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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: Just Say No To Brilliant Jerks

Tuesday, March 28th, 2017

This is a short post, with a lot of valuable links.

https://www.flickr.com/photos/kurt-b/5401822493/

Way back in 2007 Standard prof Bob Sutton wrote the No Asshole Rule and McKinsey did in-depth research on the damage they do.

In 2015 Rich Waidmann created a no jerks culture.

Sutton followed up in 2015 essentially saying it’s all about the people.

Last week a post on LinkedIn talking about women CTOs who won’t hire “brilliant jerks.”

There are hundreds more posts, articles, books, research, comments, etc. that talk about the downside of jerks — brilliant or otherwise. (In case you’re wondering, the brilliance supposedly offsets the jerk part.)

But it’s a fallacy to think that it’s just women who are creating cultures that don’t tolerate brilliant jerks, just as it is to think that all brilliant jerks are male.

As with any other label, brilliant jerks can be found in any imaginable combination of race, creed, color, national origin, gender identification, size, and shape.

None are worth keeping, because, even if it takes some time, they will poison your culture and run off your team.
Image credit: Kurt  Bauschardt

Golden Oldies: Ducks in a Row: Rich Waidmann’s No jerks Allowed

Monday, March 27th, 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.

Since tomorrow’s post takes yet another look at Silicon Valley culture, sources of the blatant misogyny, and how that relates to brilliant jerks and so-called stars, I thought I’d share Rich Waidmann’s take on the subject.

Read other Golden Oldies here.

I’m in love — with a man I never met, never spoke to, never followed or chatted with online.

His name is Rich Waidmann and he’s founder and CEO of Connectria Hosting.

I love him because when he started his company he consciously set out to make it a great place to work. (See the full Infographic at Business Insider)

That means it’s a job requirement at his company that every employee treat everyone else with courtesy and respect as well as “going the extra mile” to take care of people in the community who are less fortunate

Then his company did a survey and found that

More than half (55%) of 250 IT professionals in the US. surveyed said they had been bullied by a co-worker. And 65% have said they dreaded going to work because of bad behavior of a co-worker.

Waidmann believes it shouldn’t be that way so he’s starting a No Jerks Allowed movement in an effort to encourage better cultures.

Way back in 2007 Stanford’s Bob Sutton wrote The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn’t, but looking at the stats I’m not sure how much good it actually did.

And considering the fact that companies are shoehorning more people into less space something needs to change.

The Talmud says, “We do not see the world as it is. We see the world as we are.” Moreover, it’s often as we are that particular day, or even minute, and even as we change, minute to minute, so do others.

Jerks are known to lower productivity and kill innovation, so a lot of good information on identifying and dealing with jerks has been developed since Sutton’s book came out.

Contributing to that effort, here are my four favorite MAP attitudes for dealing with jerks.

  • Life happens, people react and act out, but that doesn’t mean you have to let their act in.
  • Consider the source of the comment before considering the comment, then let its effect on you be in direct proportion to your respect for that source.
  • Use mental imagery to defuse someone’s effect on you. This is especially useful against bullying and intimidation. Do it by having your mental image of the person be one that strips power symbols and adds amusement. (Give me a call if you want my favorite, it’s a bit rude, but has worked well for many people.)

And, finally, the one I try to keep uppermost in my mind at all times

  • At least some of “them” some of the time consider me a jerk—and some of the time they are probably correct.

Image credit: Connectria

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

How to be a Great Boss

Wednesday, September 14th, 2016

https://www.flickr.com/photos/hikingartist/3555349324/Being a great boss is hard work; it doesn’t always come naturally.

Being a boss means understanding the importance of culture.

  • “I came to see, in my time at IBM, that culture isn’t just one aspect of the game—it is the game.” –Lou Gerstner, IBM turnaround CEO

Being a boss means clarity throughout 360 degrees of your communications, i.e., subordinates, peers and bosses.

