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Golden Oldies: Pay For Performance

Monday, April 17th, 2017

It’s amazing to me, but looking back over more than a decade of writing I find posts that still impress, with information that is as useful now as when it was written.

Golden Oldies are a collection of what I consider some of the best posts during that time.

Money. Everyone’s favorite subject that no one wants to talk about. Especially when it comes to work, as in, “what were you making previously” and “what are you looking for now?”  

Tomorrow’s post focuses on a new law enacted in Philadelphia and New York City that has the potential to change that entire, unwanted conversation, forcing managers/companies to focus on the future, as opposed to history.

Read other Golden Oldies here.

starIn a post last week I asked for opinions on the ideas presented in a series of articles in Business Week on managing smarter but especially one that claims that “treating top performers the same as weaker ones is ‘strategic suicide’” and said I would add my thoughts in a future post.

Bob Foster left two interesting comments (well worth your time to click over and read). Regarding pay for performance he tells the story of a company where everybody from the CEO down all quit.

“Taking on the task to salvage the company, I hired new people that met unusual qualifications: they had to be qualified for the job they were applying for; they had to be unemployed and available immediately; they had to work at sub-standard wages; they had to work while knowing the company could close at any minute; and they had to work without supervision. The team that came together produced a highly successful company, and it was not because of high pay, or performance bonuses (there were none). The team stayed together, and performed, because of mutual respect, trust, appreciation, and consideration—people were ‘valued.’ To me, this is the truest form of ‘pay for performance.’”

I agree that trust was one of the key ingredients in what Bob accomplished, but it wasn’t the only one—or maybe I should say that it needs to be based on fairness and honesty.

Bob says the pay was ‘sub-standard’, but I assume that it was universally sub-standard relative to position and experience. If he had chosen to pay part of the team, say 10% more than their peers, the team wouldn’t have coalesced.

And that is exactly why I disagree with the idea of paying top performers, AKA stars, big sign-on bonuses or higher salaries than their peers.

  • Based on my own experience, 98% of star performers become stars as a function of their management and the ecosystem in which they perform. Change the management, culture or any other parts that comprise that ecosystem and the star may not survive.
  • Just as a chain is as strong as its weakest link there is no star in any sport, business, media, etc., who can win with a team that is subject to constant turnover and low morale.

Consider this common example.

Two people are hired at the same time with the same background, same GP0 and similar work experience, but with the one exception. One graduated from a ‘name’ school and the other from a community college. Starting salary is $50K, but the manager adds a 20% premium to the first candidate’s offer on the basis that she must be better to have gone to that school.

Neither candidate lived up to their potential because the manager made poor choices. In doing so he set both up to fail but for different reasons; one thought she had it made and the other that he was low value.

Merit bonuses fairly given for effort above and beyond acceptable performance levels make sense as long as they don’t come at the cost of developing new talent.

But one problem with ‘pay for performance’ is the pay often comes before the performance, but there are others and I’ll discuss them more Thursday. In the meantime, here are links to five posts from 2006 that give more detail on the trouble with stars.

Stars—they’re in your MAP

More about stars and MAP

Rejects or stars?

Star compensation

Retaining Stars

Image credit: sxc.hu

There were several interesting comments on the original post; check them out.

Golden Oldies: Insanely Smart Retention and Stars

Monday, April 3rd, 2017

It’s amazing to me, but looking back over more than a decade of writing I find posts that still impress, with information that is as useful now as when it was written.

Jerks. Turks. Stars. Bro culture. Definitely insanely stupid. I wrote this exactly six years ago and nothing has changed; if anything, it’s gotten worse and the post is yet more applicable.

Golden Oldies are a collection of what I consider some of the best posts during that time.

Read other Golden Oldies here.

3937284735_35e9f47fb3_mAre you already a devotee of insanely smart hiring, in the process of changing after reading insanely stupid hiring or somewhere in-between?

Wherever your MAP is on the subject there is one thing about hiring that you need to wrap your head around if you want your career to flourish.

You can not hire stars, but you can create and maintain them.

This is as true of executives and management as it is of workers at all levels.

Think of hiring in terms of planting a garden—only these plants have feet.

You’re at the nursery and find a magnificent rose. It’s large, because it’s several years old, has dozens of blooms and buds and is exactly what you wanted for a particular space in your yard.

