Top HR Pay

Somebody’s gotta get paid at the 99th percentile. (Wouldn’t it be great if it were you…just once?)

Workforce Management posted a list of The 30 Highest-Paid HR leaders. These people have a place at the table, all right. And I’d say it’s more like mahogany than Formica.

[via JT International News Wire]

If Motivating You Is Wrong, I Don’t Want To Be Right

I saw this quote today by Sir Ken Robinson on Diego Rodriguez’s Metacool:

If you’re not prepared to be wrong, you will never come up with anything original.

That made me think about why companies use pay surveys to set their pay levels. I mean, what would you do if you had none of that information and needed to create a pay plan? Would you even have base salary? Would you make everyone a partner in the business and let them share in the profits — and invest in the business? Would the calendar dictate when pay increases should happen? Would three years be considered “long-term”? Would you run your company differently? Would you have more managers than workers?

Here’s a challenge: You should pay people at the 99th percentile. (As long as we have data, we might as well use it.) Because you pay more than everyone else you will get the best talent. And those highly-paid people will rock your world. Your company will be the place to work, and the most successful company on the planet. It could work. Has anyone proven that it can’t?

Discuss.

How About a Little Pay Transparency?

How transparent are you about pay in your company? Today’s Dilbert tells how to do it in three easy panels.

Five Reasons Pay-for-Performance Fails

In another month or so, HR will begin compensation planning season in most companies. That’s when they calculate annual pay increases, plan for bonus payouts, and determine the size of long-term awards. It takes thousands upon thousands of hours of work by HR, managers, and employees. And it’s often a wasted effort.

Pay-for-performance, in its pure form, is right. It makes sense. It works. But it can be a little more theoretical than practical when the system fails.

Here are five reasons that pay-for-performance fails in many companies:

  1. Performance management is a joke. How many people do you know who get their annual goals in May or June, halfway through the year? Then they get a performance review at the end of the year with the “seven things you did right and three things you did wrong” approach? For pay-for-performance to work, performance management has to work, and work well.
  2. Not enough performance differentiation. Not many companies are headquartered at Lake Wobegon, “where the women are strong, the women are handsome, and all the children are above average.” Not all of your employees are above average. Conversely. some are below average, and to make PFP work, they have to be told that they don’t measure up. If everyone’s performance is the same, then just pay them all the same and don’t waste your time with all that planning and agonizing.
  3. Rewards aren’t differentiated. This is the corollary to “performance is punishing.” In many PFP systems, there’s just not enough pay difference between the really great ones and the mediocre ones. Not only are excellent employees asked to do more, they’re supposed to be gratified when their merit increase is 3.1% and a poor performer gets 2.9%. It’s even worse with annual incentives. You have to be willing to give no increase to bad performers and a lot more than average to the great ones.
  4. Managers chicken out. Everyone talks tough about pay-for-performance, right up until they have to dole out performance ratings and money. Then managers chicken out and take the easy route. When they do that, when they let the slackers off the hook, the system rapidly falls apart. PFP requires commitment and consistency.
  5. Employees are subject to the manager lottery. For PFP to work, the rules have to be applied consistently. But we all know managers who insistent that “no one is a 5″ and can’t get the highest rating, and we know managers who are softies and rate all their employees highly. In that case, employees are playing the managers lottery — who you get as a manager determines your pay. That’s just not fair, but it’s reality.

That’s a list of five major reasons pay-for-performance fails. It also works in some companies. I’ll get around to that soon. I’d be interested in other reasons you’ve seen PFP fall apart.

Why is Money Not Motivating to Employees, But it is to Managers?

Thought I had over coffee this morning:

Why is it that the same managers who use “people don’t work for money” to justify underpaying workers are convinced that their own bonus and long-term incentive plans are great and highly motivating?

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