A Few Thoughts on Expectations Around Pay


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Unrealistic Expectations

…Okay, so this morning I was reading this great piece from CEB talking about how several employers – led by GE – are rethinking annual raises. And by “re-thinking” I mean “considering replacing with something less cyclical and more centered on moment to moment performance”. Sounds great, right? If organizations are moving away from annual performance conversations and towards continuous feedback (and it’s working) then why not have compensation/incentive design reflect this new approach to feedback and performance management? Well, for starters there’s this:

Only 1.2 percent of U.S. companies use a discretionary timescale for increasing base pay, according to this year’s compensation survey by Mercer LLC. About 90 percent of companies have a fixed date when everyone receives their raise, assuming one is granted, while about 5 percent make the change for each employee on the anniversary of their hiring or move to their current job.

^In what is likely a surprise to no one, 95% of employers have an annual review process around comp increases – and most of the 5% that don’t are closer to having nothing at all than a continuous process like the one GE is flirting with.

…But why is that? I mean – if one really thinks about it – most employees are unhappy with the 2%-3% they are getting every year. They expect it, and when they receive it often feel like they are being shortchanged in some way. Whether this phenomena is a product of collective illusory superiority or workers really having a valid beef because wages have not kept up with productivity (maybe a combination of both?), at this point the merit increase is more of a retention strategy than a vehicle to recognize and reward high performance: And the de minimis difference between what top performers and average performers receive at review times just further drives home this reality.

But then how does a company break this cycle? Do away with merit and your average performers (who are collectively every bit as important as your stars) will leave the organization. But if you don’t differentiate performance then you push your top performers out since that’s the best way they can get paid.

^To control for the flaws in the merit system, some companies are offering more spot and performance bonuses, with such dollars making up an increasingly large slice of total payroll. Which is fine… except it doesn’t address the fact that employers are still sinking huge sums of money annually into a benefit that doesn’t improve performance and doesn’t make high performers feel recognized. Merit is just the (very high) cost to retain.

…I am not saying anything new here… but thinking (or writing, I suppose) out loud I find myself considering how expectations are formed (and how they shape behaviors) to begin with. Namely, (1) something happens to us for a while, (2) it is a net positive, (3) we get used to it, and (4) our thoughts around one or more aspects of ongoing happiness become tied to the regularity of that thing.

…But just like an expectation that salary will keep going up (or at minimum stay at the same level), the merit increase expectation can be challenged (and changed), I think. For example, if one day an organization just started rewarding its employee for performance on a non-cyclical basis then at the end of the year there would be people that got small or no increases. Some of those people would be mad and leave, replacing them would be painful… and then new expectations around pay would be set.

…So ultimately this is just a thought stream. I don’t have any empirical evidence that any given company could move away from the merit cycle without suffering terminal retention and/or engagement issues. But I do know that expectations are formed through our experiences within a culture, and that cultures change. Whether an organization can have a strong enough culture to insulate itself from broader market pressures around cyclical pay raises is a different, open matter (maybe GE will answer it for us?)… but I find it interesting that the merit cycle is as entrenched culturally in the U.S. as, say, the 40 hour workweek. Employees don’t like it. Employers don’t like it. Why hasn’t anyone managed to input something different at scale yet?

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

Happy Wednesday.



Examining the Impact of Ratingless Reviews and Year-Round Feedback on Employee Performance


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…Okay, so much has been written in the news about companies doing away with performance ratings. GE is probably the most famous company to make this change. But companies such as Microsoft, Dell, Adobe, Deloitte and Accenture have also (somewhat less famously) recently re-designed their performance management process, eschewing the formal annual review + rating in favor of more ongoing feedback and check-ins.

The articles I linked to above all have different views on the efficacy of replacing annual, formal review programs with more infrequent and informal fare… and to be sure companies have had varying degrees of success (and failure) with said implementations – often measured internally through employee feedback surveys and other experience data. Some of it has even been published online. But I don’t think that before yesterday I’d seen any large scale survey research that aggregated company experience data to quantify the value proposition companies are realizing (or not) from this performance management shift in the form of talent differentiation and productivity outcomes.

