PODCAST: What To Do When Everyone is Getting 3%: Ann Bares on Pay for Performance...

We're doing a podcast called The CYA Report over at Fistful of Talent - Dawn Burke (VP of HR at DAXKO) and I co-hosting, Tim Sackett chiming in here and there and the kid, Holland Dombeck, reading the news headlines from Workforce.com for us to react to.

Our latest podcast is up - see the whole thing here...

But, if you're interested in something you can use now, listen to the segment below.  We interview our favorite compensation professional, Ann Bares of Compensation Force.

The big takeaway?  If you're at a company where managers are giving in and just giving everyone 3% (or 4% if you're lucky), you don't have to take it.  Create a little "carve out" pay for performance strategy and trick your flock of managers into rewarding the best.  

That and other topics in our interview with Ann, which appears below (email subscribers may have to click through to see the audio player....)

"BARs" (Big Audacious Rewards) in the Social Media Age....

"Nancy!  Get payroll on the line.  I want to cut some $5,000 spot bonus checks for my senior team so I can hand them out tonight at our Christmas dinner..."

Used to be you could do that and have it be your little moment with your team.  That's no longer the case in the digital era.  Consider this AOL story from Business Insider:

"AOL hosts a "global operating meeting" twice a year.  It's holding one right this very moment in New York to firm up the company's plans for 2012.

A couple sources tell us that Tim Armstrong just opened the meeting by giving everyone in attendance – about 150 execs – a $10,000 bonus on the spot.

"About $1.5 million just for showing up!" says our incredulous source.

An AOL PR rep declined to comment."

Ugh.  Your little moment in the digital era can be tipped to an industry insider whose job it is to create 20 posts a day on anything - and I mean anything - that's going on in your industry.    This story was tipped as the checks were handed out.  How's the rank and file feel about this one?

Layoffs, schmaoffs.  Things are good at the top.

My suggestion?  Give your team a note that says a donation has been made in their name to the "Human Fund".  Money for people...

Albert Pujols and the Art of the Counter-Offer: It All Comes Down to Replacement Cost for the Same Performance...

I'm from Missouri and a St. Louis pro sports fan.  In case you missed it, Cardinal great (pro baseball) Albert Pujols has left the Cardinals at the age of 32, signing a 10 year deal worth $254 Million with the Los Angeles Angels.

The reaction out of St. Louis is disappointment, but with a hat tip toward the realization that matching that offer would have been a suckers play.

It's a much different reaction than what happened in Cleveland when Lebron James opted to "take his talents to South Beach".  The reaction should be different, because the situations are dramatically different.

It all comes down to replacement cost, your brand and the profitability line.

Lebron James was a mega-star in a superstar-driven league.  The Cleveland Cavaliers couldn't replace him if he left.  Cleveland as a sports town is a wasteland, a place where no free agent wants to dwell.  Lose Lebron in Cleveland, you're not getting back to the top.  Ever.

The Cardinal franchise is something entirely different.  Lots of world championships before Pujols arrived.  A great baseballl town and region where veterans want to play to bask in fan support all summer long.

Baseball is a sport where you need 20 contributors, and no one player can domineer the action - unlike basketball.

What would you do if Ed in Accounting told you he wouldn't be back in 2012 unless you gave him a 3 year deal giving him a annual 60% bump in comp?

Hit the bricks, Ed.  You're replaceable.

What about Stan, your top sales pro?  He's not coming back in 2012 unless you double his total comp and guarantee it for 4 years.  He's a great revenue producer, careful....

You've got 4 other reps that are near quota.  Stan's great, but you lose money on that comp structure.  Don't let the door hit you on the butt on the way out, Stan.

Countering the star comes down to 3 things:

1.  What's the total comp point where the revenue/performance the star provides goes into the red?

2.  How strong is your organization?  Can you recruit good talent in to replace the star?  Is your brand good enough where others want to work for you?

