Performensation Blog Articles June - Dec 2010


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Musings on Performance and Compensation. A full listing, with summaries, of all Performensation Blog Articles published between June 2010 and December 2010

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Performensation Blog Articles June - Dec 2010

  1. 1. JULY - DECEMBER 2010 MUSINGS ON COMPENSATION AND PERFORMANCELOCATION: COMPENSATION  CAFE DATE: DECEMBER  20,  2010 Too  Heavy  for  Any  Amount  of  Money Happy   Monday!  Were  you  excited   and  ready   for   work  today?  Was  the   weekend  long   enough?   I  keep  hearing  from  people  that  they  are  puKng  in  more  effort  and  longer  hours  than   ever   before.  Workloads  are  increasing,  but  companies  aren’t  hiring.   We  all  know  that   overworking  employees  leads  to  progressively  diminishing   returns.    But,  when  is  more   work  simply  too  much? MORE...LOCATION: COMPENSATION  CAFE DATE: DECEMBER  10,  2010 Welcome  to  the  Team,  We’re  Thinking  About  Firing  You I   was   chaKng   with   a   colleague   about   a   talented   new   hire   he   was   hoping   his   company   would  be  able  to  bring   on.  The  candidate  aced  her   interviews  and  came   with  high  recommendaQons.  She  went  to  the  right  schools  and  interned  at  the  right   firms.    Everything  seemed  on  track  unQl  she  received  her  offer  leUer.   The  leUer  was  all  roses  and  sunshine  unQl  you  got  to  just   about   the  last  paragraph.   Early  on  it  menQoned  how  impressive  she  was  and  how  they  would  be  happy  to MORE...LOCATION: COMPENSATION  CAFE DATE: NOVEMBER  29,  2010 Offer  the  World  First  and  Money  Second My   16-­‐month  old  nephew  inspires  today’s  posQng.   The  other   day,  while   watching  a   video  of  him,  I  couldn’t  help  be  amazed  at  the  vastness  o  f  his  world.    This  is  true  both   in   physical   space   and   size   relaQve   to   his   liUle   body.   He   lives   in   a   small   town   in   Nebraska,   but   it   couldn’t   seem  larger   to   him.   I  o[en  envision  him   in  twenty   years.     This  seemingly   large  world  will  in  fact   turn   out  to   be  very   small.   Nearly   every   adult   male  in  his  area  works  for  the  railroad  or  in  some  capacity  of  agriculture.  The  physical   MORE...LOCATION: COMPENSATION  CAFE DATE: NOVEMBER  16,  2010 When  KISS  becomes  WISH  -­‐  Understanding  CompensaQon We  have  all  heard   of  the  KISS   (Keep  It   Simple  Stupid)   principle,   but   when  does  KISS   become   a   WISH   (When   Is  Simple   Harmful)?     Think   about   the   color-­‐coding   at   U.S.   Airports.   The  Homeland  Security   Advisory   Systems  has  been  the  “HIGH”   threat-­‐level   orange   since   shortly   a[er   the  color-­‐coding   system   went   into   place.   However,   how   many   people  know  what  the  orange  level  really  represents?     There  is  a  level  indicated   by   the  color   red  above  it   and  yellow,   green  and  blue  levels  below  it.  The  simplicity   of   MORE...
