Justin Hampton (00:01):
All right. Well, this is Justin Hampton, joined by several compensation consultants, extraordinaires, and we are joining you here for another season of the Pay Practitioners panel. So we will be doing this for the next three months, every other Friday at 11 o’clock central time, we’ll be joined by who I’ve got here on this panel. I’ve got Jennifer Hastrick, Greg Roche, I think I said that right. Jaime Morphin, Nancy Romanian, Sherry EZ, and Catherine Dovey. So we’ll just go ahead and since it’s a brand new group of folks, we’ll go ahead and introduce ourselves. So I’ll go first. I’m Justin Hampton. I’m the founder of Comp Tool. Been doing comp for about 15 years. Started off at companies, worked for companies like Greyhounds, Starbucks, and then my last role was with a company called Big Fish Games where I was supporting their comp programs in the US and in the uk. And I’m super excited to welcome these six other brilliant compensation consultants to join us for the next three months. And love to go through some introductions and we’ll start with Jennifer.
Jennifer Hassrick (01:08):
Okay, it’s Justin. I’m Jennifer Hasek. I started my career in comp and it’s about 20 some years ago, had some brief diversion to business ownership and entrepreneurship, and then I joined Korn Ferry about two years ago. I primarily focus on broad-based compensation and pay equity, and I’m based out of the Chicago office.
Nancy Romanyshn (01:29):
Justin Hampton (01:30):
Great. Welcome. Thank
Jennifer Hassrick (01:31):
Greg Roche (01:33):
Greg. All right. I’m Greg Roche. You did get it right. I am on the comp team for UnitedHealth Group, and I’ve been doing comp for about 15 years in industries like multifamily real estate, cybersecurity, and healthcare. For a number of years. I live in Denver, Colorado.
Justin Hampton (01:51):
Great. Great. Alright, Jaime, how about yourself?
Jaime Morfin Stoopen (01:55):
Hey everybody. Great to be here. I’m Jaime Morphine, I’m managing partner from res owner and publisher of so.com, which is a survey covering Mexico, central American, the Caribbean. And I have been in compensation data analysis at least in the 15 years. More on the compensation side, not on the actual line of work, but it’s a different perspective. So great to be here and great to share with everybody in this panel. Thank you.
Justin Hampton (02:23):
Great. We’re excited to have you Nancy.
Nancy Romanyshn (02:26):
Hi everybody, I’m Nancy Reminiscent. I’m senior director total reward strategy and solutions at syno, which is workplace equity analytics platform. But I started, I kind of had baptism by fire. I started my career as creating the first compensation program for a mid-sized retail firm. I was trained by a consultant to do it and it was exciting and spent some time there. Then transferred over to consulting back in 1998 to then Towers Perrin, which then became Towers, which then became Willis Towers Watson. So spent over two decades with them designing and implementing global salary framework. So a lot of time in broad-based compensation. And then my last few years there, I got into pay equity and was leading the North America Fair Pay team. That’s when I met syno and had to tell everybody, it’s not you, it’s me. I’ve changed and made the leap into software and pay equity analytics. So really excited to be here and talk with this amazing group that you pulled together, Justin.
Justin Hampton (03:34):
Wow, great. Well, super excited to have you. And then Sherry, how about yourself?
Shari Nornes (03:38):
Hi everyone. I’m Sherry Nornes. I’m with Morgan hr. I come from primarily a practitioner background working with companies like Johnson and Johnson, Emerson Electric churches, law firms, just a variety of industries, primarily in the broad-based compensation. And I’m real excited now to be the principal consultant for Morgan hr, helping other companies solve problems and determine what their problems really are. So I’m happy to be here on this panel.
Justin Hampton (04:09):
Oh, super excited to have you guys. Catherine, how about you?
Catherine Dovey (04:12):
Hi, Catherine Dovey. I’m with Sound Compensation. I started out years ago with B of A and in-house at B of A and Bank of America and then at Kaiser as well. Then I shifted into consulting. I do mostly broad-based comp every year. I think I have worked in every industry now known to man, and then I have a human tissue harvesting company call me and I’m like, wow, okay, this is new. So that’s what I love about what I do. It’s a blast. I get to learn a lot about different businesses and get challenged all the time by these really cool and interesting companies.
Justin Hampton (04:54):
Wow, that sounds fascinating. Wow. Well, great. Well, we are joined here today by this I love Jeff’s comment, this dream team of compensation consultants. And so we’ll be starting this for the next three months. And actually right now you can actually click go and search some of our other upcoming episodes next week, two weeks from now we’ve got one post. You can go register for that one. That’ll be about pay equity. And the following one for October 20th, I believe is actually going to be around how compensation and TA can build stronger relationships. So lots of great topics coming up over the next several months. And those are the two that we have right now that you could go register for if you’d like to. But today, I think this is a very timely discussion and really one that is can catch you by surprise. So Mike Tyson has a phrase, he says, everyone’s got a plan until they get punched.