3.  Is there anyone else that can come close to doing what the star does?

Cleveland had no other options, thus the total freak out when Lebron left.  St. Louis is pretty quiet in comparson the day after Albert took his talents to SoCal.

Is your organization like the Cavs or Cardinal nation?

Groupon Lawsuit: Guess the FLSA Infraction...

Workforce reported earlier this week that Groupon, the hot Chicago-based startup that basically defined the "daily deals" category, has been sued in "class action" style for unpaid overtime.  It's a somewhat tricky suit - not your garden variety unpaid overtime class-action, since it involves sales professionals. Hmmm - let's dig into a bit of the workforce article (find the whole thing here):

"The suit says the Chicago-based 3-year-old daily-deal business didn't pay sales employees overtime, violating wage laws, or didn't pay them enough.  “It's a systemic problem,” said Douglas Werman, a Chicago-based attorney who filed the suit on behalf of Dailey and is seeking class-action status on behalf of her and other sales reps allegedly cheated out of overtime pay.

His firm, Werman Law Office, won the largest wage-and-hour case in Illinois history two years ago, an $11 million settlement against Troy, Michigan-based staffing firm Kelly Services Inc.

The overtime suit could become a problem for the company, which employs more than 4,800 sales reps worldwide out of a workforce approaching 10,000. Roughly 1,000 of the reps are in the U.S. and therefore covered by federal labor laws.

On average, the reps are paid about $32,500 a year, plus commissions equal to a percentage of the value of the deals they line up with restaurants, salons and other local businesses."

Most of you have salespeople that are out beating the street, and most of you classify those sales pros as exempt, meaning they're not generally eligible for overtime.  Which begs the question, why are the Groupon reps eligible for overtime if yours are not?

What's your take?  Think about it and I'll give you my best guess below.  Thinking....(music in background)

Got your answer?  Here's mine:

At a 32K base and knowing a bit about the Groupon model, my take is that these reps might be classified as non-exempt and overtime eligible due to the fact that they're more telemarketer than sales pro.  I'm betting that most of these people report to HQ in Chicago and smile and dial via the phone, rarely seeing customers in the field.  Also playing into that model is the fact that they're probably hooked up to a predictive dialer, which means they're fed one call right after another in their territory and they're banging it out like a telemarketer.

Which means that they don't control what they work on and when they work on it, which is the first test of independence I usually throw up for poor man's overtime eligibility test.

That's nothing but a guess, but I'm thinking it's directionally accurate.  What's your take?

PS - you have to love the model this law firm is operating under.  I can imagine the tweet from a partner - "just took down @kellyservices for 11 large.  will scan #monster for companies who are mis-classifying sales pros after the celebration.  #winning

Tuition Aid Programs: They Look Great on the Company Brochure, But Are Hard as #*#* to Use...

Hi Kris - 

I'm a benefits manager in Atlanta and I'm looking for some best practices related to Tuition Aid Programs offered by companies across America.  What do you have for me?

-J

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Hi J - 

Thanks for the note - I browsed around for a bit and didn't find anything very interesting... My experience would tell me the major program components that serve as levers to differentiate a tuition aid program would be the following:

1. The amount available annually - $$$
2. What's eligible for reimbursement - what type of programs qualify for reimbursement?  Wide open or only job related?
3. Eligibility - how long do you have to be at the company to get the benefit?
4. Performance Required for Payback - do you need an "A" or a "B" to get reimbursed?  If so, how are non-traditional classes treated?
5. Payback agreements - How much time do you have to be with the company until you clear the requirement to pay back the reimbursement granted by the program? 1 year, 2 years?

I think the last point is the most important lever.  Tuition Aid is one of those things that looks great on the company brochure, but it's hard to use.  People have kids, are trying to live their lives, etc., so only the most ambitious take advantage of the program.  With that in mind, looking at traditional penetration rates of the program is the best practice when trying to budget, and payback agreements will help give your leadership some piece of mind that the folks who use the benefit are the ones most likely to stay.