The directions say that the rose needs full sun to thrive, while the space in your yard only gets four to five hours of morning sun. But the rose is so gorgeous you can’t resist, convincing yourself that those hours from sunrise to 11 will be enough, so you take it home and plant it.

It seems to do OK at first, but as time goes by it gets more straggly and has fewer and fewer blooms.

Finally, you give it to your friend who plants it in a place that gets sun from early morning to sunset.

By the end of the next summer the rose is enormous, covered in blooms and has sprouted three new canes.

One of the things that insanely smart hiring does is ensure that people are planted where they will flourish, whether they are already thriving or are leaving an inhospitable environment.

I said earlier that people are like plants with feet. Abuse a plant, whether intentionally or through neglect, and it will wither and eventually die; abuse your people and sooner or later they will walk.

Insanely smart hiring also gives you a giant edge whether the people market is hot or cold.

By knowing exactly what you need, your culture, management style and the environment you have to offer you are in a position to find hidden and unpolished jewels, as well as those that have lost their luster by being in the wrong place. (Pardon the mixed metaphors.)

These are often candidates that other managers pass on, but who will become your stars—stars with no interest in seeking out something else.

They recognize insanely smart opportunities when they see them.

Flickr image credit: Ryan Somma

Ducks in a Row: How Good Is Your Face-To-Face?

Tuesday, March 21st, 2017

https://www.flickr.com/photos/44412176@N05/4197328040/

Why is it that the most difficult part of management, i.e., people management, constantly moves backwards?

Managers from the Greatest Generation tried to manage by memo.

That lasted until the 1970s when Boomer and Gen X managers took a giant step backwards and started trying to manage by email.

Millennials have taken an even larger step in that direction by trying to manage by text and have swept many of the previous contingents along with them.

Granted, people at all levels often look for and find ways, frequently turning to available technology, to avoid, or at least minimize, the most frustrating and difficult parts of their jobs.

However, that doesn’t work when the frustrating part is 90% of the job.

Every time this comes up I find myself quoting something Terry Dial said to me decades ago.

“People are 90% of our costs as well as the key to customer service and satisfaction. The only thing that should take priority over hiring a new employee is keeping a current one.”

Wally Bock puts it this way (and offers excellent advice on how to do it.)

In the Marines, I learned that when you’re responsible for a group, you have two jobs. One of them is to accomplish the mission. The other is to take care of the people.

I personally guarantee that you won’t accomplish the former if you ignore the latter.

You cannot “care for your people” by email or text — it requires face time.

It requires one-on-one conversations — wherever they take place — and not just about performance.

Conversations need to be human, that means family, hobbies, food, sports, etc.

Face-to-face humanizing contact is critical for teams, too, whether they are in a different office around the block or around the globe.

As Valerie Berset-Price, founder of Professional Passport says,

“Building trust is a multisensory experience,” she says. “Only when people are physically present together can they use all of their senses” to establish that needed trust. Without a bond, conflict or disengagement can more easily arise and is more difficult to resolve.

So whether you consider yourself a manager, a leader, a boss, or just a plain working stiff honing your in-person communication skills will not only improve your career opportunities, but also all parts of your life.

PS I just saw this article on IBM’s move to have teams in-person face-to-face.

Image credit: gorfor

Knowing Why/When To Quit

Monday, March 20th, 2017

https://www.flickr.com/photos/botter/70228/

Occasionally I share stuff I receive from clients and sometimes from readers, as I’m doing today. I ask if I can share it and usually the response is ‘yes’, with the caveat that I change enough to ensure that nobody will recognize the writer.

I think “Caz’s” situation and its outcome are very applicable right now. I hear from a lot of you, all asking how to know when to “pull the plug.”

As always, I’m available by phone or email if you want/need to hash things out; contact info in the right-hand frame.

Hi Miki,

It’s been awhile and a lot has happened, with both family — the adoption went through and I’m a new dad! — and I’ve got a new job.

As you know, I’ve been getting more and more concerned about my future at “Locus Systems.”

You also know I’m extremely culture sensitive and the culture has been changing quite a bit, moving more and more towards a fear-based approach.

In addition, we launched a new product about 2 years ago and landed a total of maybe 20 customers.

While the product itself worked and there is a real need, the market just didn’t respond.

This in turn led to our CEO, who owns the company, to push the sales teams harder. In the end he said the failure was on the individual sales teams, not the product.