And I think that that too can be said for companies and compensation teams when the business doesn’t hit their targets. Now what we want to talk about today is what is the compensation team’s role if the business doesn’t perform? And I’ll tell you just from my own personal experience, I’ve experienced this twice. Once where we missed Target by about 20% the other year we didn’t make any money at all. In fact, we lost money. I don’t mean profit, I mean we actually lost in terms of revenue because we didn’t have a single customer. And so I think as we kind of run through the experience that we’ve had, I think as we look at what’s happening with the economy, not knowing which way it’s going to go, there probably are some companies that are facing this today. And we wanted to bring this up as a topic for if you are facing this or if you will face this in the future, what is your role? So I’ll start it off and just ask, has anybody worked for a company, worked with a company, has anybody worked with a company that has missed targets and has had to make some exceptions around how they go through and manage employee pay? I have everyone else. Yeah, no surprise. So I’m just curious, I had it small, I think I saw Sherry raise your hand.
What happened? What was the experience like? I mean, just at a high level, what happened? How did you guys respond to it?
Shari Nornes (07:15):
Yeah, so it’s interesting. It was kind of funny the first time, like this has never happened before. It seemed like a fire drill. And it was kind of one of those aha moments for me that said, okay, I need to be in the conversation when we’re setting those targets and the consequences if we don’t meet ’em going forward. But for this particular situation, a decision was made to give a certain percentage and then hopefully be able to recover that over the next, it was a quarterly payment situation to be able to recover that over the next few months. But my message to them was we have to make sure that we have the messaging correct to the employees because this is supposed to be a discretionary plan, which means they’re not going to get it or you are. So that whole entitlement mentality has to be handled very carefully from the outstart. So we dealt with it. I can’t tell you that I necessarily agreed with the way it was dealt with, but I did have some incredible learnings on what needed to happen going forward.
Justin Hampton (08:25):
Yeah, yeah. I think that my experience too was from a practitioner’s mindset, I had a hard time accepting and agreeing with how we did it because for us personally, we deviated from the plan that we had created to really make sure we met the business needs, which really, if we thought back about it was maybe we didn’t design our plan well enough or didn’t create an exception process that really was designed for this. So now we’re having to go against our plan to really do what we need to do to the business supported and stem the bleeding from losing more people. I think Nancy, did you forgive me if I was wrong, but I think you had a similar experience.
Nancy Romanyshn (09:05):
Yeah, I mean it’s funny, as I was reflecting on this question, one of the things that springs to mind is sort of the question of do the employees know it? So I think Sherry, what you’re saying around communication and being really upfront about, immediately I think about business literacy and sort of how you set a different tone depending on are you bringing employees along in the business? And so how much of a surprise is this really going to be? So I think about the conversations. I actually, Sherry, something you said triggered the early days of covid and a lot of the work we were doing with different clients, depending on their business, the impact it was having on some of those businesses where there were some real, like you said, Sherry, a fire drill. And it was a huge prioritization exercise. Once we knew things were going to continue for some time, there was some serious discussion about how are we going to sustain operations when we know our operations depend on people being able to come here and that wasn’t going to happen anymore.
So when you think about that, I think a lot of compensation’s role is helping with that prioritization and scenario planning, but also helping, I think managing up with leadership to say what are our priorities? Is the priority to hold on to people or not? Or are we going to make some decisions around certain people and others? What exactly are we looking to do? And I think that we are in a position to say, well, this is what this is going to look like. And I’m seeing that even in the chat, some folks are talking about doing those different scenarios. Again, depending on what we’re saying about too, Justin, what do we mean by we didn’t perform? How severe is not performed?
Greg Roche (11:17):
And I think, sorry. I think what you’re saying is, and we’re talking about comp’s role is to do all these things to help with all these things and advise with all these things. And as comp practitioners, you have to understand nobody actually likes the truth. If we all told the truth on what the impacts would be or what the possibilities were, people would say, oh, I don’t want to take this job because I may not get the bonus. We make offers and we say, here’s the base and here’s the bonus. And everybody expects, I’m just going to get that right. And your average employee expects I’m going to get that. If we told them it was at risk, they’d be like, oh no, I don’t want to put that at risk.
And leaders as well, you put all those scenarios out and they’re always going to be like, well, this is the best case scenario. We’re going to assume that. So that’s what we have to do as comp people is lay all these things out and give them the whole scenario. But we can’t expect that they’re always just going to trust and believe it. I mean, they might trust it, they might not believe it. Again, nobody really wants to hear the truth. We wouldn’t do a lot of things if we laid that out at the beginning. So I think that’s part of our role is to put it out there and if they don’t accept it and then we have to help them fix it on the backend. But that’s kind of our lot in life as comp professionals.
