Where's the Money? (3)

Performance Bonus Programs represent a straightforward practice used to motivate performance, improve employee engagement and ameliorate a team’s compensation concerns while managing fixed salary expenses. Many times the decision to implement a bonus program is driven by the business leader, and the process of developing the plan involves financial modeling and a myopic focus aimed at solving a single problem, such as the need to improve sales or grow the customer base.

Seems simple enough! However, there are underlying principles that need to be thoroughly addressed if a bonus program is going to achieve the goals it is designed to achieve. If these elements are ignored in the initial decision-making you may find that your bonus program fails to achieve the desired results, creates unintended and unpleasant consequences—and you end up pouring your money down a rat hole.

Lesson #1: A bonus program will drive the behavior that is incented, therefore, be clear on how you structure the goals.

My first experience with this “fatal flaw” was with a sales organization in which the EVP of Sales launched a bonus program intended to increase sales. The fundamentals of the program were very simple: after a person sold 100% of their quota they would receive an incremental bonus payment in relation to the incremental improvement in sales. At first the program seemed to be working great —sales were growing, and in some locations, the numbers were stratospheric. However, in about six months the EVP started receiving data from the accounting department that sales cancellations and uncollectable accounts were also growing at an alarming rate—and in many cases correlated to the locations showing record sales.

The EVP turned to HR to help get the program back on track and I was assigned this task. While I won’t go into the details of my investigation, the bottom line was that the goals of the bonus program had not been thoroughly thought through and focused on one aspect of sales growth—writing new business. When setting the goals for a bonus program be sure that they not only drive the stated behavior, but do not encourage undesirable behaviors, as well.

Tips:

  • Ask yourself, “If the team only focus on doing “x”, what could go wrong?”
  • Align the bonus goals with other performance goals, as in “Increase sales over quota without increasing the cancellation rate.”
  • Keep the goals, simple, clear and measurable—remember S.M.A.R.T. goals.
  • Bonus goals should be strategic business drivers and be sustainable. Although they may need to be tweaked from time to time, if the direction is constantly changing, the bonus program will lose its credibility—fast.
  • Don’t have a laundry list. Keep a laser focus on what you want to accomplish and identify the 2-3 things that will make it happen.

Lesson #2: The goals and objective for which people are incented must be tracked and visible to people in real time or at least in frequent intervals.

My second bonus program nightmare comes from another organization that launched a bonus program for a team that was sort of a hybrid sales-relationship management operation. To the credit of the top executive, he hired a well-known consulting firm to design the program. They came up with a solid design along with two very important metrics that clearly drove revenue and a smaller percentage of the payout that was tied to personal KPIs.

I started working with this team one month before the first bonus payout was to be made. During that first meeting I learned that while the goals and metrics were clear the calculations were not shared with the employees until well after they’d received the bonus check. When the first payout was made, the employees were confused and disgruntled. Many people thought they had performed better than indicated by the amount received and there was a feeling that the bonus program was unfair and arbitrary, even a bit of a bait and switch.

The analytics team worked very hard for several more quarters to create a better and more visible tracking system for the team, but could never figure out a way to do that because there were too many variables involved in the calculation. Bonuses continued to be paid and people continued to be unhappy with them. At the end of the year I had a conversation with an employee who was leaving her role to take a position in another business unit, one that did not have a performance bonus program. She told me she was leaving because the other position paid more. Her statement puzzled me since I had the salary information for both positions. She currently made $80,000 and had received a bonus of $28,000 making her annual compensation $108,000. The new position paid $88,000 with a straight company bonus of 15% or total annual compensation of $101,200. I pointed out that she actually made more in her current position. She replied that the bonus didn’t count— to her it was “magic money”.

Tips:

  • Bonus programs drive performance when people can adjust their efforts to improve their results against their goals.
  • If people can’t see how they are performing against these goals they don’t have the ability to correct course and will not feel they control their earning potential.
  • If performance metrics are not visible to people, the program may lose credibility and people may start to view the bonuses as “magic money,” or worse.
  • If the organization does not have the ability to track metrics and make them visible and accessible to participants in the bonus plan—come up with a different compensation strategy.

A bonus plan is both a strategic business decision and a financial decision, but neither the strategic nor the financial goals will be met if you ignore the fundamentals of clear goals and clear communication. HR’s role is to make sure that the impact of a bonus plan is positive, motivating and in support of those strategic goals.