  2. 2. MUSINGS ON COMPENSATION AND PERFORMANCELOCATION: COMPENSATION  CAFE DATE: NOVEMBER  1,  2010 Management  is  About  Decisions  &  Accountability I  am  a  casual  baseball  fan  who  has  loved  this  year’s  post-­‐season  baUles.  But   truthfully,   I  have  o[en  wondered   what   a  manager   actual  does.   There   are  several  coaches   for   every   team,  hiKng,  first  base  etc,  but   only   one  manager.   It  seems  like  he  assigns  the   baKng  order  and  picks  a  pitcher  and  then  sits  through   the  game  as  others  play   it  on   the  field.  While   watching   a  recent   San  Francisco  Giants  win  over   the  Phillies  I  finally   understood  a  baseball   managers   real  role.   The  manager’s  true   purpose  is  to  make   MORE...LOCATION: COMPENSATION  CAFE DATE: OCTOBER  25,  2010 Neutralize  the  Mercury  in  Your  CompensaQon  Pool It   doesn’t  take   much  mercury   to  poison  a  water   source.  Just   two   parts  per   billion  (2   ppb).  That’s  the  maximum  amount  of  mercury  that  the  EPA  and  FDA  allow  in  drinking   water.  Any  more  than  this  and  your  body  may  accumulate  this  poison  and  it  will  slowly,   but  severely  sicken  you.   You  may  wonder  why  I  am  giving  a  clean  water  lesson  on  the  CompensaQon  Cafe  blog.   Well,  every   company  has  mercury  in  its  pool  of  employees.    We  call  them  malcontents,   MORE...LOCATION: COMPENSATION  CAFE DATE: OCTOBER  13,  2010 How  Fast  Would  You  Run  in  the  Dark? It’s  3AM  and  it’s  almost  pitch  black  outside.  The  damp  chill  of  the  dead  night  air  is  on   your  bare  arms.  You  can  barely   see  your  hand   in  front  of  your   face.  An  unseen  voice   tells  you  will  be  running   a  full  marathon.  Suddenly   someone  points  you  in  a  direcQon   and   tells  you  run  as  fast   as  you   can.     Then   they   disappear.   How  fast   would  you  run?     How  long  would  you  run?  At  what   point  would   you  simply   stop  running  and  wait   for   MOST POPULAR daylight? ARTICLE OF 2010 MORE...LOCATION: COMPENSATION  CAFE DATE: SEPTEMBER  28,  2010 CompensaQon  Top  Chef Have   you  ever   noQced  how  compensaQon  plans  can  be  like  Indian  food?     The  list   of   ingredients  sounds  exoQc,   but  is  not  very   long.  Each  ingredient   is  used   for   a  specific   reason  and  care  must   be  taken  not  to  use  too  much  or  too  liUle.  Hundreds  of   recipes   can  be  created  by  combining,  adding  or  removing  a  limited  number  of  ingredients.  The   final  product  is  determined  by  how  carefully   the  selected  ingredients  are  cut,   cooked   and  what  dish  is  being  served  to  compliment  the  unique  combinaQon  of  flavors.  Most.   MORE...
  3. 3. MUSINGS ON COMPENSATION AND PERFORMANCELOCATION: COMPENSATION  CAFE DATE: SEPTEMBER  16,  2010 Equity  CompensaQon  is  in  a  Class  of  its  Own The  origin   of  the  word  equity  is  not,   as  many   people  think,   the  word  “equal.”  In  fact,   its  origin  is  almost  the  opposite  of  equal.  “Equite”  is  a  Roman  word  with  the  following   definiQon:   "members  of  a  specially   privileged   class  derived  from   the  ancient  Roman   cavalry   and   having   status   intermediate   between   those   of   senatorial  rank   and   the   common  people."  Equity  is  about  privilege. Looking  back,  horsemen  have  almost  always  been  considered  a  privileged  class.  On MORE...LOCATION: COMPENSATION  CAFE DATE: SEPTEMBER  1,  2010 The  Challenge...  Summer  Time,  Pools  and  Work "Uncle  Dan,  give  me  a  challenge!"    My  12-­‐year  old  niece  was  at  the  edge  of   the  huge   community   pool.   She  and  her   brother   were  enjoying  the  last  “pool  day”  of  summer.   They  had  been  playing  and  leaping  off  the  diving  boards  for  almost  an  hour. Give   me  a  challenge!   The  first   translaQon  of   this  phrase  was  easy.   “Make   this  pool   interesQng,   my   brain  is  geKng   bored.”   As   she  swam   underwater   across  the  pool  in   four  breaths,  she  turned  and  waved  at  me  a[er  every  breath.  The  second  translaQon   MORE...LOCATION: COMPENSATION  CAFE DATE: AUGUST  23,  2010 Are  Employee  Engagement  Surveys  Like  New  Year’s  ResoluQons? RetenQon  during  bad  Qmes  is  easier  than  when  Qmes  are  good.    It’s  a  fact;  people  look   for   safety   in  dark  Qmes.   Ironically,   when  it   comes  to   retenQon,   bad  Qmes  are  what   keep  HR  pros  awake  at   night.     There  is  the  belief  that  when  business  turns  upward,   employees  become  moQvated  to  start   looking  for   engagements  outside  their   current   jobs.     This   concern  of   not  being   able   to  retain  top  talent   is   o[en  reinforced  by   the   surveys  employers  look  to  for  “data”.   MORE...LOCATION: COMPENSATION  CAFE DATE: AUGUST  12,  2010 The  Top  3  Provisions  of  Dodd-­‐  Least  for  the  Moment I  once  had  a  colleague  who  was  an  acronym  addict.  His  philosophy  was  anything   more   than   a   TLA   (three   leUer   acronym)   was   inefficient   and   confusing.   If   the   name   of   a   product   or   service   required   more   than   a   TLA,   he   would   insist   it   be   changed   to   something  shorter  (not  my   strong   suit).   I   have   been  doing  a  lot     of  presentaQons  on   the   Dodd  Frank  Wall  Street  Reform   and  Consumer  ProtecQon  Act  and  the  Qtle  alone   nearly  fills  my  twiUer  message  box.  For  the  sake  of  simplicity  and  my  tweet  stream,  I   MORE...