Catherine Dovey (12:42):
Yeah. I have a couple of thoughts on this. I think the most important thing where I would start with this is what happened? Was it, did we have a supply chain issue? Do we have an underlying business lever that we didn’t pull? What’s actually going on? Is this a one-off situation or is it an endemic, a business strategy that we’re off on massively. And so I think that really drives to me the information around how we decide what we’re going to do going forward. So if it’s a one-off situation, it’s a covid situation, it’s supply chain situation. Our team did all the things, they normally would’ve done a great job, but we completely missed the mark. I think there’s a different answer there than there is if we’ve got an underlying business issue that’s driving problems. So I would say in that case, even if there was going to be a payout because we wanted to retain people, I would talk about shifting aside the incentive plan as it was built and consider maybe calling it a retention bonus or something like that because that words matter and that changes the conversation. Another thing that I see a lot is we’ve got performance. Theoretically we’re all high performers, but the business isn’t performing at the same level. I think one of the things we need to be doing as comp professionals is calibrating our performance ratings to our overall organizational results. So if we’re really performing well as an organization, our performance ratings should be really high. If we’re not performing well as an organization, we shouldn’t have all fives on a scale of one to five if that happens to be the case. So some thoughts
Greg Roche (14:50):
Justin Hampton (14:50):
I that, I love that discussion around that performance piece because I did work for one of the companies where we really missed our targets. We had actually gone through a riff and I think we laid off about 30% of the organization. And when it came time for the performance period, I think we had more five star and four star performers than ever before. And the c e O looked at us and said, guys, this is absolutely insane. There’s no way that the business can be doing this poorly and everyone else is just doing that great. That doesn’t make any sense. And the management response was to me, I mean it actually made sense. They said, well, we let go of everybody that wasn’t underperforming and everyone else has to pick up the slack. And I found that to be, I mean, that was a really tough thing to argue against, but at the same time, there was just that misalignment on employee performance tied back to the business.
But actually one of the things that I think probably worth discussing too is when you miss those targets, were they fair targets to start with in the first place? Because I sat down with some of the folks to set those targets and I was still early on in comp and just thought to myself, that just doesn’t seem like how I would do it. And being new kind of thought to myself, well, I guess that is how you do it, but I wonder too, has the comp team played a significant role in helping to set those targets or confirm or acknowledge those targets both at the onset and throughout? I’m curious if anyone else on the panel has worked closely with the business, what parts of the business to build those out initially?
Jennifer Hassrick (16:27):
Just now jump Oh, go ahead. No, go ahead please, Jennifer. I’m in the process of helping a business right now do exactly that. And I think that kind of taking a step back of all this, what we’ve talked about too is that you have to account for the best case scenario as well as the worst. And right now they’re riding high. So what their targets are right now might be more aspirational and they don’t really want to put a threshold in necessarily because they think that they’ll always going to make it. But I don’t want to commit the business to paying something out if the business isn’t there. So I think the climate in which you are building a plan is largely driven. The comp team can be the steady, as Greg said, you don’t want to hear the truth. We know we’ve seen both sides of it. So making sure that it’s balanced, we’ve guided them in, do you want them to be stretch, really stretch, or do you want to pay out when they hit it? And that’s really a cultural piece that also ties into it as well, what type of behaviors are you really trying to incent and how much do you want it to be a motivator? So those are the things that as we’re working through this plan, those are the conversations that we’re having with them.
Jaime Morfin Stoopen (17:48):
Yeah, agree. I think at the end it has to be a negotiation between the business side and the compensation HR side of defining those goals. The market reference also might be a good idea to bring in, there are some other companies with similar objectives in terms of business within a specific sector. It might be a good reference to see if and to see those really target that has been defined either by the amount of money that has to come up with business, for example, sales position, which is very clear to do, but some areas are not that clear to do, for example, operations or even administrative positions that are not easy to come up with a easy target to get there. So going to the market, I would say that I would be a very good reference to go before setting those goals.
Nancy Romanyshn (18:42):
I have a prediction that I think with pay transparency, I think it’s forcing a change in how we approach rewards. And I think variable pay is going to become more nuanced and better tied to business metrics. And I am thinking that because I am seeing a lot of compensation folks. Jaime, what you’re, I loved how you just said the negotiation between the business and Jennifer, even some of what you were referencing about structuring the plan, I think there’s this opportunity for us to partner better with finance and to your point, use market data as a reference, but as a reference, really try to tie rewards in a way to different business drivers better than I think we have before. We do. Typically we’ve done it in sales comp, we haven’t done it in as many areas of the business. But really thinking about, like you said, for some of those administrative roles or the roles that are more enabling functions, maybe those incentives are more structured on team specific performance and then of course funded by company performance with more say not as much at risk, but then thinking about what are other functions that we can start to really say, gee, for instance, for us, our engineers are working on a product and that’s very much related to our business.
How can we leverage that, be a little more leverage with some of those roles? Think about those designs. And I’d be curious honestly, from any of you, how are you seeing a little bit more of that emerge or driving more of those conversations with some of the different companies you’re working with?
Speaker 8 (20:38):
It’s a good question.
Nancy Romanyshn (20:40):
Sorry, I didn’t mean to create an awkward, I dunno, am I
Shari Nornes (20:47):
Crazy? I think that’s where we’re headed. Yeah. And I agree with you, Nancy. I’m sorry. Just when we’re working with the companies on that whole incentive piece, I’m finding that they are looking for more financial metrics than the objective ones. And the key is to get kind of that seat at the finance table. So at least when things are going awry, because if they work great, finance did a great job. If it doesn’t work good, it was hrs fault. So you got to make sure that you’re in that mix so you can be prepared for the outcome. So that whole partnership piece, collaborating with them is so important. But the other aspect I’m seeing is also the introduction of a chunk for those KPIs or whatever the thing of the day is that they’re calling ’em lots of different acronyms out there kind of as a safeguard, but also needing to hit that threshold in order for that to kick in. So really that important tie to the business and that threshold can be different for different populations depending upon their actual impact on the threshold. So that’s my 2 cents on that. I think Greg was going to mention something.