Rose 1

It seems that one of the core competencies an HR professional must develop, particularly in smaller organizations, is the ability to handle frantic, panicky, anxious managers who feel victimized by the Family and Medical Leave Act (FMLA).

No other HR law creates as much angst and confusion as FMLA. The law is simple in explanation, elusive in practice. Everybody who works 1250 hours a year after their first year of employment is entitled to twelve weeks of leave to cover absences related to serious medical conditions involving self or family members. Pretty simple on the surface.

The problem in really understanding the law is the use of the phrase “twelve weeks,” because that implies chunks of time that a manager can easily plan for, like vacations. It’s more accurate to say that everyone covered has 480 hours of leave, because the law allows for two kinds of leave that give managers fits: intermittent leave and reduced-schedule leave.

Intermittent leave seems to be the most difficult to deal with. Essentially, an employee with, or caring for a family member with, a serious medical condition that involves occasional flare-ups or continuing treatment can spread those 480 hours over the entire year, often at very inconvenient moments for managers. Although the law asks that employees give notice of potential absences, the phrase “when practicable” applies to FMLA. Sometimes a condition (migraines, for example) is inherently unpredictable and may even prevent the employee from calling in. If the medical practitioner writes something like “may be absent 2-3 days per month at unpredictable intervals,” that means that all of those absences are protected absences that the employee has the right to take. This can give managers migraines as they try to deal with the impact of slipping deadlines and coverage issues.

Equally problematic in the small organization is reduced-schedule leave, which occurs when the medical provider indicates a person can only work a part of his or her weekly schedule. Managers who had been counting on a key person being there for an important launch or to finish a critical project on time find themselves in a difficult spot.

These two situations invariably cause the frustrated manager to storm into HR and interrogate the HR professional about loopholes, exceptions, second opinions and suggestions to hire private detectives to see if the employee is really does have a “serious medical condition” or is just trying to avoid work. Some managers even go around HR and try to get people to work from home in defiance of the medical practitioner’s restrictions.

While I have known a few employees who have used FMLA improperly, the vast majority of people on FMLA don’t want to be there. They don’t want to have a serious medical condition and live in constant state of anxiety. They want to work and they want to get back to work as soon as possible. The last thing these people need is a flipped-out manager who cares only about getting the work done and shows little or no concern for an employee who needs care and compassion.

The problem isn’t that people go on FMLA. This is life; stuff happens. The problem is managers who don’t know how to plan to save their lives.

My advice to HR professionals on how to deal with managers who make FMLA more difficult than it needs to be is as follows: when you train managers on FMLA, open your talk with a single slide free from graphics that contains one message: “FMLA is the law. Get over it.”

Once they’ve recovered from the shock, explain to them in simple terms how FMLA works. Then tell them how to prepare for it:

  • Plan your overall staffing needs based on the assumption that at least one person in your department will always be out on FMLA.  Double that number for every ten people in the department.
  • Ensure that all processes in your department are documented and easy to follow so that anyone can step in and do the essential job requirements with a tiny bit of refresher training.
  • Make sure you have at least one (preferably two) backups for every job in your department. Implement a cross-training plan and stick to it. Make sure the backup is regularly informed of what’s happening in the job they’re assigned to cover.
  • List all of the resources you have available to fill a position temporarily: temp agencies, temp pools, interns, floaters, borrowing people from other departments.
  • Don’t be afraid to ask your fellow managers for help when you’re tight on staffing.
  • Learn how to do all the jobs yourself. Particularly when it comes to intermittent leave, you may find that you are the backup.

The law expects that management will make whatever preparations are necessary to comply with FMLA requirements. With a little planning and forethought, managers can avoid panic, keep things running and focus their energies on encouraging a person with a serious medical condition to take the time to get better soon.

And that’s exactly where they should be.


Running Track

What better way to reward and recognize a superstar employee than putting them on a career track to management?

Hold that thought!

That myth still holds power in many organizations. The reality of a modern workforce contradicts that assumption. The lure of a management position no longer holds the appeal it had decades ago. Many employees have no desire to go into management, particularly those in technical and scientific fields. They like the work they’re doing, they care more about work-life balance than status and they really don’t want to deal with the hassle of managing people.

