On June 15, 2020 two great firms and three great consultants will be joining forces in a new business venture. Announcing Alliance Compensation!
Columbia Compensation Consulting Inc. and Compass Total Rewards LLC will be merging. Principals Jim Harvey and Nancy Ellington are being joined by David Adent, most recently of Cisco Systems. Jim, Nancy and David all met while working together in senior compensation leadership roles at Cisco.
Columbia Compensation and Compass Total Rewards
have served local, regional, national and global clients across the
spectrum of compensation and rewards strategy, design and advisory
services. They’ve built a reputation for experience, excellence,
and expertise. David is a natural fit to the new firm with his
extensive background in executive and board consultation, and broad
industry experience. Alliance Compensation already has clients in the
Western United States including Washington, Oregon, California, Utah,
and Arizona. They’ll also serve Idaho, Montana and Nevada.
As friends and colleagues, they believe now is
the time to form their Alliance given their successes in their own
businesses as well as combining their collective knowledge,
experience and expertise to serve their existing clients, and form
new relationships. Most of their new business comes through their
current client’s referrals, something they’ll continue to value
and strive to live up to as they move forward.
There will not be any disruption in any
services that clients have relied on; as a matter of fact, their
Alliance should increase their availability. Their focus has been and
remains serving the broad spectrum of compensation, rewards and
incentives from the basic blocking and tackling of market pricing and
salary structures to the highly specialized and specific aspects of
executive and sales compensation. And you’ll still be able to work
with your existing partner, although you may want to meet the whole
team along the way – they’re putting their heads together behind
the scenes to make sure their products and services are everything
you expect and more.
For existing clients, your continued
support and partnership is greatly appreciated. For new clients, the
Alliance Compensation team looks forward to meeting you and learning
about your compensation needs.
For more details about the Alliance
Compensation team and service offerings, visit their website
or contact them directly at 425.836.0206 / 888.877.4746.
My mouse started acting up the other
day. That usually means the batteries are wearing out, so I headed
over to the battery drawer for new batteries.
What a mess. Lots of batteries,
finding a fit wasn’t the problem. I just had no idea if any of
them were any good. So I did what was necessary, which was try all
the various combinations of those batteries until I got something
like the performance I needed to make the mouse run again. But at
this rate I have no idea how long it’ll work because I somewhat
randomized my chances for success by just taking what I could find.
(If your battery drawer is better organized than mine, I salute you!)
When you start “going through the
battery drawer” to design a sales compensation plan, you have just
about as much chance to get it right as I did with my mouse. Problem
is, the stakes are a lot higher for your company and the sales force.
You might find a great combination that results in a super-charged
field sales team, producing at unheard of performance levels. Winner
winner, chicken dinner!! On the other hand, think of all the other
possibilities, like great payouts but not so great results, or any
combination that results in detrimental effects on the sales force or
So randomizing the inputs probably
isn’t how you’ll be successful in this particular compensation
expertise. You need to be thoughtful with sales compensation plan
design so unlike my experience with the battery drawer, you’ll
produce the kind of excellence you can rely on. For example:
Batteries might not be the
problem. Sure, it’s easy to check the batteries first, but
you should always start with the owner’s manual! Consider all the
factors that influence the results your sales force are getting.
Are they trained? What’s the status of your product or service,
are you growing or falling behind the competition in features and
benefits? Is marketing generating demand? Did the business
strategy change and the sales plan didn’t? Are finance or other
processes keeping the sales force from getting desired results?
Use the right size batteries,
put them in the right way and don’t mix sizes. I’ve opened
up battery cases and found the wrong sized batteries even though
almost every battery case made is pre-molded to the right size. But
desperate times call for desperate measures, right? It can be so
easy to just try something and hope it works and everyone can get
back to work. But not having the right mix between base and
incentive, unclear sales role definitions, having the wrong people
on sales incentives or using any old performance measure mix may
work for a while but will eventually short out.
Some batteries aren’t
accessible. Many newer electronic products use battery power,
but you aren’t supposed to open the battery case. If you’re
being told there’s nothing wrong with the sales plan, and you
haven’t seen any supporting performance data, I’d suggest
getting another opinion. Typically sales operations groups are rich
with data, and with a little market data you can fairly quickly get
an idea for just how effective your plans are, and whether getting
at those batteries might just be a worthwhile project after all.
For example, are top performers earning at the desired excellence
levels? How much are underperforming reps earning? Did most of the
sales force achieve quota last year? Were they supposed to?
Don’t use used batteries, and
safely dispose of the old ones. Chances are your business isn’t
really exactly like the one your new sales VP came from, or where
your HR/compensation peer works. You have so many options and
alternatives when it comes to designing sales incentives; don’t
give away your creativity to others. And after you’ve tried
something and it didn’t work, make sure you’ve documented what
the issue was. Chances are you are probably doing something right
but could just use a fresh set of eyes (or new batteries?).
