Courses from FTR and SNEF. FWA course subsidy may be available…

Finally, with increased attention on the use, or non-use, of performance ratings, I’ve had full classrooms for Managing Performance Without Ratings, a course that looks closely at the companies that have decided to drop the use of ratings to understand why and examine their new practices, and to equip participants to approach this topic for their own companies intelligently, rather than simply follow the herd.

In some Asian countries, rewards professionals cannot afford existing global certification offerings. Therefore, I am forming an industry panel of senior Asian total rewards leaders, to help me develop and introduce a new certification in total rewards, to be introduced in July 2017. The Total Rewards Professional (TRP) certification will be offered at three levels: professional, managerial and strategic. It will include standard material, but will be contextualized for each country where it is offered. We will start in the Philippines. More to come on this!

Better Practices

We are getting better in our company practices, as well. Credentials have great value, but what’s the point of being certified or trained if you go back and change nothing? Sayang! Wasted! The good news is we are seeing a lot of rewards leaders driving change in their practices. My own clients are:

  • challenging the assumption that you need expensive, big firm job evaluation systems that no one can explain;
  • simplifying and realigning pay for performance practices, including both merit pay and incentives;
  • realigning senior management pay to support greater accountability for results;
  • giving line managers more flexibility and related training to enable better pay decisions and more effective communication of those decisions by the managers who must own them

It is very encouraging to see traditional practices and attitudes being questioned, challenged and left behind if better ways are available. The smart companies care less about “best practices” and prevalence and more about business and talent outcomes.

The smart companies care less about “best practices” and prevalence and more about business and talent outcomes.

Better Thinking

The most encouraging sign is seeing HR and rewards leaders thinking more critically, challenging assumptions and acting as catalysts in the senior management ranks for greater accountability, managerial competence and greater focus on value creation. Whether it takes the form of healthcare and wellness innovation, flexible work arrangements–use of smart office centres, flexi-time, work at home, part time work–or removal of performance ratings and manager training; we are seeing more companies taking bold and innovative steps to create greater value through people. Companies like ConnexionsAsia (CXA) are more than disruptive to traditional employer healthcare marketplace practices, creating greater value for money normally spent on traditional brokers and premiums. CIGNA turned to neuroscience to better understand how people actually think and form attitudes about performance management.

Greater value is expected from mobility leaders as well. Sean Collins, Managing Partner at Talent Mobility Search has noted that in order to stand out from the crowd, mobility professionals “need to equip themselves with new skill sets that will support the business and increased complexity in the role in the future. Being able to master the latest technologies, including data analytics and reporting tools, as well as developing broader business competencies such as business acumen, finance, negotiation and presentation skills will be key to adding value to the role.”

The rewards profession is moving forward, and after 30 years, I’m still excited to be a comp & ben guy.

Tom

Comp 102 Today!

ROL Screenshot

Teaching Comp 102 with SNEF today! Using fake data, we will grade a job using an online system (Paterson method), market price jobs using an online survey tool (RewardOnline) , build salary ranges 5 different ways, determine compa-ratios and recommend a salary increase budget. Tomorrow we will build a merit matrix and develop suggested increases for each employee based on rating and compa-ratio, plus learn to do Excel formulas, charting, pivot tables, conditional formatting and naming ranges. (For C&B people this is like eating dark chocolate for two days.)

Just ran Comp 101 last week covering basic theories and group exercises on total rewards, job evaluation and a promotion inbox exercise.

I’ve decided to introduce Comp 103 on Annual Incentives. Mark your calendar for 20/21 April.  Learn to develop a corporate incentive plan (variable bonus scheme.) On day 1 we will learn to design a performance-sharing plan (corp/unit/individual), profit-sharing and gainsharing plans. On day 2 we will learn sales compensation, covering commissions and target-based approaches. If your 2017 KPIs include incentive review or design, you should attend Comp 103-Annual Incentives.

Have a great week!

Global Total Rewards—2016 Review