I have a strong business background and know that for no discernible reason good products sometimes just don’t find the market demand expected.

This whole ordeal has led to a lot of resentment on the part of the sales teams and management.

Some of our best team members started leaving; I’m talking about people who sell $4MM plus a year, so great salespeople.

Each time someone left the CEO would make it a point to remind everyone that that person lacked the vision and we were better off without them.

Give me a break!

On a personal level commissions started being delayed. We always waited 2 months or so for our commission, but it was creeping into a 3-4 month time frame, sometimes longer.

All this led me to a realization that I was probably on a sinking ship. I don’t mind struggling, and you know I’m a fighter, but when the CEO and management are essentially belittling employees and putting all failures on them it’s time to go. 

So I started looking.

I found a great opportunity with “Jasper, Inc.,” another young software company that’s growing organically and has what seems like a terrific culture — all the good stuff you’ve written about (why I started reading you in the first place).

I found the opportunity locally, but the company doesn’t care where I live. That means we aren’t restricted to one town. I always wanted to be able to choose where I live and not have my job dictate that to me.

Although I just started, I’m really enjoying it. The opportunity came as a bit by surprise, but quite frankly, the conditions, benefits and pay are all superior to what I had. 

I’d like to stay in touch. This role will give me more financial freedom then I have had in the past and that may come in handy down the road ;-)

Caz

Image credit j. botter

Ducks in a Row: The Ultimate In Employee Trashing

Tuesday, March 14th, 2017

https://www.flickr.com/photos/drb62/3689632021/

“We value/care about our employees” is one of the most hypocritical statements companies make these days.

(“Our customers are very important to us” is the other.)

Want proof?

The Republican-controlled Congress is pushing through a bill to give corporations the ability to intrude deeper and more personally into your life than ever before.

A little-noticed bill moving through Congress would allow companies to require employees to undergo genetic testing or risk paying a penalty of thousands of dollars, and would let employers see that genetic and other health information. (…) The new bill gets around that landmark law by stating explicitly that GINA and other protections do not apply when genetic tests are part of a ‘workplace wellness’ program.

This mean that, in the name of “wellness,” your boss will know if you were treated for an STD or that you are predisposed for alcoholism, Parkinson’s, cancer, or whatever.

Not only your boss, but the unregulated company that runs your company’s wellness program, but is not constrained by HIPPA rules.

Employers, especially large ones, generally hire outside companies to run them [wellness programs]. These companies are largely unregulated, and they are allowed to see genetic test results with employee names. (…) They sometimes sell the health information they collect from employees.

Can your company actually force you to comply?

No, but the penalty for refusing is costly in the form of higher insurance premiums and co-pays.

No health insurance at your company? You could still take a major financial hit.

If an employer has a wellness program but does sponsor health insurance, rather than increasing insurance premiums, the employer could dock the paychecks of workers who don’t participate.

In general, Corporate America’s attitude towards its employees reflects its attitude towards customers.

For the most part, that ranges from “general nuisance” to “necessary evil.”

And while the number of exceptions to that attitude, at least when it comes to customers, is growing, it doesn’t always apply to employees.

As the provisions of this long-desired bill prove.

That said, it will be a great recruiting tool for those companies that don’t do it.

Image credit: Daniel R. Blume

Golden Oldies: If the Shoe Fits: Finding the Cause of Turnover

Monday, March 13th, 2017

It’s amazing to me, but looking back over more than a decade of writing I find posts that still impress, with information that is as useful now as when it was written.

Golden Oldies are a collection of what I consider some of the best posts during that time.

Bosses are usually unrelenting when something goes wrong with a product/service. They, the team and often the entire company work to not only find the cause, so it won’t happen again, but also to placate their customers.

However, when the problem is an internal human one, they are more hesitant to root it out, since that often means first looking in the mirror and then actually changing (not just paying lip-service until the turmoil dies down).

Read other Golden Oldies here.

A Friday series exploring Startups and the people who make them go. Read allIf the Shoe Fits posts here

5726760809_bf0bf0f558_mIn the right frame of MAPping Company Success it says, “Have a quick question or just want to chat?” along with both email and phone number.

A few weeks ago a “John,” a founder, called me to see if I had any idea why his turnover was so high.  

In response to my questions he described his company’s culture, management style, product, etc.

I told him that assuming what he said was what was actually happening then something else was going on.