The more important truth is that most employees seek validation for their contributions in the form of career growth. Countless articles and reams of research identify the lack of internal career opportunities as one of the top reasons employees leave an organization, and that data applies to those who want to go into management and those who are management-averse. For the management-averse, it’s a matter of providing career paths based on the continuing expansion and application of the technical skills the field demands.

For those who want to give management a shot, the path up the hierarchy seems relatively simple. However, research shows it is a much more complex situation than simply entering the person’s name in a different box on the org chart. As Kouzes and Posner demonstrated in their research on the subject, eighty percent of the people promoted into management are promoted for their technical skills, but seventy percent fail because of a lack of people skills.

Early in my career, I had to learn this lesson through personal experience, as I tried to correct a situation involving an internal promotion that was going bad—fast. I worked for a organization that had multiple locations, each location had a their own Customer Service Team led by a Customer Service Supervisor. Jim was a Customer Service Representative (CSR) at one of our largest branches and he was fabulous—an über-CSR.  Jim could handle any customer and every technical problem that came his way and was the person who trained all of the new CSRs, sometimes even for other locations. When the supervisor of Jim’s team retired, he was selected as her replacement.

At first, the team was proud and supportive of Jim. They were a close-knit team who often socialized together. But it didn’t take long for the friction with team members to develop and not much longer for the complaints to start flooding into Human Resources. Comments that he made to people to improve their work were heard as excessive criticism. Changes he wanted to implement were resisted. The productivity and morale of the team plummeted. One female team member actually complained of harassment when Jim invited her to lunch, even though he had extended similar invitations when they were peers.

What Jim missed was that the dynamics between Jim and the team had changed. Jim’s words and actions were no longer viewed through the lens of peers, but through the power of boss-to-subordinate. Jim hadn’t changed, but his role and the meaning his old friends attached to him had shifted. He was now Management, and people have different expectations of someone in Management. Jim failed to perceive that the boundaries of his relationships with his former peers had fundamentally changed.

Within a couple of months this high-performing team began to experience significant turnover and the quality of work plummeted. Jim soon resigned. While this situation occurred over fifteen years ago, I have never forgotten how sad and defeated Jim felt when he gave up. I felt badly that we hadn’t done a better job to help prepare him for a successful transition into management.

Unfortunately, the story of Jim is not uncommon. Glassdoor recently published an article titled Why Employee Quit Their Jobs. The most common cause is bad management, particularly bad management involving an internal promotion: “A lot of companies pride themselves on promoting from within, but sometimes that strategy can backfire if the person they are giving a management role to isn’t up to the task. “ Fortunately, an organization can take some very simple steps that will improve their internal promotional practices and help the new manager be successful.

First, help them understand the new dynamics between the would-be manager and the team they will lead. Talk to them about the change in the nature of the relationships and be candid about how boundaries move when a person takes on a leadership role. Include case-study interview questions that focus on how to handle management tasks and people situations that are common in your workplace so you can both educate them and identify learning needs.

Second, develop and adopt a process of “inboarding.” Inboarding is simply onboarding designed for internal promotions. Most organizations wouldn’t think of bringing in a new manager from the outside without a plan to get them up to speed. Yet internally-promoted managers are often moved into new roles and left to figure it out by themselves.  A good inboarding process will help the newly promoted manager be successful, so that their teams can be successful. An inboarding process cannot be one-size-fits-all because each person and situation will have different needs, but that doesn’t mean it needs to be costly or complex. The best inboarding is a thoughtful, tailored plan that includes these five ingredients:

1)   Pair up the new leader with an internal coach and mentor from within the organization and follow-up with them to make sure they are connecting.

2)   Make connections for the internally-promoted manager. Identify the key relationships the manager is going to need to foster and establish the connections. Make sure that they are on the mailing lists for key meetings and announcements.

3)   In addition to learning the new role, identify other technical areas in which they may need training, such as systems or processes that may be used differently by managers than by employees (for example, the performance management and attendance systems).

4)   Identify areas where they need leadership skill training and train them. Help the employee identify the areas that will enhance their leadership skills and connect them to training resources. Create a development plan with a timeline.

5)   Schedule time for the new leader to meet with an HR representative to review critical policies and legal obligations. The goal is to ensure that the new manager has a manager’s perspective of things like FMLA, ADA, employment discrimination and harassment.  This will help the new manager identify risky situations, so he or she can get the “experts” involved early.

