You are a well-respected, knowledgeable, and smart compensation/rewards professional, with a lot of success behind you. You’ve just put together one of the best pieces of work that is sure to be a “game-changer” (to use an over-worked phrase) for your company. You have the time booked with the CEO. And you walk out rejected and dejected.
I’ve worked for a lot of great companies over my career – Portland, Phoenix, Bay Area — but not always for people that had the greatest insight into rewards and compensation. Sometimes that’s the HR leader, but more frequently it’s the CEO, or as I affectionately call him/her, the Chief Compensation Officer (CCO). That means instead of meaningful answers on key questions and great ideas, you get responses like:
- Gobble-de-gook: “We need incentive programs that will enable us to save on expenses, not pay outsiders.” (Huh?)
- Ostrich: “I don’t hear a whole lot of negative feedback, things must be working.”
- Black or White: “Turnover isn’t a problem so compensation must be OK.”
- 4th and long (punt): “The Executive Committee needs to decide on our funding priorities.”
Or here’s where you really know things are going sideways: “This would look better it the line was green instead of yellow.” (Play sound of your hair ripping out.)
Thus the subject of this blog post. I’ve just experienced something like that again, but this time indirectly as a potential client in Seattle was unable to move ahead because the CEO didn’t want to make the changes to the compensation plan… that he had designed… and gave him the ability to change all the decisions made by managers…
So Now What?
As an external consultant, you can say “OK then,” and move on to the next opportunity. But what if you are working for the CCO? There are still things you can do that continue to advance great ideas and strategies. Here are some specific steps you can still take that while not optimal for your original compensation plans could at least help to prepare for a time when you get the go-ahead to move forward.
- For incentive and equity plans, review your plan documents. Look at those specific areas where you’ve observed some friction or perhaps where errors exist. For example, does your commission plan describe credit splits as 50/50 while Sales Operations is paying 100/100? Do you have new pay grades eligible for the company bonus plan, but haven’t updated the appendix where eligible grades are listed? Go after those areas that may only affect a small portion of your population but could cause a big headache when challenged. Use data to prove the need – best reply to a Black or White or an Ostrich.
- Spend some quality time with finance. It’s fine to try to engage with finance on the fly during a design project, but so much easier to have already established roles and responsibilities, and in some cases, educating on design principles and such when there’s no pressure or deadlines involved. And when you have a finance ally with you next time with the CCO it could be a different result.
- Invest some time in looking at all your labor cost data, not just the incentive or bonus element. Most CFO’s are willing to discuss if the company pays out cash in fixed or variable form, but they really care about the total going out the door. When you look at things like employee distributions in grades, management spans and the like, you start to uncover elements of total labor costs that may help fund future variable pay programs for the broader workforce or add a penny or two to EPS. Taking the CCO additional business metrics they may never have seen before could jump start a decision.
- Poke at your administrative processes and payment mechanism. If you’re lucky you have this well in hand, but most of us have opportunity here either to re-ask why we do things a certain way, whether we are compliant with our own pay policies, and if plan payouts are being calculated and paid correctly. For example, if your sales incentive plan is supposed to pay incentives against a year-to-date quota, is that really happening, or is there a spreadsheet error somewhere paying every month independently? Nothing derails a CCO conversation faster than sending you to the woodshed for poor execution of a current program.
- Test different approaches and ideas. Sometimes the best socialization approach with a CCO is a slow drip of the concepts rather than quick change. This works especially well when you can run your idea in parallel to the current plan and show any differences. One of the best approaches to slow decision makers in my experience.
- To take #5 a little further, ask to run a pilot. That may not be something you are used to doing, but why not gather the experience in real time before taking something live for everyone? It may even create a little “buzz” in the rest of the work force. This happened to me once with a large hi-tech company in Santa Clara. Executive support existed for a change in our employee recognition program globally, but IT and HR leaders couldn’t figure out how to support it. A brave HR leader of a large organization volunteered to run a pilot in part because she saw the opportunity to make significant inroads for employee engagement and greater simplification of existing programs. It was a tremendous success and we had other organizations clamoring to get in, creating the “pull” needed to overcome the barriers. And it proved to the CCO that it was not just some hair-brained idea.
I have an axiom I’ve followed for many years in compensation and the business world in general. You may have seen this written in different ways, but it basically goes like this:
“There is nothing more difficult to take in hand, more perilous to conduct, than to take the lead in the introduction of things, because the innovation has for enemies all those who have done well under the old conditions and lukewarm defenders in those who may do well under the new.”
Remember, it probably isn’t personal – so once you get past the surprise, find a productive way to move ahead.
Jim Harvey is a Managing Partner with Alliance Compensation LLC (www.alliancecompensation.com) , a team of seasoned experts and trusted solution for clients across the Western US in public and private companies. He has over 35 years of experience in corporate leadership roles and consulting, and lives with his wife and three dogs in Sherwood, OR.