Since we are several thousand miles apart, we came up with the idea of using a stationary camcorder to tape the interactions; a “set it and forget it” approach to capture the norm and not performances.

A few days later he sent me a link to see the results.

I choked at the length, but it didn’t take that long to find what the likely problem was.

To see if my instinct was correct, I watched the entire nine hours on fast forward.

What I saw was that, almost without exception, during every interaction John had, whether with programmers or senior staff, he interrupted them to take calls or respond to texts.

We discussed the ramifications and effects of the constant interruptions and I asked him how he would feel if they had acted the same way.

He said it had happened to him and he usually felt annoyed, offended or both.

So I asked why they would feel any different.

John said that also explained why one senior developer said he preferred to work where he was shown some respect.

John had chalked it up to the developer’s age and that he couldn’t handle the casual atmosphere, but thinking back the guy had had a good relationship and no problems with the team.

I suggested that instead of saying anything he just change, i.e., pay attention and not interrupt, since actions speak louder than words.

I also sent him this image as a constant reminder.

respect

John went further than changing; he called the most recent three who had left, apologized and said he would like them to come back.

One had already accepted a job, but the other two decided to give it another shot.

They both said that his candidness, honesty in recognizing the problem and sincere apology made it likely he would follow through.

Image credits: HikingArtist and via Imgfave

The Necessity Of Fools

Tuesday, February 21st, 2017

https://www.flickr.com/photos/francescaromanacorreale/8162774877/

Yesterday’s Golden Oldie provided links to a variety of fools, most of which you can do without.

That said, there is one variety of fool that every company should have — and that is the wise fool, as described in King Lear.

Cloaked in the form of discourteous comments or unfiltered remarks, King Lear’s fool was able to express the thoughts that others were reluctant to express. Through the mask of comedy, he would remind the monarch of his own folly and humanity. As George Bernard Shaw once said, “every despot must have one disloyal subject to keep him sane.

Look around; does your company have at least one fool? Or, better yet, one fool in each department?

As Manfred Kets De Vries, the Distinguished Clinical Professor of Leadership Development & Organizational Change at INSEAD, points out.

All in all, fools are honest and loyal protectors, who allow society to reflect on and laugh at its own complex power relations. They can act as our “conscience” by helping us question our perceptions of wisdom and truth and their relationship to everyday experience. Through humor and frank communication, the “fool” and the “king” or “queen” engage in a form of deep play that deals with fundamental issues of human nature, such as control, rivalry, passivity, and action.

As such, fools contribute to group cohesion and an atmosphere of trust by providing an opportunity to humorously and critically review our values and judgments as the powerful socio-cultural structures of power pull, push, and shape our identity.

And, beyond all that, fools are a repository of wisdom — based on strong critical thinking coupled with extensive experience — which makes them excellent role models and a great source from which to learn.

Finally, whether a boss can hire, let alone keep, a fool is an accurate reflection of their MAP (mindset, attitude, philosophy™) and a good indicator of the prevailing culture.

Flickr image credit: Francesca Romana Correale

John Wooden On Stars

Wednesday, February 15th, 2017

https://en.wikiquote.org/wiki/John_Wooden

In spite of being severely overloaded, KG still finds time to send me stuff he finds interesting and/or inspirational.

Over the years, we’ve had many discussions about culture and its importance in hiring.

He recently mentioned a quote from basketball player and Coach John Wooden.

“The main ingredient of stardom is the rest of the team.”

KG: In any high performing organization, there are lots of systems and processes that make the organization successful.

When you look at people considered stars, they are almost never part of second or third rate teams; they are almost always in organizations performing at the highest levels.

This doesn’t mean that there aren’t truly high performing people in lesser teams, it’s just that they are not defined as stars in general (sometimes they may be local stars, but generally don’t get the full recognition).

So a star, per definition, is a member of an organization that performs at the top.

Me: So true. I’d add that in most cases people become stars as a result of the culture and their manager, or so I’ve found.

KG: Exactly. Look at all the people who leave Goldman Sachs or Google who were stars there (e.g. Marissa Meyer) but are unable to maintain their level of performance outside the culture & systems of that environment.

That’s why it’s always dangerous to hire stars — more than anything else they are a product of their environment.

Me: Absolutely, and the poster child is GE’s Bob Nardelli!