Following these five simple steps will go a long way to set up the newly promoted manager for success and make your internal management promotions the win-win you meant them to be.

 


Copley Square, Boston

Copley Square, Boston

Over the past ten days I have been following the stories about the Boston Marathon Bombing. Like so many others, I have felt the shock and anger at the brutal murders and senseless carnage, but have also been touched by the countless demonstrations of courage and support for every one whose life has impacted. Whether it was a runner in the London Marathon donning a black armband, or a survivor from the Boston Marathon returning to the blast site to leave a pair of running shoes, many people were trying to answer the questions, “What can I do in the face of this tragedy? How can I show solidarity and help people begin the healing process?”

For ten days I have been trying to answer those same questions, and as I sat in front of my computer to write this blog, I found my mind drifting to the times in my career when incomprehensible tragedy hit near or within an organization where I was the HR leader. I started to recall the actions my team and I took to show people that “the company” really cared and supported their employees in a very personal way.

I have been the HR leader more times than I care to count when a tragedy has impacted my organization. Each situation was different, each one was heart wrenching and none of them were easy to work through. In my case, each situation took place in a remote location, in an office or community located some distance from the corporate location where I worked. What was common to each situation is that HR was called upon to provide support designed to help the employees cope and set the stage for the healing to begin. It is from these experiences that I learned that HR must show leadership in the face of tragedy.

Below are some actions to be taken following an event. This is not intended to serve as a full business continuity plan but to summarize some key things HR must do:

Contact the senior manager of the impacted location to ascertain the status of the workforce.  Is everyone accounted for? Has anyone been seriously injured or had a family member or close friend seriously impacted? Is she/he aware of any specific issues that need personal follow-up?

Anticipate obstacles, barriers and disruption that have impacted the team and intervene. I cannot list all of the possible issues that an employee may have to deal with, since each event is unique and employees will be impacted differently. However, as you gather information, repeatedly ask yourself, “How can we make this easier?”  Be proactive and creative. If an employee is having trouble with approval for a benefit, call the carrier. If transportation has been effected, organize car pools, make Zip Cars available or offer telecommuting options.  A word of caution:  if you do offer “special benefits,” make sure to communicate that they are temporary, and establish an end date if possible.

Make grief/trauma counselors available and convenient. If you have an Employee Assistance Program, contact them and arrange to bring a counselor(s) on site or to a convenient location for several days. If you do not have an EAP you can find a qualified counselor through your health care provider or other resources. People will need to talk about their experience and emotions in a safe and confidential environment.  A professional will be able to help people process their feelings. He/she will also be able to offer suggestions about how the organization may best support the employees.

Develop and distribute communication to the impacted employee group, to the overall organization and to clients, if appropriate.  Act quickly to facilitate a communication strategy. At a minimum you will want a communication piece from the most senior leader to the impacted employees, using a method that is accessible and as personal as possible. Communicate with the non-impacted employees to provide them with the facts of the situation, any near-term changes in the operations, an overview of the support the company is providing and suggestions about how they can help. Develop any external communication that may be needed for clients, vendors, job candidates and others. Finally, be certain that key personnel understand any instructions or protocol for dealing with the press or investigators.

Allow employees the time to grieve and heal with their families and communities. Here’s where you will need to balance flexibility with reason. People will need time to heal and may need time to reorganize their daily routines for themselves and their families—give it to them. You may also need to make some personal exceptions and accommodations for unique circumstances.

Plan or participate in a group event that offers closure and sets the stage for healing.  In the case of death, this may involve time off to attend a memorial or holding your own special memorial time on site. If the company chooses to sponsor its own memorial service, use a professional counselor as a facilitator and make sure to avoid any religious overtones.

Stay in touch. Do not assume that once the initial event has passed that everything will return to normal.  Of course, the organization and the people will eventually need to move forward, so stay in touch with their progress. Talk with the local manager frequently. Provide support and follow-up as necessary for as long as necessary.


The entrance to companies with the industry experience fetish. You have to know the secret password to unlock the chain.

The entrance to companies with the “industry experience” fetish.

Many job postings list “industry experience preferred/required/strongly preferred/a must” or endless other variations of the theme.

I tend to view these blurbs with skepticism. In certain cases, industry experience can be a valid differentiator, particularly when the organization posting the ad needs someone to step in right away and hit the ground running.