Fortunately, I stumbled upon a great white paper from the folks at USC CEO here that did just this. Surveying 244 different organizations, USC CEO looked at three trending performance management process changes – namely the introduction of ongoing performance feedback, ratingless reviews of performance, and crowd-sourced feedback – and their effect on the way that employees were rewarded and the impact on their development.

You’ll need to purchase the full working paper if you want to deep dive into the findings, but I want to share a (really compelling) exhibit on the impact that the shift in performance management practices has had on the way employees are developing and being rewarded. From the study:

Rewards Admin

^*80* percent of respondents are saying that shifting their performance management process to a more informal/less cyclical format has improved development outcomes for employees, which is exactly what a good performance management process is supposed to do. 2/3rds of companies also report that top employees are being more appropriately rewarded, with real differentiation between poor, average and good performance that (based on the data) is reinforcing the behaviors merit/reward pay should be reinforcing. Again, developing good performers into great performers is what this is supposed to be all about. And that’s what 4 in 5 are getting out of this change.

And now for my favorite data point:

Reward Allocation

^Again, 80% of the companies responding are – on some level – trusting and empowering their managers to make merit/reward decisions without meddling. And it’s working. Only 21% of employees say they are less clear about how they’re performing, with 62% saying that they feel pay decisions are more transparent (see exhibit #1 above). Much has been made about the subjectivity of a ratingless system… but most employees seem to prefer them and feel that they more accurately capture their value.

Having transitioned away from the rating scale and annual performance discussions in favor of no ratings + ongoing feedback with my own teams years ago, this data jives with my own experience and wasn’t much of a surprise. Still, it’s good to see some survey data coming out supporting what most people managers already know: If you have frequent, candid conversations with your people about what is expected and reward them appropriately, most of the time they will improve their performance (and be more engaged).

…Anyway, that’s all I’ve got for today. Check out more research at USC CEO from Ed Lawler here, and as always let me know what I got wrong (or right – positive feedback is appreciated!) in the comments section below.

Happy Wednesday,


P.S. Has anyone tried crowd-sourcing feedback yet? Approximately 80% of the companies surveyed here had moved to ratingless reviews, while (I suspect) a much smaller number have started crowd-sourcing feedback as part of the performance management process. It is a novel idea, but I think you really have to have the right culture for this to work. What that culture looks like? I don’t know. Please share your own experiences etc.

Which Talent Should Your Organization Be Investing Resources Into? Why? A Few Thoughts…


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…Okay, so over the weekend I read an outstanding blog post from CEB here. It talks about how to distinguish between high performers in their current roles (who are doing good work but may not be a good fit at higher levels) versus the kind of talent that has the potential, desire and commitment to keep progressing. It turns out that – if you are in fact like 83% of companies – only 15% of your high performers are promotable multiple levels above where they are now, and 55% of the folks in your HiPo programs today will be gone in five years. See the breakdown below of how that plays out in the aggregate companies reviewed (full study can be found in the link above):

55 Percent of HiPos Leave

Let that sink in a bit…

Okay? Let’s move on:

Again, I would encourage everyone to check out some of the prevailing research behind the article here (e-book). Some of the material referenced – such as the 70:20:10 model around learning – is fairly table stakes/well understood stuff, I think, but the more powerful parts of the data deal with the fact that success at higher levels in an organization are contingent on talent having a combination of (1) aspiration to progress (2) ability, and finally (3) the often forgotten engagement/loyalty factor. See the below chart (from the same study) outlined below for more:
HR HiPo Overview #2

^What this chart basically tells us is that today you probably have:

  1. Folks in a HiPo program/tagged as HiPos that are very loyal/engaged and have aspirations for advancement, but little capacity for growth beyond their current role.
  2. Employees with tons of talent and loyalty but little interest in progressing beyond their current level.
  3. Talent with tons of ability and aspiration that are flight risks due to low organizational engagement and/or a perception that they can do better elsewhere.

