A Few Thoughts on the “Hometown Discount” as Part of an Organization’s Comp Strategy

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<furlongproperties.com

<furlongproperties.com>

…So yesterday I came across a great article from Tim Sackett wherein – as is often the case – he brought attention to an HR/marketplace best practice that I have always intuitively known exists, but never gave much thought to. From the piece (which again, you can read here):

We tend to pay same level experience internal employees less than we pay someone coming from the outside with the same experience, education, etc. This ‘discount’ is well known in the industry. Hometown discount. They’ve been here forever. They aren’t going anywhere. Why pay them more competitively?

…To be fair, the extent to which the above concept takes place in practice is governed by a host of factors; some of these factors come at the expense of external hires (e.g. in organizations with mature comp structures, any external offer is to some degree limited in size by how it impacts internal equity), while others come at the expense of internal hires (e.g. internal candidate’s salary histories and what they will work for are more well known commodities).

With that said, as Sackett gets at above, a core driver behind why internal talent tends to see smaller pay increases than external talent goes to leverage – most of the time, an external candidate has more of it because he or she can always walk away/stay with their current company if they don’t like an offer. An internal candidate can also turn down a new role if the package isn’t right (which by the way is an excellent negotiation play if one is far and away the most qualified applicant), but this can come with costs internally – most obviously in the form of limited future advancement opportunities.

For the above reasons, companies are often willing to low-ball internal talent, and said talent is often reticent to push back. I personally think it’s a poor play for a company to use with anyone they have a vested interest in keeping (why invest months or years of time and resources into developing a person only to pay them at a rate that makes them easily poach-able by an outside firm once you’ve trained them?), but for organizations willing to play the counter-offer game (or that have optimized the knowledge transfer process) this can be a good hedge to keep human capital costs low and free up budgets for business development and/or allocation of more dollars to top performers.

…So (without condoning) I get it.

In looking at the incentives behind why a company might adopt this strategy, however, it also makes sense to look at employee incentives: Through one lens, it perhaps makes sense to accept an internal promotion even if the offer is well below market value because:

1. It’s a net increase in total pay – even if a modest one. And;

2. The experience gained in the new role makes one more attractive internally *and* externally… allowing for a big payday down the road.

I briefly commented on the latter phenomenon here back in October, noting that frequent career movement is statistically the best way to maximize lifetime earnings. Gaining critical experiences almost always pays dividend over time.

…Just a Wednesday morning thought stream. As always, I reserve the right to be wrong.

Please share your thoughts in the comments section below.

Best,

Rory

Let’s Talk About Punching Above Your Weight…

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<www.bearpig.co.uk

<www.bearpig.co.uk>

1. ‘punch above one’s weight’: (idiomatic) To achieve or perform at a higher level than would be expected based on one’s preparation, attributes, rank, or past accomplishments.…So I am a huge advocate of regularly trying to punch above one’s weight. 1 For the uninitiated, in corporate-speak this (mostly) means successfully completing stretch assignments or otherwise taking on tasks and projects outside of one’s wheelhouse of skills / core competencies.

…I was not always this way, though. In my early 20s during my first internship I received failing marks from the review committee (i.e. I wasn’t invited back for the following year) for not completing all of the task assigned 2. This is (I think) the first time I’ve ever told anyone this.to me. 2 I’d received glowing reviews from my Manager the entire summer, however, and so this came as quite a shock. Unfortunately for me, that feedback had been exclusively of the verbal variety… and so I had no means to validate the work performance I’d (until the end of the summer) been told was outstanding. This experience stuck with me for years afterwards, and the key lesson I took from it was that I needed to get (documented) consensus around everything I did of significance before moving forward so that I might cover myself in case things went bad.

^With that said, while it turns out this a fantastic way to cover-your-backside and *meet* (not exceed) expectations, it is an awful way to take risks and push yourself. Because when you try to document everything, people mostly become very conservative, backing only those things which they are reasonably sure will succeed… particularly in situations when you have a 3. This makes sense if you think about it. Attaching your name to an unproven commodity is risky.limited track record for success or are in a stretch role. This makes the costs of eschewing risks this way prohibitively high.

Ergo, now I don’t worry so much about paper trails – at least where it concerns my own development. I’m much more interested in trying new things and learning how to do them through (preferably) numerous iterations. I don’t really even care if pushing oneself this way is valued in the environment I’m operating within… the experience I get from learning how to do something new is its own reward. And I have a sneaking suspicion that the best performers are those that stretch themselves in this way anyway, and so over the long run identifying new plateaus and pushing past them will typically serve me better than seeking out the conservative play.

