Performensation Blog Articles Jan - June 2011


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Musings on Performance and Compensation. A full listing of all Performensation Blog Articles published between January 2011 and June 2011, including summaries of each.

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Performensation Blog Articles Jan - June 2011

  1. 1. January - June 2011 MUSINGS ON PERFORMANCE AND COMPENSATIONLOCATION: COMPENSATION  CAFE DATE: JUNE  22,  2011 The  P90X  Workout  and  Effec)ve  Performance  Compensa)on I  like  finding  unique  training  tools  for  compensaBon  professionals.  My  newest  addiBon   is  the  P90X   training   system.     For   those   of   you   who   have   not   tried  it,   or   seen   the   infomercials,   I  should  describe  the  program.   An  individual  works  out  at   home  using  a   series  of   DVDs  that  guide  them   through  varying  daily  exercise  programs.  The  sessions   are  lead  by   a  dynamic  leader   named  Tony  Horton.   Tony   is  in  great  shape  and  has  very   high  energy.  The  program  is  very  intense  and  requires  a  level  of  personal  commitment   MORE...LOCATION: COMPENSATION  CAFE DATE: JUNE  14,  2011 A  Founda)on  Like  a  Ship,  Not  a  Building This  concept  came  to  me  at  a  recent  compensaBon  philosophy  engagement.  During   an  employee  interview   session  I  explained  that  the  compensaBon  philosophy  would   become  the  foundaBon  for   new   compensaBon  programs,   pay   levels  and  strategy.   The  very   astute  employee  chimed   in  and  asked:   “We  have   a  new  CEO   and   were   expanding   into   new  business  lines  and  markets.  Won’t  a  strong  foundaBon  anchor   us  to  where  we  are  right  now?” MORE...LOCATION: COMPENSATION  CAFE DATE: JUNE  1,  2011 They   S)ll   Create   New   Music   with   the   Old   12   Notes,   You   Can   Do   the   Same   with   Compensa)on The  basic  scale  used  in  western  music  incorporates  12  notes.     The  scale  has  only  five   lives  (staves).   This  combinaBon  of  a  simple  structure   and   limited  elements  has  been   essenBally   unchanged  for   hundreds  of   years.   Somehow  new  music   is  created   every   second   of   every   day.   These   limited   components   have   given   us   Beethoven’s   “9th   Symphony”,  Gershwin’s  “Rhapsody  in  Blue”,  John  Lennon’s  “Let  it  Be”  and  literally   MORE...LOCATION: COMPENSATION  CAFE DATE: MAY  19,  2011: Total  Rewards  and  a  Farmers  Market  Strategy It   is  fact   that   poor   food  choices  lead  to  poor   health.     Of  course,   there  are   many   other   contributors,   but   when   food   is   bad,     health   almost   always  follows.   In   the   United   States,   bad   food   is  oen   cheap   food.   We   have   found   ways   to   feed   our   country  more  while  providing   less  of  what  is  truly   needed.   People  don’t   starve,  but   neither   the  body   nor   the   brain  can  operate  at   peak  performance.   We  find  ways  to   keep  people   alive,  but   is   it   really   helping   them   thrive?   In  the  end,  this  short-­‐term   soluBon  creates  too  
  2. 2. MUSINGS ON PERFORMANCE AND COMPENSATIONLOCATION: COMPENSATION  CAFE DATE: MAY  10,  2011 Are  Your  Compensa)on  Goals  GeVng  You  to  the  Top  of  the  Wrong  Mountain? So   oen   we   see   companies   whose   execuBves  are   paid   handsomely   only   to   falter   shortly   aer.    How  does  this  happen?   Goals  were  apparently   met.   Success  seemed  to   have  been  achieved.   But   the   final  result   of   the  goals  and   success  is  a  large   payout   followed   by   a   sharp   corporate   collapse.   Are   we  doing   something   wrong   when   we   incenBvize  our  execuBves? As  the  evoluBon  of  Dodd-­‐Frank  and  mandatory   Say-­‐On-­‐Pay   quickly   impacts  execuBve   MORE...LOCATION: FORBES  EXECUTIVE  PAY  WATCH DATE: MAY  3,  2011 Companies  Deserve  Pay  Transparency,  Too ExecuBve   compensaBon   is   jusBfiably   complex.   In   fact,   the   total   compensaBon   for   nearly   everyone   in   this   country   is   difficult   to   communicate.   Those   at   the   highest   corporate   levels  generally   have   pay   structures   that   reflect   the  complexity   of   their   company.   Regardless   of   the   intricacy   of   execuBve   pay   programs,   it   is   sBll   a   very   reasonable  request  to  ask  for  pay  transparency  from  these  publicly  traded  firms. New  disclosure  rules  have  taken  another  step  or  two  up  the  ladder  towards  percent  to   MORE...LOCATION: COMPENSATION  CAFE DATE: APRIL  25,  2011 Icing  is  Nice,  but  Fros)ng  is  Essen)al  (Compensa)on  is  like  Cupcakes) How  is  compensaBon  like  a  cupcake?  Is  it  just   that  people  crave  it,  or   is  it  something   far   more  fundamental?   I’d   like  to  suggest   that   it   is  in   understanding   the   important   difference  between  frosBng  and  icing. Think   about   generic   plans   created   from   stale   boilerplate   documents.   Or,   communicaBon   programs   which   teach   lihle   and   inspire   nothing   beyond   high-­‐level   overviews   or  lengthy   legal  documents.   Or,  even  sales  compensaBon  plans  promising   MORE...LOCATION: COMPENSATION  CAFE DATE: APRIL  19,  2011 Are  You  Pushing  the  Wrong  Rock  up  the  Hill? We  all  know  the  story  about  Sisyphus,   the  man  who  was  sentenced  for  eternity  to  roll   a  stone  up  a  hill  only   to   have  the   stone  roll  back  down   and  begin  again.  I  have  been   speaking   to   compensaBon   professionals   recently   who   seem   to   have   assigned   themselves  this  same  punishment.   In  one  case,  I  recently  spoke  to  a  company  who  has  placed  communicaBons  at   the  top   of  their  “needs”  list  each  of  the  last  few  years.  They  are  fully  aware  that  their MORE...