…The paper notes that those employees who lack even one of the three characteristics above have less than a 40% chance of success at the next level. This means that organizations needs to be extraordinarily thoughtful about who they invest resources in. Talent isn’t enough. Desire isn’t enough. Loyalty isn’t enough. It’s important to really figure out a way to measure all three characteristics to maximize ROIC in HiPo programs.

As is often the case with issues like this, the key to success is to develop a feedback process that encourages employees to (1) talk about their goals and (2) deliver feedback on what it takes to reach them. And if you’re going to put this process in place in a way that works, I think you need to be prepared to have candid discussions with the talent lacking one or more of the three key criteria outlined above around how to either (1) overcome and/or eliminate the derailing characteristic or else (2) align on career expectations in the absence of that possibility. A few key points:

  • This means that for your loyal and engaged – but average ability – talent you have to be prepared to give some candid feedback around capabilities and be prepared to invest the time and resources into developing that person around the areas where they are lacking (or failing this to have frank discussions around what sort of success is possible internally. You also need to put in place a total rewards and recognition package that recognizes and keeps this talent engaged if further progression is not possible).
  • For your high engagement/high talent but low aspiration folks, you have to be willing to (1) get at what has got them unwilling/disinterested in progressing and (2) be patient and/or content if they don’t want to progress any further. Sometimes high capability+engagement but low aspiration employees just have other things going on in the moment (e.g. they may have personal/family issues going on outside of work) and want to take a step back for a while. Or they may have just found their niche. In the former case, time + flex work arrangements can position this talent to move up going forward, and in the latter case these people make good continuity players that firm up internal knowledge management (on a related note, if these people are at risk of being blockers in a role that you want to use to step future talent up then you have to have a transition strategy in place to migrate your blockers into other roles where they can still add value, but that topic is long enough for another post…)
  • Finally, for your low engagement but high talent/high aspiration folks, it is important to have a careful hand here. Are these people unhappy with their long-term comp outlook? Do they see limited opportunity for advancement go forward? Are they just not a cultural fit? This group can often times be the hardest to get aligned with, retain, and ultimately develop because they are the least likely to engage in a discussion around their derailing issues/concerns, but they are also a group that it makes sense to invest in re-engaging because they (anecdotally speaking) often have the highest upside if you can get them to buy-in to a long-term future with the organization. This is because – while often you can’t teach talent or ambition, generally speaking talented folks with ambition can be re-engaged if you can just get them to open up.

Along these lines, as it concerns our last group I want to share a final graph from the CEB study (again read more here and here):

ROIC Max Engagement

^This should trigger a few ideas around the sorts of discussions and programs you can put in place to engage your high talent/ambition population that might otherwise become a flight risk. The big piece seems to be giving them ample opportunities to take on high risk/reward opportunities while making it clear that you have their back if they fail.

As always share your thoughts in the comments section below.

Happy Monday.



Exiting Your Organization Like a Pro





…From Dunn (in an April 2016 post titled “MAMBA OUT: When Leaving Your Company, You Should Go Out Doing What Made You Special” – bold emphasis mine):

When the end comes at your company – whether you’re voluntarily leaving or you’ve impacted by a reorganization that allows you to stay in your role for a month or two – WE SHOULD GO DOWN SHOOTING AND SWINGING. That doesn’t have to be negative.

Your role in your final days – if you want to be remembered as a talented person – is to go down shooting…

…Whatever your special skills are, you should use them as much as possible in your final days. Good at pressuring people to do things they don’t want to do? Do more of that. Good at blowing people up so the greater good in your organization is served? More please. Good at making your team feel good about themselves and full of positive self-esteem? Don’t stop. Do more of it.

^Sharing this because I have recently had the chance to watch what this looks like first hand when done well, and if I should ever leave my own organization it’s an ideal that I also want to embody.

