Show Me The Shekels

My buddy KD just wrote a piece about the importance of the Employee Development Plan when targeting the performance “middle-class.” It makes a lot of sense; you have 20% of your people who don’t want development, 20% who manage their own development, and a huge population in the middle who are waiting to be captured by one camp or the other.

It’s not a point I would argue, but the mercenary in me will add this: don’t forget the motivational impact of money.

Show me the shekels, boss.

One of the more eye-opening consistencies I’ve seen over these many years is the inability of managers to make meaningful differentiation in compensation decisions. Why does that continue to perpetuate?

  • Over time we have become accustomed to a “Cost of Living” mentality that confused the purpose of a merit increase.
  • Bonus “targets” were seen as a guaranteed component of our annual income.
  • Long-term incentives were utilized more as an annual reward, rather than a strategic component of retention.

The result is a population of employees who expect increases from management. You can give your own department a quick litmus test—using the same Pareto guideline of 80/20, would you say your top performing 20% are receiving 80% of the rewards to which they are entitled? That’s really a question that needs no answer, right? Of course they aren’t.

It’s not an easy situation to correct, and we (as management AND as Human Resources professionals) continue to make things difficult for ourselves. How?

  • Goal-setting rarely gets the attention it deserves, leaving a lot of leeway for marginal performers to slide into the “Meets Expectations” net. It comes time to give a merit increase or bonus, and a manager feels “stuck”: “I can’t knock them for not hitting goals that weren’t specifically called out.
  • As managers, we also know that if we haven’t been diligent in addressing performance shortcomings, we’re putting ourselves at risk by surprising an employee with a poor rating (this little scenario happens more than we’d like to admit, and deserves a dedicated piece of its own—stay tuned.) In professional circles, this is known as the CYA method.
  • “Other” managers aren’t making significant differentiations in their awards; why should we be the trend-setter for unpopularity?
  • We feel bad… OR… we’re scared. The thought of being the bad guy/girl just doesn’t resonate very well with our desire to be magnanimous.

HRBP’s should be on this situation like stink on a monkey. One of the great tools we have for creating positive movement throughout the organization is the effective use of monetary rewards.

Use your money wisely. Meaningful differentiation in merit and bonus allotment is the proof in the pudding. Every “Meets Expectations” is not created equal. Merit raises have ranges. Bonuses are discretionary. Long-term incentives are designed to retain your key performers. Money matters.

Challenge your hiring managers to make the tough decisions and have the tough conversations. We can debate the merits of stack-ranking employees, but I’ve found it to be a helpful exercise to prompt the mindset needed in these situations.

Your 20% is watching.

FOT Note: This post is sponsored by the good folks at CareerBuilder.com, who care so much about the world of recruiting and human resources that they’ve become an annual sponsor at FOT.  Here’s where it gets good: As part of the CareerBuilder sponsorship, FOT contributors get to write anything we want on a monthly basis, and CareerBuilder doesn’t get to review it.  We’re also doing a monthly podcast called the “Post and Pray Podcast,” which is also sponsored by CareerBuilder.  Good times.

FOT Background Check

John Whitaker
“Whit” is an HR Business Strategist and Staffing Professional: he primarily works in the healthcare industry, because... healthcare. A Texan, he tends to amuse us (okay, he amuses himself) with colloquialisms and a cowboy’s view on our industry. John honed his HR chops at Alcon Laboratories and CVS Caremark before starting HR Hardball™ in 2010. He currently hangs his sombrero at DentalOne Partners where he has been fortunate enough to lead a world-class team of recruiting professionals. You can email Whit, find him on LinkedIn, or read more of his brain-droppings at www.HRhardball.com

4 Comments

  1. Paul Hebert says:

    Let’s not forget – relying on CASH MONEY to motivate and engage does nothing to connect emotionally with your employees – it creates and perpetuates a mercenary workforce that will continue to demand more until you say uncle and they leave.

    Cash is the least effect long-term loyalty building lever. It is too blunt and too transactional.

    It will work – but more often than not – it works against companies not for them.

    • John says:

      less about the amount and more about the message…you can transaction me to death if it’s based on my performance

      • Paul Hebert says:

        Everyone says that but the data shows non-cash works better for the short and long term. And it costs less. We are irrational – we say one thing and do another. That has been proven over and over. Ask anyone – they say hit me with the money – but the results of research (real research not just opinions) show people perform better when cash isn’t involved.

        Agree that incentives do create signals to the audience – but they can have horrible unintended consequenses if poorly design (which most are – see belief above )

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