Greg Roche (22:11):
Yeah, I think when we plan these, we talk about different departments or different groups have different goals and we assume that that’s all going to be rolled up and it’s all going to be aligned and make sense. And I think in a scenario where you maybe have products or something like that, you’re saying roll out these products or launch these products or things like that and you can do that and they hit all their numbers. And then we still run into this, and I say this a lot in the comments where the business still doesn’t perform. And so what do you do there, right? Because you’ve got one department is killed it all year and they’re hit all their numbers, but then you didn’t make your overall numbers to hit the funding. And then just what do you do? And I think there’s different ways to handle that, but it does kind of go back to how you set up the plan in the first place and what are you going to do in those kinds of scenarios.
It’s almost like contingency planning at the beginning and maybe for a comp, that’s where we need to flex more into that area. Like you said, lay out all the different scenarios, but say this could happen when this happens. We’ve all seen it happen. We all know this happened in our experience, what are we going to do in that situation? And are we going to give one department more funding than another, right, because a case to be made for that, and then it’s like, or are we all part of the same team and we’ve all got to share evenly? So it’s a very philosophical discussion about are we all going to share in the success or take the hit if we make the numbers. So it’s a really, really complicated question to try to tackle, better to try to tackle at the very beginning as opposed to when it actually happens.
Catherine Dovey (23:57):
Yeah, I was going to say, I think the key here is what is the philosophy? Some organizations, it’s all boats float, right? Everybody’s on the same team. So even if one department or group killed it, it doesn’t matter. And other organizations, it’s very broken out by division or by geographic areas depending on how they’re structured. So it’s a great point, Greg, to really dial that up ahead of time and make sure that we’re clear about what is our philosophy at the upper levels, what is our comp philosophy and how are we going to think about this? And to Nancy’s point, do we want to break it down? Excuse me? Do we want to break it down more finely? And Sherry was talking about breaking it out. Sorry, I’m going to have to let somebody else talk. I’m just having a moment here. Sorry.
Nancy Romanyshn (24:59):
No, but I think Catherine, what you’re getting at is are there different deals? Is it a different employee value proposition potentially? Does our philosophy play out differently by different functional areas, parts of the business? And I do think with pay transparency, basically acting as a compensation educator, I talk about employees or comp analysts now because they’re doing their own research. I mean, there is an opportunity I think for companies to stop approaching comp as this monolith and B, to do more fine tuning. And I think that also comes though with more advanced analytics, more advanced approach to how you’re using data. But to your point, you made a great point. It’s a huge philosophical question. And I think as comp people, we are kind of caretakers of the comp philosophy and we see signals maybe that leaders don’t, where we can say, Hey, we need to flex a little bit on this philosophy or we need to engineer it in a different way. And I think that’s what you were getting at.
Catherine Dovey (26:09):
Jennifer Hassrick (26:11):
And Nancy Deton tag onto that. I think that caretaker of the philosophy, I think one of the gaps that I’m seeing in a lot of these conversations, and we kind of said it way in the beginning, was communication. How is it being communicated so that when it happens, people aren’t taken back? And I think there’s a shift. Comp is in the room now. People never used to talk about it. So we’ve had a cultural shift in general as well, largely driven by these pay transparency laws and whatnot. But now this is the time that you have to have your ducks in order behind to be able to communicate and continue to communicate. It’s not a one-time shot anymore, annual bonus conversation done. It’s a continual conversation. And what is your philosophy and do we need to adapt and what’s happening? People are interested, people want to talk about it, and I think they’ll understand it more and will have less of a visceral reaction if they’re not taken off guard and be like, what do you mean? I don’t understand this?
Shari Nornes (27:13):
I have a question for, I’m sorry,
Jaime Morfin Stoopen (27:16):
Very quickly it is related a question I want to ask you. We don’t have such kind of legal requirements for compensation, openness and transparency in Mexico, neither in Central America or the Caribbean. So I’m really looking forward to see what’s going on in terms of seeing in the us, which I see the most developed country in that regard, how it’s going to happen in terms of a couple of things, communication, which you already mentioned, Jennifer, but also responsibility definition, who is really responsible of bringing what into the company? Is it going to be part of that, how it’s going to be compensated? You need to understand very clearly what is your role in the organization. So is that also part of the conversation where your company’s talking about, you’re talking about transparency at this moment?