…The truth is that no matter how well a company treats you, sometimes a better opportunity just comes along: More money, the right title, a better location, more flexible work hours… sometimes change sneaks up on us and it is the right moment and we just need to pursue it. And conversely, sometimes you may also be treated unfairly by an employer – be that getting severed as part of a re-org, or performance managed out for something you’re left holding the bag over. And it is in these moments – when no one expects anything from you but the minimum – that you can demonstrate incredible character and professionalism by proving that expectation wrong.

Setting aside the fact that it’s a small world (and people you work with now tend to be people you work with or for later in another context), being in the habit of being the best version of yourself every day, all the time will pay dividends throughout your career because it isn’t common. You will start to create separation from your peers – first at the margins and then in abundance. And this separation will turn into promotions and comp that grow exponentially over time against what you’d have gotten by just coasting when you could get away with it.

…I don’t have a great HR insight today or big question… this is mostly a re-share. That said, I wonder if there’s a way to really screen for this “it” factor… anyone have any great interview questions to parse it out?😉

Happy Friday.



Thoughts on the Sort of Talent Discussions That Drive Employee Engagement



…Okay, so an article published about a year ago by Ben Whitter titled “Bye, Bye, Human Resources” has been making the rounds on social media. The piece highlights the way that Airbnb has transformed its HR function – with the focus internally moving away from a conventional approach to HR (recruiting/talent management/labor/total rewards etc.) to focus on employee experience. From Whitter’s piece:

Five Circles

How Relationship Management Impacts Strategy Execution





I recently stumbled across an oldish (late 2015) but excellent executive summary of a Center for Advanced Human Resource Studies (CAHRS) sponsored event examining the changing role of the HRBP. You can read an overview of what the event covered here (and the full executive summary here), but one of the things that stood out to me in the overview was the following section:


^This section jumped at me because – in as much as the focus here was on HRBP knowledge transfer – the highlighted section is really true of *any* leadership role. Whether an organization has centralized decision-making processes or more decentralized ones, to execute on any activity of importance a leader has got to understand the socialization and organizational alignment process (to both ensure support from other key stakeholders and to flush out any institutional issues that might otherwise disrupt a change midstream). Understanding the knowledge level/needs of key stakeholders and making sure the message flows upward and outward to them in the right way is also key. And doing this wells means understanding how each audience differs, what they care about, and what knowledge they do or do not have. From there, the message must be tailored appropriately for each intended stakeholder.

…So at this point you may be thinking “this is table stakes stuff”, and in many ways it is. And yet when I think about the most effective teams and organizations I have worked with compared against those that have been more dysfunctional, for a surprising number of teams within the latter group some combination of effective relationship management/streamlined decision-making was missing. That lets me know that addressing this issue is easier said than done.

Okay – so I suppose my thought questions to readers today would be as follows: Do teams need to discuss information flow and decision-making as part of the onboarding process for new hires? If so, at what level does that start? And on a related note how explicitly does the socialization effort and communication strategy required to advance an idea need to be called out when working through key project milestones? I would argue that maybe it needs to be called out fairly explicitly, because in a lot of cases at all levels I believe this stuff is being considered tacitly understood knowledge when it really isn’t.

Let me know what I have wrong here…

Happy Wednesday.



How Cultural Norms Around Work and Family Life are Impacting the Gender Pay Gap


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Happy Tuesday all.

…So I recently read a great article by Ben Casselman at FiveThirtyEight here that talks about why women are no longer making material progress towards narrowing the pay gap between men and women. Long story short, there are a number of variables that drive the pay gap (such as men’s tendency to opt into high earning careers at greater rates and women’s tendency to negotiate less often), but the one I want to talk about today deals with the article’s primary focus – namely that as a society we are increasingly compensating employees at higher and higher rates for working longer hours – regardless of exemption status. From the piece:

Men make up a bit more than half the full-time workforce, but they account for more than 70 percent of those working 50 hours a week or more. So as wage gains have gone disproportionately to people working long hours, they have also gone disproportionately to men, widening the earnings divide between men and women overall.