…Which brings me to the following quote from a Human Workplace reader writing in to HR thought leader Liz Ryan here:

Yesterday, a woman walked up to me at work and introduced herself. I’ve never laid eyes on this woman before, and I thought I’d seen everyone here. She said “Hi, I’m Denise. I’m brand new – I just started my job. I’m the new Training Manager here. I know you’re new here, and I’d love to get your impressions on the kinds of training that would be helpful to new employees.”

I gave her the Q & A document we’ve been talking about. I had it sitting right on my desk. “This is great!” Denise said. “I haven’t seen this before. Did you get this Q & A when you started the job?” I told her no, I just made it up myself and maybe she could use it. She was thrilled. She wants to have coffee with me. Can you believe it? I mean, I’m not an Instructional Designer, of course, but still.

…and Liz writes:

Keyholes are the key! Don’t be cowed by titles like Instructional Designer. That means people who create training materials. Nobody in our company including Liz Ryan, our CEO, has ever been to school for that, but so what? We design training materials all day. They are used all over the world.

Don’t let jargon and professional designations rattle you. You have the experience to claim dozens of those titles. No one has to confer them on you. You could call yourself an instructional designer if you want. It’s not like passing the bar exam. If you do it, then you are it.

^This is a really powerful idea if you think about. Virgin Group Founder Richard Branson once said “If somebody offers you an amazing opportunity but you are not sure you can do it, say yes – then learn how to do it later!”, which is very much in the spirit of what Liz’s reader above did. Smart, intellectually curious self-starters will mostly make the same choices as experts the majority of the time anyway 4, so if those labels generally 4. Google CHRO Laszlo Bock agrees with me (or I agree with him >_>), saying in this NY Times piece that: “If you take somebody who has high cognitive ability, is innately curious, willing to learn and has emergent leadership skills, and you hire them as an H.R. person or finance person, and they have no content knowledge, and you compare them with someone who’s been doing just one thing and is a world expert, the expert will go: ‘I’ve seen this 100 times before; here’s what you do.’ ” Most of the time the nonexpert will come up with the same answer, added Bock, “because most of the time it’s not that hard.apply to you then pushing yourself to try new things that grow your KSAs like this is (over the long run) a winning money play.

…This is getting a bit long again, so I’ll just close this morning’s thought stream by saying that we should never wait for permission to push ourselves out of our comfort zone(s) and do great work. Instead, if you’re ready for the next level of work, look for opportunities to do it and start doing it. If you fail, learn from that failure (which requires having the humility to recognize when you’ve failed) and try again. That simple.

Happy Tuesday,

Rory

P.S. Smart recruiters and hiring managers look for people that stretch themselves when filling open roles, so in addition to being a great skill builder, possessing said characteristic is a great way to get in with a world class organization and/or team.

Quote of the Week: “You don’t set out to build a wall…

…You don’t say ‘I’m going to build the biggest, baddest, greatest wall that’s ever been built.’ You don’t start there. You say, ‘I’m going to lay this brick as perfectly as a brick can be laid. You do that every single day. And soon you have a wall.” – Will Smith

<www.hollywoodreporter.com

<www.hollywoodreporter.com>

For this week’s quote we can thank American actor, producer, rapper, and songwriter Will Smith; it’s timely for me because – after taking some time to examine my life choices – I am once again internalizing what it means to live it.

Back in November when I last wrote in this space, I commented that I was going to be reading and writing about HR less because I felt like I needed to focus my energies towards developing less HR-centric technical competencies – competencies that would in the long run make me a stronger HR person.

I suppose this was partially true; at the time I was beginning to realize that I needed to become a more well-rounded manager and expert in the business I support, as opposed to strictly being an HR process expert and administrator. And the past few months of white space has helped me to identify some of the gaps I have, which has lead to me developing new work skills that have made me a greater asset to the team I lead and client groups I support.

…When I wrote my November post more than anything I was just frustrated, though. I was frustrated with how much time and effort I was putting into developing myself for (in my mind at the time) such small returns… frustrated with the pace of change; I knew where I wanted to be and what I wanted to accomplish, but all of the hours I was putting into work, the webinars I listened to, white papers I read, networking I did, and thinking/writing about HR weren’t getting me there fast enough. And I got tired of it – tired of working hard all of the time no matter how I felt and never slowing down no matter how much I wanted to… all to feel like (most of the time) I was standing still.

…So I stopped for a while. I went from 75 hour weeks to 55 hour weeks: If it was Friday evening and I wanted to go home, I went. If I didn’t feel like doing 1. I once watched House of Cards season 1 and 2 back to back over a three day weekend.anything on the weekend, I didn’t. 1 And if I wanted to enjoy a Wednesday evening with friends, I did so. For 3 months I did what I needed to do to support my client group and business, then lived – nothing more or less. Learning and development took a back seat to good old-fashioned rest and relaxation… and to be honest for a while it was good. My life was out of balance, and I needed a moratorium of sorts to re-find my center.

