The StratigicPay Blog's primary writer is on vacation for the next couple of weeks, but that won't prevent us from supplying you with some of the thought leaders in the field.  Today's guest post is from fellow Compensation Cafe blogger Chuck Csizmar. Chuck is one of the several great writers at the Cafe'.

Why Managers Don't Manage Pay

When an employee is promoted to their first manager's position, they are given the proverbial Keys to the Kingdom – your company.  They now have the authority to spend your company's money.  From hiring, to promotions, to salary reviews and equity adjustments they are now able to make the decisions that directly impact (increase) your labor costs.

However, most of these managers turn out to be, at best, well intentioned amateurs at the process of making pay decisions that are appropriate for the needs of the business.   Fresh from being anointed they often lack the basic internal education necessary to make business vs. emotional decisions – and their actions commit you and the company to costs that may not be in your company's best interests.

Actions taken by these managers not only increase direct costs, but often irritate other staff members as the circumstances become known, creating morale and internal equity problems at the same time.  The net result is usually a corresponding lack of engagement and ultimately separations by disenchanted employees. 
 
Note:  Most employees leave managers, not companies.  Thus actions do have consequences.  Likely this is not what you envisioned when you made that promotional decision. Now, how did (fill in the name of your company here) get themselves into this mess? First of all, no one really trains managers on how to properly attract and reward employees via base salaries and incentive pay.  A few anecdotal examples:

• Just because some bloke is a good "XYZ Operator" does not mean they will be an equally good "XYZ Manager".  The skill sets for success are dramatically different.
• How many managers understand your company's philosophy about pay?  Do you?  How many understand the workings (the what and the why) of the company's pay practices and methodology?  These are the folks responsible for spending 40% to 60% of your revenue in the form of employee pay, and even the most well-intentioned is prone to make mistakes.
• Managers want to be liked; they do not wish to pick favorites, do not want to discriminate on the basis of performance and definitely do not want to have their decisions challenged.  They would rather point a finger at HR and assign the blame to them for having to assess performance and distinguish one employee from the other.  Left to their own devices they would give everyone as much as they can.

If you were a high performing employee, would you like to work for this sort of Manager?  If you were coasting at work, barely putting your time in, would you want to work for this sort of Manager?  Which sort of employee do you think will eventually tire of being undervalued, and quit?   Leaving the Manager with a staff of . . . .  You get the picture.

Ineffective managers are always afraid that an unhappy employee will decide to quit, but that is usually a selfish thought.   Their prime concern is more often what your departure would mean to their deliverables, to their reputation as a manager.  Your departure is typically viewed as an inconvenience to them, not an avoidable loss for the company.  A reflection of this is when managers resist a transfer that is clearly in the employee's career interests.  The manager's concern is how that transfer affects their department – and whether their personal success becomes that much more difficult to attain.
 
Ineffective Managers can be a defensive lot, challenging attempts at reform.  Why?  Because of their fear that spotlighting reform action will demonstrate their ineffectiveness (make them look bad), and that is unacceptable.  Typically their advantage within the company is that the more ineffective the manager, the stronger their political connections.   And as senior management oftentimes surround themselves with those most agreeable to their own way of thinking, it's not surprising.

Assuming the company's willingness to make key decisions and the presence of the all-important support from senior management, companies can correct the problems that they've created.  They can:

• Select candidates for management positions on the basis of their skills / potential for actual management (dealing with people, managing projects, business-oriented, professional demeanor, etc.)
• Educate Managers in the philosophy and methodology of the company's pay programs, ensuring that this information is shared with their staff
• Construct job specifications that call for a Manager to manage, as a prime accountability, limiting or even eliminating the retention of individual contributor responsibilities.
• Measure and reward the performance of the Managers  primarily on the basis of how they have actually managed their employees, or on the performance of their unit
• Encourage Managers to develop the potential of their employees, to the point that a staff member being promoted / transferred upward is a mark of success for the Manager
• Ensure that procedural checks and balances are in place to ensure that pay decisions are reviewed by at least one higher level
• Hold Managers to an annual salary budget; let them develop the budget and monitor/adhere to it during the year

Consider the above as a checklist that can be used to test your company's vulnerability to wasted money, employee morale problems / turnover and avoidable cost increases. 
Would you be comfortable with how your own company would score?