Nancy Romanyshn (28:13):
Yes, yes, actually. And I would say hammi, great points you’re making, even the United States isn’t as advanced as what’s happening across Europe with the EU directive. So the EU directive is even because what’s going to come up is they’re talking about pay transparency and opportunity transparency. We just saw that too, come out of Illinois. So there’s one spot maybe in the US that’s doing it. But yeah, and I go to, I think too, it’s not even about legislation, it’s just about what’s available on the internet that people can access. So I think too, we as companies, we have to take control of the story about why you’re paid, what you’re paid, how you can advance. Those are the things that I think I agree that the communication people are still struggling, I think with a lot of that communication and trying to find the right words to talk about their philosophies. And then I think the other complication is it’s changing as we speak because as things kind of come to light, people are sort of rethinking what they’re doing. So it’s sort of this ongoing thing. And I agree, it’s exciting to watch
Shari Nornes (29:26):
It is people think of pay transparency from a practitioner standpoint is, oh, I have to post a range. But it’s really a gift to us as comp practitioners because we have to provide now the basis for the decisions that are made and make sure that they’re equitable and they make sense and that you have a story for them. We didn’t have necessarily that permission before. So I think as paid practitioners, it’s a great opportunity to really nudge yourself in the door if you’re not already there.
Catherine Dovey (30:02):
And there was a great, go ahead.
Greg Roche (30:07):
Go ahead Catherine. No, go ahead.
Catherine Dovey (30:08):
There was a great point in our chat here that Denise RA pointed out, and that is the partnership between finance and hr. So many times I see completely divorced these two functions completely divorced from each other or finance makes all the decisions, and then HR just goes along behind and picks up the flowers that are dropped behind the wonderful work that finance is doing. And I think a true partnership’s really important there, especially as we move forward, we’re moving more and more to our culture is a big component and is driving, and I don’t think finance pays attention to that. So having that partnership is really, really important.
Justin Hampton (30:54):
Yeah, agreed. And as we’re talking around the partnerships between finance and compensation, and then a little bit about the pay transparency piece, one of the underlying things that we really were hitting on earlier was that communication opportunity. And so if we think about those moments when we are in that kind of recovery mode or that disaster mode or all hands on deck for how do we communicate to employees, who communicates to employees, when do we do that? I’ve seen one of my previous bosses, he always told me, I will never be upset with you for over-communicating just the opposite. And I think of course there is a balance for that. But if we have to lean towards one side of that spectrum, I want to lean towards over-communicating. But one of the things that I would say is I have seen companies strive to provide that information to employees throughout the year on a quarterly update. They’ll say, here’s how we’re doing towards target. But with non-publicly traded companies especially what I’ve seen them is I’ve seen smiley faces that were big smiles, not so smiley, and they’re like a middle face. And that just from the employee perspective, you’re kind of like, great, here we are, five smiles, five quarters of smiles. I don’t know what that actually means.
I wonder how have you seen companies effectively communicate that on an ongoing basis? And then if there is that moment of, oh no, we’re in a frowny face, how have you seen companies communicate that effectively? Because I think that’s one of the most important things is that communication piece. Also setting people’s expectations to remove that level of, I don’t want to say entitlement, but that feeling that we’re going to get to this no matter what, which we kind of touched on earlier. Has anyone had any good experiences or just have some best practices to share?
Shari Nornes (32:50):
I view that as
Greg Roche (32:50):
A great opportunity.
Shari Nornes (32:53):
Sorry. I think it’s a huge opportunity that we figure that out because if we talk about retaining our employees, who’s the best person to do that in that seat to tell that story and build that trust? I have not really witnessed a great communication plan for this type of information. And it was always very sad, right? Because the employees didn’t know what was going on and they just left not knowing what, so Catherine, you were going to mention something.
Catherine Dovey (33:29):
Yeah, I, what I tell my clients to do is to establish a target and use it percentages because they’re so sensitive to revenue numbers, they don’t want the competitors to know. And these privately held companies, the financials are so tightly held that many times even one or two layers down, they have no clue what any of the numbers are sometimes. I literally was talking to an executive the other day and she has no idea what is the total revenue for the organization. It’s like a black box. So what I encourage have been encouraging clients to do in that situation is to switch to a percentage. So here we have, our target is a hundred percent and we are at 20% right now or 25 or whatever. It’s not as powerful as having a specific number. When I used to manage a lot of sales comp plans for an insurance brokerage firm, we had really clear targets and they had to hit a particular number. And I cannot tell you how many times they would be $200 over 1.2 million or $2,000 over whatever the target and they would hit it within the last month. Targets really matter and they can make a huge impact. But we do have to be careful with these organizations and I’ve just shifted to percentages. It’s kind of the only way I’ve been able to figure it out. So if you guys have some great ideas, I’m all about it.
Greg Roche (35:00):
I would say it’s not just in private companies. Even in public companies, there’s a challenge, and this is, I’ve worked in mostly public companies, my career in every one of ’em, there’s this dynamic also that’s like you may have, there are different audiences. So you have shareholders who you are making commitments to and you have an earnings call to update them on those commitments. And employees listen to those and they believe that their plans are exactly tied to the same outcomes, which is not always the case. Sometimes your plan may have metrics and things to hit internally, which are different than what gets reported out publicly. And so you have this challenge because in the flip side, you may have reported great earnings to the street, but there were certain internal targets you didn’t hit. And so you then have this communication challenge of people listening to the earnings call going, I thought we did great, our stock is up, but you’re telling me we missed our targets internally.