The effect being denoted above is illustrated really well in the below chart:



…Essentially, men work more hours than women because women disproportionately shoulder home-life / childcare duties. And because men work more hours than women, over time their earnings start to diverge progressively more from their female peers who are more likely to take a step back in work hours and/or opt out of the work force entirely.

Of course, this begs the question: What role should organizations – particularly HR – be playing in addressing the cultural legacy issues that leave women disproportionately shouldering home-life issues at the expense of their careers? Should the private sector look to play a greater role in changing expectations around gender roles through more balanced parental leave policies? There are companies that have taken this view, with the outcome of such policies leading to more work-life balance for both genders and a more balanced workload between men and women in the office. And yet anyone arguing that dramatically expanding parental leave policies has the potential to be costly to net workforce productivity would be right; accordingly, implementation of any new leave policy must to be done with the demographics and operating environment of one’s organization top of mind.

…That said, I will close by asking if trying to tackle gender imbalances in the workplace by making it easier for *everyone* (regardless of gender) to work more hours is the wrong way to even think about the issue? Does anyone *really* need to consistently work 80+ hour weeks? What does the data say? I am not sure, but have a sneaking suspicion that if societal expectations around work/life balance shift that much the pay imbalance we see today will shift with it.

Please share any personal/professional experiences and/or studies in the comment section below.



Why People Leave Their Jobs (and How Their Reasons Should Shape Your Organization’s Talent Strategy)





Happy Monday all. 


…So I spent the weekend reading about turnover and engagement, and this HBR article had some really good insights that got me thinking about talent attraction and retention strategy – specifically how Managers/HRBPs can use human capital data to improve turnover and progression outcomes. The below section particularly resonated with me:


“New research conducted by CEB, a Washington-based best-practice insight and technology company, looks not just at why workers quit but also at when. “We’ve learned that what really affects people is their sense of how they’re doing compared with other people in their peer group, or with where they thought they would be at a certain point in life,” says Brian Kropp, who heads CEB’s HR practice. “We’ve learned to focus on moments that allow people to make these comparisons.”


^In support of the above quote, anecdotally speaking I can say that my sense of how ‘successful’ I am is in many ways driven by how I am doing compared to my peer group (and most of my friends and associates at similar career stages feel this way as well). One moment, I might feel good about where I am in my career. But if a close friend is promoted to a level that is comparably much higher than mine in their organization and/or their total comp jumps materially higher, I suddenly find myself wondering “Am I working as hard as I could be? What is wrong with me? When will it be *my* turn?”


…In some ways this is a healthy line of thinking – focusing on the next milestone and benchmarking your performance is a good way to stay focused on your career and developing yourself. Along these lines, I have had candid discussions with peers around just this topic, and the consensus is that wanting to lead the pack/be the best doesn’t take away from our feelings of happiness for one another’s success – it just sets a new bar for the group and causes everyone to keep pushing one another to get the next title/pay/span of control progression.


That said, from a talent management standpoint I believe that understanding this relatively common line of thought around careers means organizations need to be really deliberate about where they source talent and how they retain them. For example, recruiting from a school where the median pay is 20% higher than that at one’s organization, or where potential advancement opportunities are limited against a graduating cohort’s expectations is a recipe for high turnover and disengagement. And I would note that I think many organizations have done some good work identifying what schools/opportunities/managers/profiles are correlated with high internal retention and promotion rates (and reflecting the outcome of this data in their recruitment strategies).


…I also wonder if there may be an opportunity to take this work a step further – can we use the same datasets driving our recruitment strategies today to be pre-emptive in the way we communicate and engage with talent? Who is a flight risk and why based on historical data? What sorts of outreach is necessary to retain these people? In some cases do we even want to? Being really deliberate in the sorts of discussions our managers/HRBPs are having with our talent around career expectations could be a fantastic way to drive turnover down and re-direct languishing talent to areas where they can be more successful – either inside or outside of the organization. 