My advice to clients is to face these issues straight on, to implement policies & procedures that save money without penalizing high performers or mistreating their employee base.  But the challenge will always remain, as there is an inherent reluctance on the part of many managers to make the tough decisions, because we do want to be liked, we do like to give good news, and we do not like to play judge and jury with an employee's career. But that behavior is not managing is it?

Most HR professionals would agree that happy (or at least satisfied) employees generally make better employees overall.  They tend to complain less, show up more, and make for a better work all-around environment.  Most HR professionals would also likely agree that more satisfied employees are also generally are more engaged and better performers overall.  For these reasons alone, it's worth it to try to build and maintain a happy/satisfied workforce.

But assuming increased job satisfaction automatically leads to increased job performance is a false assumption.  Many HR professionals believe that if we can just increase job satisfaction/happiness, that this will increase job/organizational performance in the process, but this is where the relationship breaks down.  Just because more satisfied employees tend to be better performers, does not mean that increased satisfaction causes increased job performance.

In reality, the satisfaction = performance equation should be reversed. If employees are successful at work, they tend to be more happy.  They tend to feel better about themselves, their work, and are more engaged and invested in what they do.  As a manager, if you can teach and lead employees towards improved job performance, you will also end up with more satisfied and happy employees in the process, and fantastic "two-fer" to have as a manager (better performance and morale).

A recent discussion on the LinkedIn HR Executives Network and a great article on the the Street.com reminded me of this topic. I've wanted to write about it for some time, and these reminders finally got me going. 

The Street.com article started out by stating: "We've got a fundamental premise wrong. We believe that making employees satisfied will make them successful. That's not true. In fact, the relationship is reversed -- make people successful and they will be happy. Employees, at least those you want to keep, don't want to be indulged, they want to be successful." "Causality flows from success to satisfaction. We've got it backward." It then goes on to provide supporting studies and other evidence of this relationship.

So, if you want happy employees who are more engaged and less likely to become unwanted turnover, then help to make them successful, and you will be helping yourself, your organization, and your employees to be better off.

We need to stop trying to make people happy so they will perform better and/or turnover less.  Instead, help to make them successful in their jobs, and you'll get higher job performance, and several other beneficial outcomes in the process!

The StrategicPay Series blog is happy to welcome back guest Blogger Theresa Chambers of Recognition Works.  See below for additional contact information.  Thanks Theresa!

While leg warmers and feathered hair may be making a comeback, let's make sure your recognition programs aren't stuck in the 80s. Whether you are creating a program from the ground up or revamping an existing one, here are some tips to bring your recognition practices into the 21st century.

Employee of the Month programs are so 80s. We've heard all the jokes, "Whose turn is it this month?" or "Let's give it to Joe, he hasn't gotten it in a while." The impetus for recognizing great work doesn't happen because you turned the calendar from August to September. It needs to be deserving, for sure, but it also needs to be based on criteria that reinforces employee behaviors aligned with company values.

No surprises. Surprise awards are more about the shock value for those watching than truly honoring the person you're trying to recognize. If you are going to receive an award, wouldn't you like to know ahead of time? Some people love the fanfare and applause, while others prefer their recognition in private. When it comes to recognition, one size does not fit all, so it's always best to ask employees how they like to be recognized.

Don't show them the money. Harvard Business School's thought leader, Rosabeth Moss Kanter, captured it well, "Compensation is a right. Recognition is a gift." While 85% of employees surveyed say they want cash awards, only 9% actually spend it on a special personal treat for themselves. Cash disappears. Awards should serve as a tangible reminder of the achievement. It can be as simple as a framed certificate with signed accolades from coworkers or a retrofitted Oscar trophy with a superhero cape renamed FRED (friendly, resourceful, enthusiastic and dedicated).

Think strategy, not program. Recognition needs to be more than once a year celebration where only a small percentage of employees are honored and everyone else watches. A strategy is ongoing and multidimensional. The most important element is the day-to-day thank-you and acknowledgment. It's about creating a culture of appreciation where it's up to everyone to "notice out loud" when someone does something right for the company.