So that’s a challenge too. And so all of this is communication. How do you communicate? I think as comp professionals, most people in comp are like, I’m going to go do the spreadsheets and come up with the numbers. But there’s like if you really want to be effective in comp, you have to really become good at translating those metrics and the plans and the outcomes into a language that all levels of employee can understand because we’ve gotten a lot of comments about this being shared at the C-suite level, and that’s okay, but you have to be able to explain it to the person who’s doing the work on a day-to-day basis so that they understand it. And so communication becomes a huge, huge thing for compensation to help people understand that.
Nancy Romanyshn (36:53):
I think it’s a missed opportunity, Greg. And to everybody’s point that it is an opportunity. I mean, I’m troubled by the lack of communication and I agree that it’s, I think business literacy is so critical in keeping employees engaged and focused on the behaviors that they need to do. I
Greg Roche (37:18):
Think it’s also, yeah, it’s not just the business literacy, but there’s a fair amount of behavioral science in this too. And there’s a fair amount of understanding people and how they respond to incentives. So then you get into behavioral economics and all those kind of things where again, as a comp person, you can’t just be like, I can figure out salary ranges. You have to go deeper into all these things to understand if you hit your targets, nobody is going to be like, yeah, they’re going to be like, that’s what I thought. If you miss and you lose it, that hurts twice as much as hitting it right? I mean that’s the thinking fast and slow Daniel Kahneman stuff is we feel lost twice as much as we appreciate gain. And so it is one thing you’re going to get no credit for hitting. You’re going to take all this heat for not hitting. So we’ve got to think about all those things and how that’s going to come across when we’re communicating.
Catherine Dovey (38:21):
I would share, love to share this story, it’s all secondhand, so I don’t know how much of it is true, but what is that candy company, that born candy company, they had an incentive plan for their salespeople where if they hit their targets, their sales trip, they went to The Bahamas or something and if they missed their target, they ended up in Fargo, North Dakota and they missed their target. And they all ended up in Fargo, North Dakota. And I don’t know if you remember, probably about eight or 10 years ago, all of a sudden you saw Bourne candy everywhere. They did not miss their target two years in a row. They hid it the next year. They were all remember Fargo? No, don’t do it.
Shari Nornes (39:12):
Great. Okay, so has anybody been to Fargo? I lived by Fargo, so Fargo isn’t such a bad place, but it’s not The Bahamas
Catherine Dovey (39:26):
They had to buy everybody
Shari Nornes (39:28):
Coat. My only reference is the movies. So that’s all I can see. Well,
Justin Hampton (39:38):
I wonder too, so if we go down that path a little bit longer, I imagine there was some kind of planned document that said if you hit it, you go to The Bahamas, if you don’t hit it, you go to Fargo. I’ve worked for companies that typically don’t share the actual plan document for a number of reasons that I think are all valid. But I wonder if anyone else has worked with companies that have actually shared the specific plan document or if everybody’s deferred back to kind of one pagers that are custom made for the manager and for the employee. Personally, I have found that we’ve had employees ask you the plan document and giving that to them could be opened it up for a lot of interpretation and discussion that maybe that not be the best discussion for the comp team and the employee. But having those one pages that really distill it down to the key points for it. I’m curious, and maybe we’ll start with Jennifer. So
Jennifer Hassrick (40:36):
Yeah, the ones I’ve done, I’ve always had the plan documents shared and because it spells it out and it’s very clear and there’s no discretionary piece of it, it’s metrics. For the one I am thinking, one in particular, it was real estate a syndication and so do you hit your numbers or not? Now those targets were very clear because it was kind of going to the behavior piece of do they undercut their estimates or not? So we made sure it was built right, so they were very clear on what they were expected and they saw the detail. So there was really no question at the end of the year and they could monitor it themselves. So I think that’s the one pager is fine, but I’ve always had those planned docs shared personally.
Catherine Dovey (41:18):
Justin Hampton (41:19):
Yeah, Catherine. See everyone kind of shaking their heads. Yes.
Shari Nornes (41:22):
Yeah. So what we’ve done is generally had a plan document for the plan over governance and then individual plan summaries for the employee to see exactly what their targets were and how they get to those. So the plan document wasn’t necessarily something you touched every year, but the summary plan for each employee, those targets were something that I think by practice should be reviewed and monitored and changed to make sure the employee knows it’s not etched in stone every month or every year.
Jaime Morfin Stoopen (42:00):
Just going back to the Mexican perspective on this, as you can imagine because of the lack of legislation, most of the compensation discussions are kept in a big box that nobody can touch and it’s handled only by CT o C-level positions and probably consultant like ourselves. So to be honest, one of the things that we have seen more and more, and it’s part of our growing business here, is the fact that the companies are understanding that there need to be a clear objective and goal for the employees at least a certain level who has a group responsibility or a real clear business responsibility to have a very good understanding of how they’re going to get paid. Because previously what was happening is that the manager, the general manager had the key to say the people or the team, yeah, you made it or you didn’t made it at the end of the year without really knowing which was the number they have to be there.
So it is a growing trend and you can see it differently from international corporations that are bringing these concepts and these ideas and it is really affecting and going down to Mexico corporations with a different mindset to try to have a different mindset and start discussion about this. So to be honest, you don’t see too much here. We are trying to push it much further, but somebody said, I think it was Catherine, it is a cultural thing. It’s a very difficult to change and it normally changes from generation to generation of within the company and that’s it. And it’s going to be very difficult to change it otherwise.