I’d love to hear your thoughts on how we can all use analytics – be that through a new HRIS or different reporting (Deloitte has a third party tool available that can do much of the work outlined above) – to develop actionable data that facilitates proactive discussions with key talent that might otherwise be a flight risk. 




A Few Thoughts About Winning


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…So I have made a career out of existing in the top-right quadrant of the Thomas-Killman conflict resolution spectrum (see image below). Given two (or more) competing objectives – no matter how far apart – I figure out a way to bring everyone together and leave (mostly) happy about the end resolution… whatever it may be.

I have been nothing else if not patient, persistent, and perhaps even relentless in the pursuit of this goal. One of my personal mottos has been that anyone that believes you can’t please everyone simply isn’t trying hard enough.


…That said, what the past year(ish) has taught me is that often times there should be losers. I don’t necessarily know that there have to be – given enough time almost anyone can reach a compromise – but the emotional, physical, and capital investment required to get everyone on the same page is way-more-often-than-you-might-think not worth it.

Kris Dunn wrote a few days ago here that the best HR leaders are as assertive as the salespeople in your organization. He notes that in our function the need for comfort with confrontation continues to escalate. This is as true as anything I’ve read all year.

Frankly, as our workforces have become more global, company investments in long-term retentive benefits such as pensions become less prevalent, healthcare access becomes less tied to enterprise employment, and skill-sets become more transferable, the tension between talent management and business priorities have become both more interlinked and in conflict. Today’s business leaders need HR Business Partners that will push back on human capital strategy when the current state doesn’t make sense for organizational health, whilst also being willing to let go of their agendas and/or the present agendas of the function when it/they don’t align with the needs of the business.

Winning and success don’t always mean everyone walks away happy. And sometimes it means everyone walks away more or less pissed. That conflict – that tension – is an integral part of success.

…I think. I will keep you posted.

Happy Wednesday,


The Importance of Cultivating Good Judgment (and How to do it)





…So this morning I read a great piece from CIPD here that examines the changing role of the HR Business Partner, and why some organizations have been more effective at cultivating the talent pool required to be successful in these roles than others. From the piece:

In many cases, however, there has been a failure to understand the business partner role and how it differs from the old HR model and then match this to existing HR capability. The simple fact is that the ‘ask’ has risen faster than the capability of many people in HR to deliver it. As a result, many HR business partners have been unable to deliver what is required in the role or have dumbed down the role to a level they are comfortable with but which doesn’t deliver what is required by the business.


This isn’t just about a competency framework; it’s about being realistic about the level we are asking people to operate at. It’s become unfashionable to use tests of verbal and numeric reasoning skills, but perhaps we should look at more sophisticated and rigorous ways of assessing what level a person can operate at. We are letting our people and the business down if we recruit people to do a job they simply can’t do. Levels of work suggest that by far the best predictor of success in higher complexity roles is judgment – but this is rarely assessed.

and finally:

It is very difficult to send someone on a programme that develops their intellectual capability or their systemic thinking ability. But these capabilities can be more swiftly developed through a broader career-pathing approach which tries to develop perspective (for example across different functions) and hence judgement. But this takes time and our research shows that this kind of development is the least often used by HR.

…So what’s powerful about the above is that it frames the matter of experience in a different way than I normally see it talked about. By instead tying the importance of good judgment to performance, the author (1) highlights the reality that not every person can develop the capabilities to be great at every role, and (2) highlights the reality that developing the capacity of talent can only come from giving them the high volume of ‘reps’ required to get good.

This may all be a roundabout way of saying that each organization needs to (1) recognize its talent’s strengths / weaknesses and (2) give its talent the targeted development opportunities required to reach their full potential. *But* this advice is easier said than done. It requires an organization to (1) really knows its people and (2) really understand what drives success in every role and what someone needs to be exposed to properly develop.