Sometimes you have to go to
Batteries+. Although batteries are available at most corner
stores, sometimes you need an expert to help figure out what to do
next. Over the years I’ve found that most people seem to think
they are compensation experts. As a matter of fact, count the total
employees in your company and subtract one and that is the number of
people who seem to know as much (or more) about compensation as you
do. And you probably don’t
need an external consulting expert for every single thing every
single year. But if it’s been a while and you’re not sure
you’re still getting the most out of sales compensation, there are
folks like me who do this work, and by the way really enjoy it.
I’ve found few places in a company where you can learn more about
a company and what it takes to make them successful than in the
process it takes to design sales compensation plans.
Last night we were going to sit down
and binge on a show on one of the streaming services. I went to turn
on the TV and a message came up, “No Source Identified” so I take
the remote and start pushing buttons, nothing happens. I shout
downstairs, “Bring up 2 AAA batteries for the remote!” One, I
hadn’t opened the remote fully other than to see it had AAA
batteries, and two, I hadn’t thought what else might be wrong.
Turns out I was wrong on two counts (the wi-fi needed to be reset,
and the remote required 4 AAA batteries). After I reset the wi-fi,
everything worked and we happily binged away.
I’m happy again, and continue to
learn about batteries.
So randomizing the inputs probably isn’t how you’ll be successful in this particular compensation expertise. You need to be thoughtful with sales compensation plan design
have enjoyed teaching a couple of compensation certification classes
for WorldatWork, the association for total rewards professionals. I
would get a lot of questions about a lot of topics, but one that
frequently surfaced – whether in a module or not – is “this is
great, but would you tell your employees that?” And this isn’t
some super-secret recipe for the incentive plan funding that makes
you an insider, this is some of the compensation basics like pay
grade, pay range, that sort of thing.
just to get it out of the way let me say that I am a believer in
sharing more openly about compensation than most people I’ve met.
That belief doesn’t come from a beating I took or something I
learned when I was young, it comes after seeing what happens when you
don’t share more openly. The best thought-out programs with the
most strategic elements and execution can still fail when not
properly communicated. As a matter of fact, I’d say the two things
that most often are an anchor around the neck of an otherwise
successful program are the lack of management training (related
topic, different time) and the lack of effective communication.
of it another way. What if for one of the biggest investments most
people ever make (like your house) all you were told was, “it has a
total of 11 rooms. Sorry, I can’t be more specific.” Is that
enough information for you to be all-in as a buyer? Should the
seller, who really wants to unload the house reasonably expect to
is a huge investment your company makes, and if you are keeping
secrets you probably aren’t getting the most from your money. Here
are my Top 5 reasons you should communicate as much as possible about
your compensation programs:
will make up the part they don’t know.
information is a constant negative and anxiety producing reference
of your employees are adults and you expect them to act like adults
in all other ways.
problems don’t require secrecy, they require fixing.
accountability where most of us want it anyway, in the hands of
This is a very real outcome of not communicating compensation. For
example, a base pay program is typically the largest ongoing
investment an employer will make, yet one of the areas that can be
shrouded in greatest mystery when pay grades and ranges exist, but
are closely held secrets in HR. And the associated HR strategy
implications in areas like succession planning and career development
can’t be overstated if an employee doesn’t know what sort of pay
opportunities you’ll offer them for their continued growth of
skills and abilities. Without facts from you, other opportunities
with known facts are certainly more realistic outcomes.
Your employees make decisions every day about their engagement. The
anxiety that can be produced in a person when managing critical
aspects of life without sufficient information isn’t something that
should come from something that represents a major part of someone’s
life and livelihood. And even though it’s not really lying, you’ve
got to dance your way out of it every time someone asks you a
question your policy doesn’t allow you to answer, and that doesn’t
leave a lasting positive impression either.
is a two-way street.
Since most of your employees are adults and you expect them to act
like adults, what makes you think they can’t handle the truth? The
best example I’ve experienced of telling the truth about
compensation was at a company I worked for during the first
recession, when we knew we weren’t going to be able to give base
salary increases that year. We told employees three months in
advance of the usual date. Sure, there were a few rants, but by the
time it came to execute the program, it was a non-event.
the underlying problem.
If you have something uncommunicated because it would cause unrest,
fix the underlying problem – design, training, whatever, don’t
mask it. Salary range spreads causing compression? New hires coming
in above current employees? Neither a good reason to stop
communicating about pay ranges, but good input for the next program
design cycle. Segmenting your promotions budget so organizations
with more entry level employees get more funding? Explain how job
families work and the concept of promotion velocity for early career
employees. These aren’t difficult problems to solve when you
in the hands of managers.
Providing needed compensation information to those who make the
day-to-day decisions about the base pay, promotions, classifications,
bonuses, recognition, etc. only makes the most sense. One common
issue with open compensation communications is who has control.
After all as it is frequently said, information is power. Do you
really need “Compensation Power?” or can you afford to let
managers do what their job descriptions tell them they are supposed
to be doing? Sure, there are some who abuse it, but realistically
that is a small minority. Most management jobs come with some level
of fiscal authority anyhow, and in most cases that is many multiples
above what we’d ask of them in a compensation program.
strongly encourage you if you see yourself somewhere on the secrecy
side of the communications spectrum to re-evaluate your approach to
compensation communications. At least start asking yourself whether
the way it works now couldn’t be improved. Good communication
won’t repair a flawed rewards program, but ineffective
communication will cause a well-designed program to fall short of
So just to get it out of the way let me say that I am a believer in sharing more openly about compensation than most people I’ve met. That belief doesn’t come from a beating I took or something I learned when I was young, it comes after seeing what happens when you don’t share more openly.