Involve employees in designing the recognition strategy. People own what they create and want to see it succeed. Committees should represent a diagonal cross section of your organization and its unique culture. Identify Recognition Ambassadors throughout the company who serve as the go-to person for ideas and resources.

Storytelling is one of the most powerful forms of recognition managers can use. People pay attention to who gets recognized and why. An effective presentation should tell the story about what the employee did, the positive impact it had, and how it was an example of one or more of the company values. Use multiple communication vehicles to share employee achievements, including the intranet, recognition bulletin boards and the company's Facebook page to post pictures and give coworkers an opportunity to add their congratulations. This works great for remote employees.

Maximize your managers. People join a company for the pay or benefits, but it's an employee's relationship with their manager that determines whether or not they stay and how engaged they are. Research suggests that employees need to receive recognition and praise for doing great work every seven days to stay actively engaged. Thankfully, giving effective recognition is a leadership skill that can be learned. In fact, training managers on recognition skills increases the occurrence of recognition by up to 50%.

As your business goals evolve, so should your employee recognition strategy. Your core values may remain the same, but it's always a good idea to take a fresh look at your recognition practices. Here's to keeping the ZING in recogniZING!

Theresa Chambers is the Chief Motivation Officer of Recognition Works and founder of the Puget Sound Recognition Roundtable. Visit www.recognitionworks.net for more info.

The Strategic Pay Blog is pleased to welcome Becky Regan as a guest blogger to the StrategicPay Blog.  Becky is the founder and President of Regan HR, Inc. and a fellow blogger on the Compensation Cafe'. See below for more contact information.  Thanks Becky!

Would you want to work for yourself?  Let's be honest here....to be effective as a manager, you know that your employees must trust and respect you. They need to believe that you'll handle their work issues fairly and consistently, yet maintain their confidential information when they seek your help. Repeatedly, studies have shown that employee retention is directly correlated to the quality of the relationship between a manager and his/her employee. Employees frequently look for another job when this relationship doesn't exist.

Years ago, I had a boss who believed that he should treat all three of his direct reports exactly the same in terms of salary. He believed that he was being "fair" by treating all of us the same. Yet we all had different areas of responsibility, work styles, and performance levels.

Treating us all the same simply didn't work, because we were all different.  He treated us like a parent treats his kids; he didn't want to show any favoritism to anyone in particular.  Good parenting practice; lousy management style.....

When I began working for him, I made significantly less money than my peers. I almost left that job out of sheer frustration over the lack of recognition for my efforts and the discrepancy in salaries. Instead, I decided to stay and see what would happen because I trusted my boss to "go the distance" for me. Though it took a longer than expected, he did come through with a title and 33% increase in base pay for me.

I'll never forget how he told me about the big raise and VP title. He took me out to an Italian  restaurant for a fancy lunch and truly made the occasion a celebration to remember!

What kind of a manager are you? Do your employees believe in your ability as a manager? Can they depend on you for your support and fair treatment? Do you recognize their individual efforts and contributions?

Take a minute to consider what you need from your manager in order to succeed in your job? Make a list of your "top 10" requirements. Chances are, your list is very similar to the one your employees would create for you! You can use it as a self-evaluation of your managerial effectiveness to determine how you can improve as a manager before the economy begins to recover in earnest.

How can you become a better manager? By caring enough to...

•     Build a professional yet warm relationship with each of your direct reports
•     Frequently ask them how their job is going and how you can help; be available when they need you
•     Commit to holding weekly staff meetings with everyone reporting on what they're working on in a round table setting; don't cancel or postpone scheduled meetings
•     Honor your commitments to employees; follow through!
•     Stand up for them as necessary to provide support, get salary increases, supplemental training, etc.
•     Do little things, like saying "hello" at the beginning of the day ; walk around & talk with your employees
•     Keep your door open; don't sit in your office with your door closed unless in meetings
•     Find out what their individual interests are and use them creatively when recognizing each employee for exceptional performance
•     Hold your employees accountable for work you expect them to do and timelines to be met
•     Manage performance problems as they arise; manage poor performers out of the workplace
•     Hire smart
•     Ask them how they want to be treated or what outcome they expect from a conflict at work
•     COMMUNICATE, LISTEN and EMPOWER!