(Click for more Wooden wisdom. For more information about stars and Nardelli use use the tags below.)

Image credit: Wikipedia

Golden Oldies: Bullies And Performance

Monday, February 6th, 2017

https://twitter.com/goldenoldiesbnnIt’s amazing to me, but looking back over more than a decade of writing I find posts that still impress, with information that is as useful now as when it was written.

Golden Oldies is a collection of what I consider some of the best posts during that time.

I hate bullies. The biggest changes in the decade since I wrote this post are that there are more bullies, many using the anonymity of the internet to morph into trolls, more hand-wringing, that accomplishes nothing, and a rising tide less willing to be bullied that responds loudly and displays its disgust actively with its wit and its feet. Hopefully that tide will turn into a tsunami.

Read other Golden Oldies here.

Does your newspaper carry The Born Loser by Chip Sansom? Actually, I don’t find Brutus, the main character, to be a loser—just a slightly naive guy who works for an arrogant bully who constantly belittles him.

In the July 26 panel the dialog is as follows:

Boss: I am looking for a unique spin to put on our new ad campaign—do you have any ideas?

Brutus: Gee, Chief, I’m not sure—are there any ideas you think I should think of?

Boss: Brutus Thornapple, master of thinking inside the box.

It reminded me of managers I’ve known, who, no matter what happened or what feedback they received, never could understand that it was their MAP and their actions, not their people’s, that was the root cause of their under-performing groups.

After all, if you

  • ask for input and ridicule those who offer it, why be surprised when you stop receiving input;
  • claim that you want to solve problems while they’re still molehills, yet kill the messengers who bring the news, you should expect to grapple with mountainous problems requiring substantially more resources;
  • tell people their ideas are stupid, whether directly or circumspectly, or, worse, that they are for thinking of them, why should they offer themselves up for another smack with the verbal two-by-four?

So, before you start ranting or whining about your group’s lack of initiative and innovation, try really listening to yourself and the feedback you get and then look in the mirror—chances are the real culprit will be looking straight back at you.

Role Model: Craig Zoberis and Fusion OEM

Wednesday, January 25th, 2017

http://www.fusionoem.com/

In 1914 Henry Ford doubled his workers’ daily wage, much to the consternation of other magnates, who believed, as do most of them today, that success comes from paying as little as possible.

Ford, however, believed that he would benefit if his workers had disposable income and he was correct; they used the extra money to buy Fords.

The same holds true today; modern research has proved that higher wages increase profits.

Businesses, from very large to very small, still don’t believe it and scream at the thought of a so-called living wage.

But not all of them.

Fusion OEM at just $12 million is considered very small, but it’s profitable and founder Craig Zoberis is very happy, because he is meeting his twin goals.

While lots of other manufacturers have moved operations to China or Mexico, Zoberis has kept his plant in the United States – and considers it a point of pride to pay his 55 workers above-market rates. Workers with no experience start at $14-an-hour, he says, and by completing training and gaining skills can reach $18-to-20-an-hour, plus overtime and bonuses, for total pay near $50,000 a year, within a few years.

Zoberis doesn’t expect his people to buy his products, but he did want to have a  place to work that matched his MAP and not his father’s.

My father and his partner never did a good job of hiring the right people with the right attitude. I wanted to be excited to go to work every day, and working for my father’s company, I was not.

Fusion OEM has never had a layoff, but finding great workers in its industry is just as difficult as finding great programmers, hence the need for a creative, long-term solution.

My colleagues were always complaining that there aren’t enough skilled workers who have the right attitude. When I talk about skilled workers I’m talking about machinists (…) What we discovered halfway through our life at Fusion is that we couldn’t always look outside for skilled people. We decided to hire for attitude and train for aptitude.

Fusion OEM is enjoying double digit growth, but Zoberis isn’t interested in taking outside investment. He loves going to work, saying, “This is my hobby, my income, my life,” and knows that hyper growth can kill you.

You can’t grow your company any faster than you can get the right people. If it goes too far, you might go beyond your capabilities and you’ll fail.

The interview is well worth reading, especially their approach to hiring and compensation.

I rarely make predictions, but in this case I feel pretty safe making two.

  1. Zoberis will continue building his company, growing his own people and being a management outlier.
  2. Most companies of whatever size will continue to treat people as disposable, pay them as little as possible and bitch about them to whomever will listen.

Image credit: Fusion OEM

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