Easy to promote, hard to use.  A cynic would call it the perfect company benefit - drives positive good will but most folks will never utilize it ...

Sorry I can't help more than that - and remember...stay thirsty my friend.

Moneyball the Movie: How Can You Miss with Brad Pitt and Jonah Hill? (Video Trailer)

Question to HR pros:  Have you read the book Moneyball by Michael Lewis?  If not, stop and order it now.

I know.  KD talks too much about sports.  HR pros, especially the women in our industry, don't connect with you when you talk sports, KD.   Blah, blah, blah...

Couple of things on that front.  The majority of my readers are women in Talent Management, Human Resources and Human Capital, and as it turns out, a lot of them get offended when people say that they don't like sports.  Additionally, Moneyball is required reading even if you don't like sports.

Why is Moneyball required reading?  Because it's about thinking differently related to valuing talent.  It's a compensation, culture and recruiting story with a limited sports backdrop.  Talent acquisition, background check and talent sourcing at it's finest.

Plus, the movie that comes out later this year based on the book stars Brad Pitt.  Interested now ladies?  Trailer appears below (email subscribers may need to click through), take a look and let's break it down after the break.

Moneyball fans - what did you think?

Here's my thoughts - I love Pitt in the role and Jonah Hill is easy to like in anything after seeing him for the first time in Superbad.  I like the vibe of the first minute of the trailer and then the movie takes a left turn...

...into doing the whole Billy Beane (character played by Pitt) is going to get fired thing... You've got Jonah Hill in the #2 role and Pitt's got a history of doing understated comedy very well - why make it a drama?  I'm not asking for the Oakland A's version of Major League, but don't get serious with this cast in place.

Your thoughts?  I'll be going to see it later this year even with those reservations in mind....

When to Work For Free...

When do you work for free?  There's a lot of chatter about this one, but my general rules on working for free are as follows... Work for free when:

1. The work you do is distributed in a way that can be monetized down the road.  Will your work be broadcast to thousands of people or hoarded by those that receive it?  Key question...

2.  If you're attempting to change careers or enter a different market and you need to build experience to figure out what the hell you're doing...

3.  If you're attempting to build references you can point paying clients to....

So to sum it up, kids... Work for free when you're trying to build experience in any areas that you can't get paid for until you reach proficiency, when you think you need a reference to get paying work for what you can already do well, or if the free work is going to be seen and commented on by the masses and serves as effective marketing.

First one's free, kid.

Enter into it knowing when you'll stop doing it for free.

PREACH IT: A Home Without Equity is Just a Rental With Debt....

Michael Lewis is a great writer.  Be a better HR Pro by reading his classics, which include Moneyball and The New, New Thing.  His latest is The Big Short, which chronicles the Wall Street culture that led to the stock market crash of 2008.  

As with most things business-related, the talent and HR quotes are everywhere in this book.  Here's a great one from an investment banker named Greg Lippman:

"Senior management's job is to pay people.  If they #@## a hundred guys out of a hundred grand each, that's ten million more for them. They have four categories: happy, satisfied, dissatisfied and disgusted.  If they hit happy, they've screwed up: They never want you happy.  On the other hand, they don't want you so disgusted you quit.  The sweet spot is somewhere between dissatisfied and disgusted."

Need another happy quote from The Big Short on a Friday?  How about this:

"A home without equity is just a rental with debt".

Word to your mother.  Try to stay somewhere between happy and satisfied next week, suckers...

But read the book.  Those aren't Lewis quotes, he's simply reporting.  He's money.

The Big 2011 Compensation Question - Are the Starbucks Baristas Getting Screwed by a Cash-Free Society?

You think I'm joking but I'm not...

Has there ever been a bigger employee relations nightmare related to compensation than what's happened at Starbucks over the last three years?