Now is the time to become a better manager to enhance employee engagement.  Don't wait to use sound management practices for employees when the economy finally emerges from this "repression" and your turnover increases.  Train your managers now how to effectively manage and build that critical relationship between supervisor and employee.  It's your best insurance policy to implement now to protect your company from losing staff down the road.

Don't treat all of your employees the SAME, RECOGNIZE and build upon their differences to treat each individual FAIRLY.

Becky Regan is the founder and President of Regan HR, Inc., a human resources consulting firm specializing in compensation consulting for California employers and purveyor of online HR products. A former Corporate Human Resources Director (10,000+ employees) with more than 25 years of HR work experience in many industries, her team works with private, public and non-profit clients.  Becky is passionate about designing HR programs and compensation plans that build organizations.

Flickr photo courtesy of Reclassic2

Appreciate the Employees You Have: The value of recognition escalates in a tough economy

The StrategicPay Blog is very pleased to welcome Theresa Chambers as a guest blogger. Theresa is the Chief Motivation Officer of Recognition Works, and an expert on recognition program design,development and implementation.  See below for her contact information.  Thanks for contributing Theresa!

In a challenging economic environment, the value and impact of employee recognition multiplies. While it may be financially prudent to scale back on expensive awards or events – which generally do little to increase employee engagement or productivity – let's not lose sight of what recognition is all about.

Whether your company is large or small, the truth is that the people working there want to know that what they do makes a positive difference. And they need to hear it now more than ever. A survey from the Center for Work Life Policy reported that trust and loyalty levels of workers are at an all time low. Only slightly more than half of those surveyed felt "loyal" to their company and nearly two-thirds said they felt "demotivated" at work.

Organizations need to appreciate the employees they have and acknowledge when they are being asked to step up and do more with less. Jim Harter from the Gallup Organization put it well, "Employee recognition is actually more important during difficult times than periods of prosperity. Recognition helps people to be resilient. Right now, businesses are trying to survive. And to survive you've got to have psychological resilience. We need employees who are positive despite the negative situations around them."

Companies – or more specifically, managers -- cannot afford to take employees for granted or assume people should just be thankful to have a job. In fact, company decisions resulting in layoffs could very well trigger their own solid performers to leave.  According to the Harvard Business Review, researchers found a strong relationship between layoffs and subsequent voluntary turnover. For example, layoffs targeting just 1% of the workforce preceded, on average, a 31% increase in overall turnover.

It's no accident that the companies on Fortune Magazine's 100 Best Places to Work list consistently outperform S&P 500 companies by 30-40%. Employee recognition is a critical component of their business models and they practice it.

The solution is available to everyone. A solid recognition strategy is built on a foundation of trust and respect. It involves integrating recognition into your company's culture and training managers on meaningful, low-cost ways to show appreciation for staff.  It starts at the most fundamental level: paying attention to people, making eye contact, smiling, saying "Good morning." This simple act communicates the message that "I see you. I care, and I'm glad you're here."

Appreciation starts with awareness: awareness of the things employees do well. Recognition is simply "noticing out loud."  It can take the form of a verbal comment for providing excellent service or a handwritten note to thank them for staying late to meet an important deadline.

Even though U.S. companies spend upwards of $300 billion a year on awards and incentives, 65% of employees say they don't receive recognition or praise at work. As organizations downsize their annual awards banquets, it doesn't mean less recognition for employees. It actually provides a perfect opportunity to get real about what recognition means to employees. It becomes less about the "stuff" and more about how the message is delivered. Do your employees know they make a positive difference? Do they understand how their job is connected to the bigger picture? It's that frequent, genuine "thank you" that moves the needle on employee engagement and satisfaction scores, and has a real impact on the bottom line.

We need more "employees of the moment" than "employees of the year." Take the time to pay attention, acknowledge, and appreciate what is right in your organization and the people responsible for making it that way. Now, more than ever, it may be the best business decision you ever make.


Theresa Chambers, Chief Motivation Officer at Recognition Works, changes the way organizations think about employee recognition. She can be reached at theresa@recognitionworks.net or 206.353.8267.