Total Compensation in the Age of Cholera
Posted on Friday, November 21, 2008 by Frank RocheI’m working at home today, which has its benefits. It’s quiet. Then I flipped on CNBC. Things aren’t good. And that made me think about Total Compensation in the Age of Cholera.
Having a lot of leverage in your pay plans is great in an up market. Everybody wins. Heck, when the market is up, it’s fantastic to offer below-median base pay and above-median total cash. Bring on the bonuses. But did we forget to tell employees that leverage works two ways in pay plans? It’s not Up Up, and Away in My Beautiful Balloon anymore. It is Total Compensation in the Age of Cholera.
I’m not trying to be Mr. Gloom-and-Doom. But it’s a reality. Crafting total compensation statements is going to take some real positioning. You’re going to need to talk clearly and plainly to your employees about business realities. You’re going to have to give your best and brightest a reason to stay when money is tight. You’re going to have to really mean “pay for performance.” And you’re going to have to talk about big things in combination with little things. Everyone’s in this together. It’s the Age of Economic Cholera. We can make it go away…but it won’t be by doing what we’ve always done when we talk about total compensation.
For you Monty Python fans, I think this “Bring Out Your Dead!” segment is one of their funniest ever.
Greg
Nov 21st, 2008
HP was legendary in the '70s with reducing pay by 20%, giving everybody Fridays off, and forgoing layoffs.
I wonder if anybody will try that model now?
lruettimann
Nov 21st, 2008
Wait, I just can't mail my total comp statements and hope my employees feel pretty good about just being employed?
Also, I love Total Compensation in the Age of Cholera. I also love One Hundred Years of Meetings and Chronicle of Team Building Foretold.
Great books, all of them!
Frank
Nov 22nd, 2008
Laurie, I'm going to write Total Compensation in the Age of Cholera. Or…HR in the Time of Cholera. It cracks me up to think about it. You should spend a weekend and whip out those other two. Could be a whole series. LOL.
Frank
Nov 22nd, 2008
Greg, that is a model that works. I'm not sure that you could get people to cooperate that much in this day of instant and continuous gratification. We may need to find out, though.
Nick
Nov 27th, 2008
Hi Frank: you know, when the economy is good companies still struggle to keep talent, because many of their competitors are hiring and willing to pay more for scarce talent pools. The point about pay leverage is interesting, this means that companies are actually smart to setup high variable amounts so that their costs adjust with how they perform. Retention though, is another issue. Time for the good old “case by case” adjustments for those employees the company really cares about, when available.