Great bosses

  • provide their people with all the information needed to understand how to perform their work as correctly, completely, simply, and efficiently as possible.

They do this by

  • providing clear, concise, and complete communications at all times.

Being a boss means a strong focus on hiring.

Great bosses hire smart.

  • “Don’t hire jerks, no matter how talented.”

Great bosses hire sans ego.

  • “There’s two ways to manage. You can hire to be the smartest person in the room or you can hire to be the dumbest person in the room.” –Michael Lebowitz, founder and C.E.O. of design firm Big Spaceship (He says he works at being the dumbest.)

Being a boss means many other things, too, but master these three and you’ll be well on your way to being a great boss.

Image credit: Hiking Artist

Golden Oldies: Entrepreneurs: Limitations

Monday, July 25th, 2016

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

CEOs, their words, actions, and egos, have been fodder for academics, coaches, consultants, pundits, the media and numerous others for decades. I’ve never believed that stardom (at any level) travels well. I wrote this three years ago and since then I believe that egos have gotten bigger even faster than CEO skills have shrunk. Read other Golden Oldies here.

superheroIn a celebrity-driven culture and considering the hype around global startup salvation, you might start believing that founders are, indeed, some kind of superhero, different from the rest of us, and worthy of adoration.

But you would be wrong.

“Throughout history, narcissists have always emerged to inspire people and to shape the future. The ones who lead companies to greatness are those who can recognize their own limitations.” –Michael Maccoby (2000 Harvard Business Review article about the pros and cons of narcissistic leaders.)

A Fortune article, with heavy input from Zachary First, managing director of The Drucker Institute, does a good job kicking holes in the idea.

Star CEOs grow dangerous when they see their success as destiny, their place at the head of the pack as the only path possible, rendering all of their choices justified. The best leaders might enjoy the red carpet, that’s fine, as long as they understand that being the best fit for the CEO job is a relative status — relative to the needs of the rest of the people in an organization at a specific moment in time.

And fame, no matter how great it may feel, does not equal infallibility.

Steve Jobs is considered a star CEO, but it’s questionable whether he would be if he hadn’t brought in John Sculley, been dumped and then come back.

While it’s not good to believe you’re the smartest person in the room it is far worse to actually be the smartest.

There are many things you can do if you want to stay grounded; here are the basics.

  • Hire people who are smarter than yourself;
  • encourage feedback and don’t dismiss it;
  • listen and hear what you’d rather not;
  • build a culture with sans fear where the messenger is never killed; and
  • don’t believe your own hype or drink your own Kool-aid.

And above all, stay aware.

Be sure to join us tomorrow for KG’s take on leadership strength, vulnerability — and asking questions.

Flickr image credit: Cory Doctorow

Golden Oldies: Insanely Smart Retention and Stars

Monday, June 27th, 2016

It’s amazing to me, but looking back over 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’ve never been a fan of so-called stars. Bosses constantly waste their time, not to mention their budgets, looking for stars. As with everything, stars are often a product of a specific ecosystem and set of circumstances which are rarely duplicated in the new environment.You have only to take a hard look at Marissa Mayer’s history to see the problem in action. 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. Ed)

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

Entrepreneurs: Soledad O’Brien and Starfish Media Group

Thursday, June 23rd, 2016

Soledad OBrien

What was your work history before you became a founder?

Many founders don’t have senior management experience, let alone CEO/President or COO experience.

Some are young; others were non-executive managers, team members or individual contributors.

Which is OK, if they recognize that having the title and filling the shoes are two different things.

That’s not just my comment; it’s what award winning journalist Soledad O’Brien, founder and CEO of Starfish Media Group, said about herself.

Another challenge was that I was successful in my previous role because I really worked hard and took a lot of responsibility for making things good. But that’s not actually a great skill for being a boss. The job of the boss is to help other people reach their goals and their dreams.