What's happened you ask?  No one is using cash anymore.  Everyone's swiping a card.  That means the you don't look at $.50 in your hand and dump it into the tip jar.

Tipping's a pack activity at a place like Starbucks.  You get some change back, note that the person helping you is pretty nice (airport Starbucks don't qualify), see the full tip jar and... bam... moment of weakness, peer pressure and a need to feel classy, you dump a 25% tip into the jar.

For coffee.  Your great grandparents are cursing at you from the clouds.  They didn't fight through Ellis Island for you to be dumping cold hard cash at a coffee store, much less tipping at one.  You're soft.  Doughy even...

But I digress.  Tips are gone at Starbucks.  The tip jar, if it's out at all, is a lonely place.  You hand your card and the barista (I'm calling the person at the register that, I'm assuming they rotate) POLITELY says the following:

"You need a receipt today?"

TRANSLATION: I know you don't want a receipt, and it's a hassle for me.

TRANSLATION #2:  I'm forgoing any opportunity for tip compensation by not giving you a receipt (if Starbucks would even have that functionality turned on as a part of the receipt.  Never got a receipt, so I don't know).

The bottom line?  Someone's paying for the lost compensation opportunity at Starbucks related to tips.  Either the baristas are taking it on the chin and don't seem to care, or Starbucks made them whole as suburban America suddenly developed an inability to carry and use cash.

To the credit of Starbucks, I haven't noticed a drop in the experience at most Starbucks.  That says a lot about how they hire, or how they were proactive about this compensation issue, depending on what the reality is.

Starbucks associates or parents of Starbucks associates - educate us on the reality.  

And no, I don't need a receipt.

When Raises Shouldn't Be A Given...(Non-Economic/NFL Edition)

If you follow the NFL, you may have seen earlier this week that the New England Patriots traded Randy Moss, widely regarded as a hall of fame receiver and still very productive, to the Minnesota Vikings for an undisclosed draft pick.  What the news could have said was that they traded a premier player for the equivalent of some loose change the Vikings found in the couch.

Harsh.  Classic Bill Belichick, however.

What's up you ask?  The Moss contract was up at the end of the year, and it's pretty clear that the Patriots had no desire commit multi-year $$$ contractually to a player whose skills will do nothing but decline from this point forward.

Simply put - the Patriots have a long history of not upping, overvaluing and overextending compensation to players who won't continue to improve or whose skills may decline quickly.  It's an organizational philosophy, and they live it each year - I could go do a list of 6 other situations the Patriots have dealt with in the past that shows they're very, very consistent in this area.

They won't overpay.  Won't do it.  Would rather be brutal.

You can't trade Sally in Finance - oh, how you wish you could.  But you've got other means at your disposal to deal with the same issues.  When should you walk away from providing raises, allow talent to walk out the door when a competitor comes knocking, or otherwise live a philosophy of being prudent with compensation dollars?

Here's my list.  I say you force yourself to have the tough conversations related to an individual's contribution and where their compensation is going when:

1. Skills and contribution are in apparent decline, and don't look to be coming back...

2. You've arrived at a place where they're over-valued for the contributions they make...

3. Giving them additional comp (especially if they're comparing themselves to the marketplace) doesn't fit the comp model you have in place.  Best example I can give you of this?  You're a consulting firm and you built your model around providing opportunity for young associates out of college.  You can only promote so many, and the remaining associates are still talented.  You have to say no to increases for solid talent in that situation, because it doesn't fit your model.

That's my starter list.  In writing it, it's obvious that many reading that list will say, "So what Kris? We know that"...

Technically you know that.  So do I.  The real question is whether you believe it enough to live it.  To have some brutal conversations with good people.  

Do you have those conversations, or do you pass on the drama, providing a 3-4% increase and opting to play on?  

If so, you're no Bill Belichick.  I'm not sure whether that's good or bad.  I do know it's interesting.