With that said, life can often have an interesting way of letting us know when it is time to shift course: Over the past month and a half I have found myself faced with some pretty big professional challenges and been surprisingly up to tackling them. When pressed, I drew on knowledge I didn’t know I had to solve problems I didn’t know I could. The cement had set between the bricks I’d been laying for the past few years, and they’d congealed into a wall for me 2. I promise that last bit sounded much more insightful/clever in my head.to lean on for wisdom and strength. 2

This is getting a bit too long and isn’t really good enough to justify it, so I’ll close by saying that as of late I have settled on two things:

1. I was working way too much before my “break”.

2. If you really dedicate yourself to getting better at something you are getting better – even if you can’t always point to the returns right away.

…Maybe the answer to marrying these two at-times-competing statements lay somewhere between 55 hour work weeks and 75 hour work weeks, maybe it lies in process… or maybe it lies in just making time for everything 3. This last bit might be sneaky good advice (and was recently shared with me by an HR mentor), but that’s a post for another day.you can and being present in those moments 3, but I will tell you that wherever that medium is I am excited about finding it again in a way that I haven’t been for a while now.

…So as we get started this week, I would ask you to remember that – while the pace of change can be slow – as Smith points out in today’s quote, it is important to focus on the process and not the end result. This is often easier said than done… but if you know where you are going and keep taking steps to get there then – if you’re a little bit lucky – you will find your way in due course. It just takes time.

Happy Monday,

Rory

Quote of the Week: “It may be hard for an egg to turn into a bird…

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…it would be a jolly sight harder for it to learn to fly while remaining an egg. We are like eggs at present. And you cannot go on indefinitely being just an ordinary, decent egg. We must be hatched or go bad. – C. S. Lewis

<en.wikipedia.org

<en.wikipedia.org>

For this week’s quote we can thank novelist, poet, academic, and literary critic C. S. Lewis. It’s timely for me because I’ve been making some pretty dramatic life changes… some of which arguably have as many deltas as they do pros.

…Once such change is to a morning ritual I’ve had for over 600+ days now; every morning, I start every day learning something new about HR and people management. This has been a transformative experience for me, ingraining what I hope will be lifelong good habits around execution and process management.

But as often happens in life, I need a change. Right now this is because I’m entering into a space where the time I require to further my development in certain areas – statistics and financial accounting – necessitates that I pull back on the time I’m spending developing within HR in order to learn more deeply. And while that doesn’t mean I’m not still going to write and learn about HR, people management, and learning/development, it does mean that I’m going to be allocating fewer resources towards developing competencies in these areas for the foreseeable future.

With that said, when I do share something on this channel I want to be more deliberate in what I’m writing and that I have something significant to say on a going forward basis. And so while the quantity of the content going up will go down, I would like to think that the quality and substance will improve.

…So why am I making a derivation from developing HR competencies and placing a greater focus on statistics, analytics, and accounting? I could (and maybe will) write at length about this later, but in summary I would say that the arenas of talent management, total rewards, and HR strategy are becoming increasingly data-driven – and I think that staying out in front of where we’re going with these spaces and being a strategic business partner requires me to develop real competencies as an analyst (and a greater comfort with statistical methods). Furthermore, I’m also finding that as my roles become less bogged down in transactions and processes that to add value I really need to have a stronger foundation in the day-to-day of how my company’s business (and its competitors) generate revenue. These shifts require me to transition from being a Generalist and Project Manager to a Business and People Analyst with strong competencies in HR. This process will require the same sort of dedicated focus I’ve had towards being the best HR person I can be over the past two years… with a continued emphasis on process instead (as opposed to destination) throughout.

With that said, as we get started this week I would encourage you to look at what you need to do next to get to where you want/need to be. Because regardless of how difficult it might seem to accomplish your goals right now, it is only that much harder before you take your first step(s).

Happy Monday,

Rory

Sunday Reading: Compensation, Community, and Exit Strategies

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<www.accu-chek.com.my>

Sunday reading for 11.16.2014.

1. Tony Bergmann-Porter, Principal and Owner of Compensation Consulting firm Yale Associates LLC, has a great post up on Compensation Cafe wherein he postulates about the future of total rewards in the U.S. He has some bold ideas, including a hypothesis that pay in the private sector will flatten over time, resembling the federal government’s GS schedule. The implications for what this would mean as it concerns identifying new ways to recognize and reward top performers are intriguing, to say the least. To learn more about them (and for some fascinating companion pieces examing the effects of pay transparency) check the full article out here.