At what point will I actually grow into this job, because I have the title? At what point will I actually be making decisions like someone who is the C.E.O. of the company? I would say it took a solid year before I felt good about it.

And I’m willing to bet, based on her own words, that she has little interest in hiring “stars,” who are usually full of attitude and ego.

You hire for character and teach people skills. And environment is very important to me. It’s important to me that people aren’t unpleasant and that they treat each other respectfully. It’s hard to be creative when there’s someone or something that’s really irking you.

So are you a person of integrity who makes the environment a really nice space? I will watch how they treat the person at the front desk versus me.

Whatever kind of startup you have, take a few minutes to read the O’Brien interview.

Then look in the mirror and accept that no matter what your background is you probably have a steep learning curve before you become your title.

Flickr image credit: Starfish Media Group

Golden Oldies: Mine’s Bigger Than Yours

Monday, January 25th, 2016

It’s amazing to me, but looking back over nearly 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. Read other Golden Oldies here

no_guarantee

I’m no happier about the AIG and other bonuses paid to screwed up Wall Street banks, but I’m not sure why any of us are surprised.

“In the largest 25 corporate bankruptcies between 1999 and 2002, while hundreds of billions of dollars of investor wealth and over 100,000 jobs disappeared, the Financial Times found the “barons of bankruptcy” made off with $3.3 billion.”

Giant compensation packages, guaranteed bonuses and platinum parachutes are excused by Boards and executives as necessary to attract the “best and brightest,” but here’s what’s really going on.

The ‘name’ demands outsize compensation/stock options/guaranteed bonus/etc. in order to validate their ‘brand’.

Those responsible for hiring not only meet the demands, but even exceed them in an effort to attain or sustain the company’s reputation as a better home for ‘stars’—the more stars you have the greater the bragging rights— mine’s bigger than yours in high school locker room talk.

Now let’s consider the folly of this attitude.

Those hiring often seek a name brand in the mistaken belief that the brand comes with a warranty that guarantees good results.

But no matter who you hire you’re actually paying for their past performance, which is always influenced by

  • circumstances—boss and company positioning in its market and industry
  • environment—culture and colleagues;

and let us not forget that minor factor

  • the economy.

The hiring mindset is that everything the brand accomplished was done in a total vacuum and dependent only on the brand’s own actions, therefore changing every single surrounding factor will have no impact on performance.

Put like that it sounds pretty stupid, doesn’t it.

This is one of the prime reasons that so many CEOs bring their ‘own team’ over when they move, as do managers all the way down the food chain—they know they didn’t do it alone.

CEOs aren’t like movie and rock stars whose very names draw consumers into spending money—nobody ever bought a product from GE because Jack Welch was CEO, nor do they carry Jobs’ iPods—so why pay them that way?

Moreover, assuming that performance occurring during an expansion is a valid yardstick for performance in general, let alone a downturn, is sheer idiocy.

You have only to remember the difficulties faced by people whose management skills were honed between 1991 and 2000, the longest expansion in our history. When the recession hit in March of 2001 they had no experience whatsoever of how to drive revenue or manage in a down economy.

That recession and the previous one in 1990 lasted only 8 months each. The longest recession we’ve had was 2 years, January-July 1980 and July 1981-November 1982, and that one had a 12 month break in it. This means there are a very small number of managers with any actual experience managing in anything even close to what’s happening now.

The current recession officially started in December 2007, so it’s already 15 months old and the end isn’t in sight.

What experience makes these folks the ‘best and brightest’ for today’s world?

Just what the hell are companies still guaranteeing oversized compensation and exorbitant exit packages when now is definitely the time to pay for future performance—no guarantees.

Sad, isn’t it. Seven years and nothing’s changed, in fact, it’s gotten much worse.  

The wealth of the richest 62 people grew by more than half a trillion dollars in that last half-decade, while the wealth of the poorest 50 percent of people globally decreased by more than $1 trillion during the same period.

Image credit: flickr

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