  3. 3. MUSINGS ON PERFORMANCE AND COMPENSATIONLOCATION: COMPENSATION  CAFE DATE: APRIL  8,  2011 Curiosity  May  Kill  Cats,  but  It  Saves  Compensa)on  Professionals Do  you  ever   wonder  why   you  are  reading  this  arBcle?  No  one   is  paying  you  to  read   this.  Your  boss  will  probably  never  even  know   that  you   read  it.  Why   take  a  few   more   minutes  out  of  your  busy  day   for  something  that  only   you  truly  value?    The  answer  is   simple.  You  are  a  curious  person.  (Fair  warning  this  is  a  “so”  arBcle  with  no  staBsBcs   or  compensaBon  rules) We  are  always  told  that  curiosity  kills  cats.  The  theory   is  that  it   gets  cats  into  trouble   MORE...LOCATION: COMPENSATION  CAFE DATE: MARCH  28,  2011 Compensa)on  is  a  Balancing  Ac)on  (Not  an  Act) Have   you  ever   used   one  of  those  workout   things  called  a  “Bosu  Ball”?  A   Bosu  Ball  is   half   a   workout   ball   ahached   to   a   round   plasBc   plalorm.   Many   people   workout   standing  on  the  so,  round  ball  side.     My   trainer  turns  it  upside  down  and  makes  me   stand   on   the  flat   plasBc   side.   Balancing   with   the  round   side  on   the  floor   requires   concentraBon  and  constant  adjustments.    Add  some  basic   weights  or  movements  and   the  process  makes  you  stronger,  while  exhausBng  you.  The  trick  is  making  frequent   MORE...LOCATION: COMPENSATION  CAFE DATE: MARCH  16,  2011 Compensa)on  and  Loyalty:  The  Head  and  the  Heart Recently,   I   was   working   onsite   at   a   client’s   office   doing   a   series   of   employee   engagement  interviews.     The  company   is  looking  for   ways  to  move  to  the  next   level   and   I   suggested   that   we   find   out   what   their   employees   were   thinking   before   we   guessed   at   any   type  of   new   compensaBon   program.   These   types  of   interviews  are   almost  always  eye-­‐opening  and  this  case  was  no  different. On  the  bright  side,   a  steady   stream  of  employees  came  through  the  interview  room   MORE...LOCATION: COMPENSATION  CAFE DATE: MARCH  8,  2011 What  Do  You  Do  if  You  Don’t  Like  Your  (Stock)  Op)ons In   my   Febraury   25,  2011  posBng  “Stock  OpBon  Moving   Sale”,  I  suggested   that   rather   than   end  up  with  the  compensaBon  equivalent  of   acid  washed  jeans  or  a  teal  mock-­‐ turtle   neck,  perhaps  a  beher  shopper  could  find  deals  that  were  a  bit  less  trendy   or   even   tenuous.   Equity   compensaBon   may   be   beher   uBlized   like   a   list   of   401K   investments.   Imagine   different   tools  balancing   at   the  same  Bme   to   create   a   more   effecBve  compensaBon  package.  People  using  a  single  instrument,  like  stock  opBons,   MORE...