2. Linkedin Influencer and Partner at Upfront Ventures Mark Suster has a great post up on Linkedin outlining the role he believes that investors should play in creating funding opportunities for start-ups outside of communities like Silicon Valley. He writes about the transformative effect investors can have on their communities when they invest locally… and the migration of top talent and jobs that takes place when they don’t do so. This piece is a great window into the long-term potential for economic growth that exists in communities throughout the U.S. if only more investors choose to give back to the places that helped them cultivate the skill sets when they were young. It’s a thought provoking piece, and I recommend you check it out here.

3. In our careers most of us will work for a boss/company that just isn’t the right fit. Sometimes these fit issues are rooted in broad-based cultural differences, while other times they are simply the product of who we (or the people we work with/for) are at a particular moment in time. Regardless, when we find ourselves in such situations we can either (i) quit, (ii), wait to be fired, or (iii) move forward with a third option that HR guru Liz Ryan espouses in a new Linkedin post here… which is to work with your manager on an exit strategy. There is of course a fourth option Liz doesn’t talk about (that being to quietly look for another job and hope to find one before your current employment is terminated), but I think option three results in the best outcome for everyone involved when utilized correctly. Again, read more about it here.

As always, please share your thoughts in the comments section below.

Best,

Rory

Examining the End

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…So a leader I very much respect recently announced he was pursuing another opportunity. When I first found out, my immediate reaction was to be happy for them; after all, professionally speaking (as in other contexts) people move on. And as both an HR pro and human being, my default place is to wish everyone the best when they come upon this moment in their own lives.

With that said, my second thought was “I wonder if I’ve seen this person for the last time?”, which is of course a perfectly valid question since – as a practical matter – many people that we know in a work context disappear from our lives once said context changes.

How many other people have faded from my life the same way – and vice versa? I’ve spent the better part of an hour thinking about it, and I’m not quite sure… I lost count long ago. There have been at least a hundred people of some significance – probably more.

…People that were there until they weren’t. Some are acquaintances that are now barely a memory, while others touched me deeply in ways that ensured my life will never be the same. But – regardless of the impact they made on my life – each relationship shares a common transience that in the aggregate encapsulates the temporary nature of all things.

…I think that what I’m getting at here is that we don’t really know when the end is coming – and we can’t really pick where it will be and what it will look like. I suppose that I would say this is why it’s important to treat each moment with a person as if it might be your last, but this is jointly impractical and inadvisable at the same time.

Instead, I suppose I would recommend that we all try to appreciate the significance of the moments that really matter. For they are both fleeting and defining; failing to make the most of the moments that matter often leaves one feeling that they haven’t truly lived a life well lived.

And in the end, looking back on your life and feeling that you’ve lived it well is what matters, yes?

Happy Friday,

Rory

Infographic Thursday: What Your Dream Hires Want and Where to Find Them

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Check out this great infographic from Jobvite showing what attracts today’s talent to roles, what their demographic make up is, and what level of position they’re seeking. As always, if you like today’s inforgraphic follow Jobvite here. And as always, please share your thoughts in the comments section below:

The Candidate Experience

 

The Impact of Attitude on Your Career

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Image Credit: <mindclockwork.com

Image Credit: <mindclockwork.com>

This morning I was reading a piece (here) on Linked from GE’s former CEO Jack Welch wherein he shared three ways to make a career comeback. Of particular note to me in the piece was the following insight:

3. Finally, if you are draining away political capital within the organization in any form, stem the flow immediately. That means you may need to stop disparaging fellow employees, even in jest, or acting in any form like a wet blanket. Right now, your attitude needs to shout one word: “Yes.”

and:

Can we guarantee that these three “fixes” will revive your career? Of course not. The facts are, sometimes a person has been underperforming for so long that they get an embedded reputation. No matter how hard you try, you will always be seen as the same old you.

…Again, you can read the full piece (and the other two insights) here, but I loved this article because it spoke to a belief that has been integral to my life outlook for many years… that being that over the long run projecting out negative energy almost always does more harm to your reputation (and consequently life/career outlook) than good.

When someone is complaining all the time most people’s reaction is to feel uncomfortable and/or annoyed. And if you’re the cause of making enough people feel these emotions for long enough, eventually you become associated with those negative feelings on a permanent basis.

Being the person everyone cringes when they see isn’t good for your career.

With that said, to close today I have a question: If one is always in a place where they’re saying and/or doing toxic things, is it always best to try and repair what’s making one feel that way or move on? Welch explains how to repair – recommending that you move on if this doesn’t work – but I’m not entirely sure that trying to repair first is always the best first approach (and to be fair to Welch he doesn’t explicitly say that it is, either).

…Put another way; if your environment isn’t bringing out the best in you, perhaps instead of trying to change your environment (or yourself), the better approach is to move on.

Just a Tuesday morning thought stream…

Best,

Rory

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