Justin Hampton (43:46):
Great points. Let’s see. So one of the other things as we’re really kind of talking through the whole process of culture communication, what role does that employee feedback play when we are talking about hitting targets, missing targets, I mean, what do we do with that employee feedback? How do we collect it? What kind of tools are we using to collect that feedback? I think while we can communicate if our message is not understood, then I think there is opportunity for us to change how we’re communicating. So I wonder post-mortem, I dunno, pre-mortem is a word, but post and before we start looking through the bonus cycle, have we seen companies that are taking that employee feedback throughout that period to build on those communication strategies and to make sure that that communication piece and their compensation is understood, which I think is so, so important for the compensation function.
Nancy Romanyshn (44:58):
I mean I’ve seen, I would say, oh, I’m sorry Greg, did you want to go?
Greg Roche (45:03):
Yeah, I was just going to say, I think when you get people saying, I don’t even have any idea how you’re calculating my pay or how I don’t know why I got this pay or I got this bonus, you can say, okay, let’s try to communicate better. Or you can ask yourself the question, do we need to be having a bonus for this employee population? I mean if they don’t understand it and it’s probably too complicated or the better question is do you need it? And I see Denise kind of put this question in the chat, which was incentives can only do so much for at some point. So do you spend time trying to communicate better or do you rethink the plan? And if you’ve got a couple employers ago, and this was in multifamily housing, we had these complicated plans for our service technicians that would show up and fix things in the departments.
We want to have an incentive plan for them. And then when we really got down to it, they had no idea why they were getting comped the way they were, why they were getting this bonus. And we did it quarterly. So every quarter they’d get this amount of money and none of them could tell you exactly why. And we had all sorts of guides and I had created all sorts of dashboards and there was this place they could go look, but they’re never looking at that. And so we ultimately are like, juice isn’t worth the squeeze here. So we basically just said, let’s give them an increase. I mean it doesn’t go with pay for performance, but at some point neither is your incentive plan driving performance. So do you change the way you think of that for certain populations and really examine that instead of going, I need to come up with a new way to communicate?
Nancy Romanyshn (46:46):
Yeah, I agree. I mean that goes, I think to the nuanced rewards conversation about and thinking through like you were saying, what makes sense for each population, what are the behaviors we’re trying to get and what’s going to really incentivize and resonate. I think what I’ve seen during say the not so great scenario where say there have been layoffs or there have been other, again, not happy messages about how the business is doing. Justin, to your point, I’ve seen this combination of regular employee sensing. So whether it’s a quick online kind of pulse check and this regular cadence of that during that period, I’ve seen folks employ that and then that’s helped inform what are the next steps, what are the things we have to communicate, what are the messages that clearly aren’t landing and how should we communicate it? And then thinking through how do we enable that and using different tactics. So kind of hitting multiple ways, so you have sort of from the top kind of communication and employee sensing happening. Then feeding that back to HR VPs who are coaching managers. I’ve seen that sort of motion happen. And then I would think too, it’s also employing different metrics. So not just hearing directly from the employee, but looking at attrition, looking at exit interviews, looking at those types of analytics too, to kind of get a gauge as to what’s successful, what’s not.
Speaker 9 (48:26):
Justin Hampton (48:32):
And one of the things that we talked on a little bit, I’ll shift gears a little bit unless anyone wants to add on, but one of the things that we talked about a little bit earlier, but I think’s really important for the context of this conversation to kind of bring us back to was when we do miss when it’s too late, we’ve missed our numbers, we are below the threshold. And I ran a poll earlier this week to say, Hey, if you totally miss your threshold, what did you do? So there were 218 companies that responded. Only a third of those actually said that no bonuses were paid to anybody, which I thought to be very interesting because to me that suggests that two thirds of bonus plans, we just don’t adhere to them. Some key employees received a bonus that’s about 20% all eligible and employees received a small bonus.
And then that was 38%, that was the largest group, and that’s what I’ve actually seen personally. And then about 10% said we did something else. And I wonder too, from when I saw this happen, they said, shoot, we’ve got to create something because if we don’t pay a bonus, I think going back to everyone, the general sentiment that some bonuses feel like people are entitled to them, people will leave when those bonuses do not get paid out. I’m curious about best practices. I think I loved Catherine’s suggestion of saying that names matter, and I’ve seen the comments where if we were to make an exception that’s not in the bonus plan, that sets a precedent for next year and expectations for going forward. And I would just like to open this up for discussion in terms of if it’s too late, we’ve missed even the payment threshold overall, what is the right thing to do? And I know, let’s try and not use the, it depends answer, but what is some of the best practices that we have seen? And for me it was they created a small pool and then worked with the senior management team to identify who were the key performers. And it might not have been those that had the highest five star ratings. It may have just been folks that were steady eddies that were in core critical business business pieces. I’m curious if we’ve seen had other experiences with that and what has everyone else done? And I’ll open with Jennifer on my top right and see if you have any thoughts before, just see. Yeah,
Jennifer Hassrick (50:58):
I mean I’ve seen, I think it goes back to the communication piece first and foremost, especially if you’re doing exceptions and how are you going to communicate it. I think I’ve seen, I’ve used with Catherine that recognition bonus calling it something other than that because that precedent is very, very important not to set. And so those are the things that I’ve seen. And in terms of if you have that performance piece, if everybody’s rock stars, what do you do? And so being very aware and from a fairness perspective, how are you going to distribute that? And again, communicating that is going to be is the most important thing to do with that.