  4. 4. MUSINGS ON PERFORMANCE AND COMPENSATIONLOCATION: DATE: Stock  Op)on  Moving  Sale! Everyone  loves   when  a   business  or   a  family   down  the  street   has  a   moving   sale.   You   have  opBons  to  buy  stuff  at  a  discount  even  if  you  might  not  need  it.  Heck,  someBmes   you  purchase  something  even  if   it  might   be  out   of  fashion  by  the  Bme  you  finally  get   around  to  using  it.   You  convince  yourself  that   the  discount  jusBfies  buying  things  that   you  might  even  have  owned  and   found  not  to  work  in  the  past.   Maybe  this  Bme  that   type  of  skirt  will  look  good  on  you.  Maybe  this  Bme  you  will  lose  the  weight  and  be   MORE...LOCATION: COMPENSATION  CAFE DATE: FEBRUARY  14,  2011 Enough  is  Enough.  Knowing  When  to  Say  When  on  Compensa)on SomeBmes  enough  is  enough.  I  had  a  client  go  through  a  surprisingly  good  experience   last  week   that  made  me  realize  the  posiBve  context  of  this  cliche.  Aer  several  years   of   being   beaten   up   by   insBtuBonal  shareholders   about   equity   compensaBon   burn   rates  and  usage,  they  are  now   in  a  posiBon  to  ask   for,  and  get  approved,  more  shares   than  they   have  used  in   the  past   3   years.   Here’s  the   interesBng  thing,  they   won’t  be   asking  for  it  all...  Yes,  Virginia,  there  is  a  company  who  shows  restraint. MORE...LOCATION: COMPENSATION  CAFE DATE: FEBRUARY  4,  2011 In  a  Vacuum  of  Informa)on  People  Will  Use  Imagina)on I  love  talking   to   employees  about   their   compensaBon  plans.    It  is  always  easy   to  see   the  people  who  work  at  companies  with  effecBve  communicaBon  programs.    Whether   the  staff  likes  or   dislikes  the  plans  they  tend  to  provide  similar   details.  They  generally   understand   the  components  of  the  programs.  And  they   have  an  idea  of   what  it  takes   to   progress  within  them,   earn   something  from   them   or   otherwise   take  advantage  of   them.  If  I  have  to  be  honest,  my  favorite  employees  are  at  the  companies  that  have  a   MORE...LOCATION: COMPENSATION  CAFE DATE: JANUARY  25,  2011 What  Do  Your  Employees  Really  Think  About  Pay? Last   Friday   I  was  in  the   final  stages  of   ediBng   when  I  came   across   the  exchange  of   messages  below  posted  on  a  social  networking  site.     All  messages  were  posted  within   about  an  hour  of  each  other. Employee  1: Morgan   Stanley,   which   is   the   owner   of   the   worlds   largest   brokerage,   cut   the   investment  banks  compensaBon  pool  2%  last  year  to  $7  billion.  Morgan  Stanleys   MORE...
  5. 5. MUSINGS ON PERFORMANCE AND COMPENSATIONLOCATION: COMPENSATION  CAFE DATE: JANUARY  17,  2011 You  Can  Self-­‐fulfill  a  Prophecy,  Just  Ask  the  Right  People! I  just  read  two  recent  arBcles  explaining  that  nearly  every  single  employable  American   will  be  looking  for  a  new  job  in  2011.    Perhaps  as  many  as  98%  of  all  Americans!  To  tell   the  truth  I  was  shocked.    First,  I  gnashed  my  teeth.  Then,  I  pulled  my   hair.     I  panicked   when  I  realized  what  a  drain  this  would  be  on  companies.    It  seemed  as  if  we  were  all   going   to   go   through   the   tumultuous   year   in   our   lives.   Just   as   I   was   about   to   hypervenBlate,  I  looked  at  the  source  of  the  informaBon. MORE...LOCATION: COMPENSATION  CAFE DATE: JANUARY  5,  2011 Execu)ve  Pay  and  the  Emperors  New  Clothes I  read  a  recent  arBcle  by  Dan  Ariely  on  how  we  measure  thri.  Mr.  Ariely,  is  the  author   of   “Predictably   IrraBonal”   and  “The   Upside  of  IrraBonality.”   He  is  also  a   professor   of   Psychology  and  Behavioral  Economics  at  Duke  University.  He  used  a  simple  example  of   how  we  may   choose   to  purchase  expensive  premium  coffee  over   less  expensive,  but   sBll   good  coffee,   to  show  how  seemingly   reasonable   decisions   can  be  influenced  by   past  experience  rather  than  current  facts.  In  the  end  he  quesBons  whether  some  of. MORE...LOCATION: DATE: Dan  Walter  is  the  President  and  CEO  of  Performensa5on  an  independent  compensa5on   consul5ng  firm  focused  on  the  needs  of  companies  not  in  the  Fortune  1000.  Dan’s   unique  perspec5ve  and  exper5se  includes  equity  compensa5on,  execu5ve   compensa5on,  performance-­‐based  pay  and  talent  management  issues,  Dan  is  on  the   board  of  the  Na5onal  Center  for  Employee  Ownership,  a  partner  in  the  ShareComp   virtual  conferences  and  the  founder  of  Equity  Compensa5on  Experts  a  free  networking   group.  Dan  is  frequently  requested  as  a  dynamic  and  humorous  speaker  covering   compensa5on  and  mo5va5on  topics.  Connect  with  him  on  LinkedIn  or  follow  him  on   TwiNer  @performensa5on.LOCATION: DATE: All  ar)cles  authored  by  Dan  Walter President  and  CEO Performensa)on  Consul)ng,  LLC 514  Precita  Ave,  Suite  100  San  Francisco,  CA,  94110 415.625.3406  (direct/mobile)    |    415.821.9883  (fax)    |    |   ©  2011  PerformensaJon  ConsulJng  LLC.    All  Rights  Reserved