On the other hand, I think some companies use it as a defense mechanism to hide lazy thinking and narrow-mindedness.

Everyone thinks their industry is special, unique and different. I’ve never met anyone in any industry who didn’t tell me that their business was incredibly complex and difficult to learn. This is always an exaggeration. Some industries have more rules, some use unusual language to describe their activities and some are in relatively new fields where there are no rules. None of that makes an industry more complex. The claim that their industry is uniquely challenging is something that people often use to make themselves feel important. They also use it in collaboration with others to form an exclusive club, and exclusive clubs always want to keep out the riff-raff and the people who don’t know the secret knock or have the secret decoder ring.

I base my argument on three key facts:

  1. I am no Einstein.
  2. I do not have a business degree. My degrees are in English (BA) and Public Administration with an OD emphasis (MPA).
  3. In consulting and in-house roles, I have worked successfully in all of the following industries: Health Care (clinical and medical devices), Manufacturing, Logistics, Energy, Environmental Services, Computers, Telecommunications, Software, Semiconductors, Wireless, Government, Higher Education, Military, Trucking, Internet, Food Services, Financial Services, Nonprofits, Social Services, Real Estate, Advertising, Business Analytics, Publishing, Entertainment, Employment Services, Construction and Precision Instruments.

So, if I am not imbued with any magical powers, how have I managed to accomplish something that most employment ads assume is impossible? Simple:

  • When I go into any company—even if I’ve worked in the industry before—I adopt the attitude that I am entering a foreign country where I know neither the language nor the customs. I listen, I ask questions and most importantly, I make no assumptions that my previous experience has any relevance to this experience. I will bring my experience into the conversation only when I have proof that it is relevant.
  • I’m not afraid to learn new things. Even though I’m the consultant and supposed to be “the expert,” I’m there to learn first, teach second.
  • I don’t let them intimidate me with buzzwords. If you’ve ever tried to learn a foreign language in school and you go to a country that speaks that language, you’ll have a moment of terror when you have your first encounter and find out that you can’t understand a word they’re saying and that you are completely unintelligible to them. What happens then? You get anxious, fearful, start beating yourself up for having had the arrogance to believe that you could master the language . . . and wind up forgetting everything you do know and disabling your ability to listen and learn.

To put it simply, it’s not industry experience that matters, it’s learning ability. Anyone can learn the essentials of any business in a relatively short period of time with an open mind. The advantage of hiring outside the industry are enormous. You get new perspectives on old problems and different ways of thinking. You get people who are unlikely to be bored because they’re learning new things. You’re more likely to get excitement and motivation from people who want to prove themselves as opposed to people who have been there, done that.

This brings us to the fundamental danger of insisting on an industry experience requirement. If all you’re doing is hiring people who think like you and talk like you, how are you ever going to innovate, deal with change, or create a learning culture? How do you expect your company to grow when all you’re doing is recycling old ideas? Why on earth would you want to duplicate the practices of a closed, stagnant culture like North Korea?

When I worked in health care (as closed an industry as there is), I knew we were making progress in our culture change efforts when one of our best leaders, a clinical professional with multiple certifications and a long career in health care, called me about recruiting front desk staff for the clinics. “You know, I’ve been thinking. I don’t want anyone with health care experience. I can teach them what they need to know. What I want are people who are good with people and who have had customer service training at some of the companies known for great customer service. The candidates I get from health care don’t really connect with people. They seem bored.”

Bless her heart. To be fair, health care has more limitations than most other industries because you can only hire physicians, nurses and technologists from within the health care mindset. This is a major reason why health care is so slow to change and why a colleague of mine who recently entered the industry described it as “going back in a time machine twenty years.” It’s not going to get any better in health care until they remove that “health care industry experience preferred” tag from their employment ads for non-clinical positions. The sheer weight of custom and accepted practice needs a strong counterweight if the industry is to join the rest of us in the present day.

My feeling is that the industry experience requirement is overrated and sometimes dangerous. It reflects lazy thinking on the part of HR and hiring managers who don’t take the time to clarify what they really need. Sometimes it’s used to avoid the possibility of hiring someone who will challenge the status quo, and in that case limits the ability of an organization to diversify its thinking. Focusing instead on interviewing for the critical competencies of learning ability and flexible thinking will get you far better results than simply hiring people who may know your buzzwords but may have stopped learning long ago.

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