Jaime Morfin Stoopen (51:45):
I would say also that those are the times that seeing the metrics will be not enough because in some cases the human perspective of seeing that guide that lady killed themselves for the company, put in everybody everything and not making the numbers due to the market circumstances, for example, any international scenario that might happen, then you need to have a good conversation with the C level and tell them, okay, guys, it’s clear that we need to have a specific bonds for that person just for the effort of making things. So that’s one of the things that we cannot forget in terms of the current circumstances of working at Globalize Arena, where there are things that you cannot foresee, the invasion of raia, a number of things that you might see Covid, et cetera. Are you not given the bonds because they’re not making the numbers even though it’s outside possibilities. I will always push for that idea of going to more, having a human perspective, even though it’s outside the policy and just go ahead and do it and give it.
Shari Nornes (53:05):
I did experience one situation where there was one particular group that didn’t hit their metrics. So it was like there were overall company metrics and then individual group metrics, they did not hit it. So we did not pay out from the plan. However, there were bonuses distributed from the business to those individuals outside of the plan document. Can’t agree or disagree, just giving you the information I have,
Greg Roche (53:40):
And maybe this is not for this, maybe this is a discussion we talk about in one of the other sessions, but we’re all sitting here talking about eventually you pay something out and maybe it’s a smaller amount, but according to your poll, Justin, lots of people are still finding a way to pay things out. And then you really go back to are we really doing pay for performance? I mean, everybody says they are because it’s the least worst thing to say. I mean the alternatives are worse. I think we would all not worse, but because lots of people have them, but I think most of us go, we don’t just want to give to people because you could have poor performers that are just still getting paid. We can’t get comfortable with this idea of making it a given yet when we don’t hit it, we still find a way to still pay it anyway. So are we really driving pay for performance and all of these things? Or is it a nice thing to say in a good philosophy, but we don’t actually execute
Nancy Romanyshn (54:38):
On it? I a hundred percent agree. I mean, so as everybody’s talking, so Jennifer, I’m thinking of, I know Korn Ferry’s, done surveys, Morgan Charm, you’ve done, we’ve all seen the surveys, W T W, we did a survey. And on short-term incentives, it was always funny because it was a huge percentage of people that even though they’re not performing, they still get an incentive. And to your point, Greg, it’s like, well then what’s the point? And I think I could stay statistically speaking and pay equity analysis. Typically performance rating is not a driver of pay, but that’s not, when you think about it, that makes a lot of sense because we’re not really paying for performance. We pay for the job. Its impact where it’s located. There’s a lot of other things we pay for. So with a short-term incentive, we should just be paying for performance, but we have to better define it.
And that’s I think what I keep coming back to. And I think what we’re all talking about is by tying it to specific business metrics and maybe being more nuanced by different areas of the business. And let’s just lean into the fact that employees know a lot more about all of this than they have. So great, let’s embrace it, make it an educational opportunity. I think honestly, I’d be interested what the rest of the group thinks. I think the hardest folks to convince of that are going to be actually leadership and executives. Absolutely. Right. Okay. I’m alone in that. And again, I feel like that’s compensation, partnering with finance has an opportunity to kind of manage up and influence leaders and say maybe there’s a better way.
Catherine Dovey (56:24):
And that’s what Greg was about early on, right? Yeah. That people, you don’t want to have the hard conversations, and we’re all a little cowardly at our core. Nobody wants to have those hard conversations,
Greg Roche (56:41):
Especially those executives are all for let’s have pay for performance down through the organization until you start talking about their performance. And then it’s Yeah, but not for me, right? I mean, I agree, right?
Shari Nornes (56:57):
Well, we are in the world of everybody wins, right? Nobody goes home, everybody wins. So we have to figure that that’s a hard nut to crack and we’ve got to crack it, for sure.
Justin Hampton (57:11):
Well, great. Well, we are just about coming up towards the end of the hour, and I got to say, this has been really fun. I’ve really enjoyed the conversation. I’m really looking forward to the next three months meeting with this group every Friday at 11 o’clock central, every other Friday, 11 o’clock central. So we’ve got several other of these coming up. You can register for the next two on the events page within LinkedIn. But again, many thanks to Jennifer Hatrick, Korn Ferry, Greg Roche, hey, hi, may Morphin from ue.com, Nancy from Syno, Sherry from Morgan hr, and then Catherine Doby from Sound Compensation. So again, thank you guys so much. Really appreciate it. Really enjoyed the conversation. And this will be out for anyone to go back and review through on YouTube, and then we’ll have it posted out on LinkedIn here as soon as we close out. So thank you guys again. It was great fun today.
Shari Nornes (58:08):
Great. Bye everyone. Thanks.
Catherine Dovey (58:11):
This was fun. Bye. Thanks.