“What is our average compa-ratio
Jim?” asked the CEO as I sat down to report on our annual focal
Having been through enough of these
meetings over the years, of course I had the answer; as a matter of
fact, I had it calculated not only for the whole company, but for
each division, each country and each corporate function. But I
didn’t want to just spout off the answer, I wanted to educate him
about how to think differently about his labor costs. Unfortunately,
he had worked with enough compensation professionals over his storied
career and had been taught by each and every one that if he could
just get the compa-ratio to 1.0, another year could be put in the
“We ended at 0.99,” I said, “but
what I really wanted to review with you was…”
“That’s great Jim, and tell your
team that Jerry thinks they did a grrreat job! Could you ask Kathy to
come in here on your way out?”
I shook my head again as I headed for
the door. Not only because he still referred to himself in the third
person, but again I was not getting the sort of traction that would
really make a difference in the company’s performance. I mumbled
to myself, “Yes Jerry, it’s just wonderful to know that all your
averages are aligned. In addition, do you know you have 20% more
Senior Professionals than your competitors? Do you know that when it
all adds up our labor costs are 4.5% more than your competitors, and
on a $200M payroll, that’s $8M, or about $0.05 per share?”
As the aisle row occupants of cubeville
stared at me talking to myself again, I decided I needed a better
approach than expecting the CEO to just nod his head and hang on my
every word. What I needed was a few more people with some time and
some skin in the game in order to make the difference bottoms-up
rather than top-down. I needed people with shortages of resources to
get their jobs done. I needed Human Resources.
Even then it was a hard sell. I had a
solution looking for a problem. I finally found an ally in the HR
Director of the Technical Services organization, a group that was in
the process of trying to manage global labor costs through a planned
migration to lower cost-of-labor markets and away from some of our
higher-cost US urban locations.
It didn’t take long for her to get it
– it seemed she was “high-potential” after all! Her
organization’s costs and associated factors looked something like
this, with these assumptions:
Our average wages were the same as
the market at each job family level
Our benefits were equal to the
market, 35% of base pay
Our incentive targets were
competitive and identical to the market
The difference in how we’d looked at this in the past was taking off the “Jerry Glasses” and looking at the data in a whole different way – our total labor costs, not just our average labor costs… our “Portfolio” of employees. You see, you have choices in how you manage the decisions around factors and variables that make up your labor costs, even while maintaining the typical “50th percentile” strategies that so many companies employ.
So even though we’re matching the
market in all the traditional senses we’ve become accustomed to,
we’re still exceeding the overall market cost-of-labor by 4.5%, or
with this example the sum of $13,000,000!! Would that make a
difference anywhere in your business – hiring more skilled
technicians, sales people, funding a new product line, avoiding
layoffs… you fill in an example.
How does this happen? Here are a few
things to check for after you’ve done an analysis like this:
What is your promotion policy and
practice? At Our Co, we enabled a process that says that people can
come to expect promotions when they are high performers. Nothing
really wrong with that on the surface, but it got away from us, and
we didn’t take into account how many people we already had doing
work at senior levels. We probably should have thought about more
rapid promotions for employees hired at lower levels and slower
rates for higher leveled employees.
We’ve had a few difficult years
on the merit budget, so pay increases have been hard to come by.
But when a new employee is hired, they can be hired at pretty much
whatever level the manager wants. Our managers started over-hiring
levels because they didn’t expect they’d be able to give pay
increases. We’ve got a lot of competitively paid but
under-skilled people as a result.
We’ve ruled out the geographic
labor cost issues – we know that the cost of labor is higher in
places like the Bay Area, so that’s not a factor here.
Obviously we also discovered a few
more dollars hiding from us, since incentives and benefits are a
factor of base. Never forget that, as a business it’s all about
fully-loaded labor costs.
One thing we did do right was we
“gated” movement into the P5 or expert level of the job family.
That means it requires additional approval to promote or hire
someone there. It is more administration, but at that level the
responsibilities are so much greater and implications of
misplacement are of greater consequence so it’s worth it.
What can HR do with data like this?
Thinking first of a popular topic, how about an element of workforce
planning, as in an overlay around labor cost? How about coming to
the table with a proposal to reduce labor costs over time by
realigning skill requirements and leveling? Obviously there are many
other aspects of workforce planning to consider, but armed with
cost-of-labor data, a smart HR Leader can create hiring plans around
needed skills and determine whether training and development may
enable business needs rather than taking an expensive hiring or
Data can be intimidating, or at least
that’s what people tell me when I ask why they never got into
compensation. But almost anyone can see the clear benefits that
present themselves when looking at data differently than the way
we’ve been training everyone else to do so for so many years.
Data can be intimidating, or at least that’s what people tell me when I ask why they never got into compensation. But almost anyone can see the clear benefits that present themselves when looking at data differently than the way we've been training everyone else to do so for so many years.