  4. 4. Smiley faced curve annotated MUSINGS ON COMPENSATION AND PERFORMANCELOCATION: COMPENSATION  CAFE DATE: AUGUST  2,  2010 Properly  Driving  Performance  Can  Pay  for  Itself  1,000  X  or  More Step  right  up!    I  want  to  offer  you  an  investment  where  for   every  $1  contributed     you   have  the  potenQal  of   earning   $1,000!  In  fact,  each  dollar   may   have  the  potenQal  of   earning  a  million  dollars!   While   this  seems  unlikely,   or  perhaps  even  impossible,  it  is  true  that  money  properly   invested  in  driving  performance  can  achieve  these  results.     What  if  someone  showed   you  a  way  for  your  company  to  invest  $200,000  and  drive  returns  of  toward  $2  billion?   MORE...LOCATION: COMPENSATION  CAFE DATE: JULY  22,  2010 Is  Your  CompensaQon  Program  the  PreKest  House  on  the  Street? I   live   in   San   Francisco   and   as   I   walk   the   streets   it   is   impossible   to   ignore   the   magnificent  homes  all  over  the  city.     There  are  an  incredible  variety  of  styles  and  many   streets  are  lined  with  grand  Victorian  or  Edwardian  homes.    These  homes  are  generally   two   or   three  stories  high  and  include  many   interesQng  details.    Some  are  painted  in  a   monotone   and  most   are  painted  in  two  or   three  colors  (the  base  and  the   trim),   but   occasionally  I  will  pass  a  home  that  stops  me  in  my  tracks.    These  magnificent  homes MORE...LOCATION: COMPENSATION  CAFE DATE: JULY  9,  2010 Pay  for  Performance  OR  JusQficaQon  for  CompensaQon?  That  is  the  QuesQon... I   have   recently   done   several   presentaQon   covering   the   possible   impact   on   U.S.companies  once  Management  Say  in  Pay  (MSOP)   becomes  mandatory.  Around  the   world   MSOP   is   usually   defined   as   a   shareholder   vote   on   compensaQon   or   remuneraQon   pracQces.     The  pending   Dodd-­‐Frank   bill   includes  MSOP.   The   current   document  calls  for  a  vote  on  compensaQon  every  two  or  three  years. In  most  countries  with  MSOP  this  vote  is  non-­‐binding,  but  it  gives  voice  to  a  powerful MORE...LOCATION: COMPENSATION  CAFE DATE: June  28,  2010 Everything  in  Compensa2on  is  Changing.  Is  That  Such  a  Bad  Thing? "If  youre  in  a  bad  situa2on,  dont  worry  itll  change.  If  youre  in  a  good   situa2on,  dont   worry  itll  change."  ~John  A.  Simone,  Sr. There  have  been  Qmes  over   the  past   8   or   9   years  where   I  felt   like  "Chicken   LiUle"   yelling   that  the  sky   was  falling.   Countless  people  have   heard  me,  in  both  private  and   public   conversaQons,   selling  crazy   ideas  like:   "Say   on  Pay   is  coming";   "Performance-­‐ based  equity  is  our  future"  and;  "The  compensaQon  world  as  we  know  it  is  changing   MORE...
  5. 5. MUSINGS ON COMPENSATION AND PERFORMANCELOCATION: COMPENSATION  CAFE DATE: JUNE  28,  2010 In  Pursuit  of  the  Perfect  Performance  Metric With   Management   Say   on  Pay   (MSOP)   rising   on  the  horizon,   we  are  all   faced   with   properly  implemenQng  a  new  performance  paradigm.     Academic  research  in  countries   that   have   had   MSOP   for   a   while   shows   that   its   true   impact   is   not   changes   to   compensaQon   levels   or   frequency.     Its   single   biggest   impact   is   the   broad   and   increasingly   deeper   use  of  performance  metrics  to   determine  pay.    This  is  especially   true  for  long-­‐term  instruments  such  as  equity  awards  and  deferred  compensaQon. MORE...LOCATION: EQUITY  COMPENSATION  EXPERT DATE: September  16,  2009 Cloudtasking  begins  as  MulQtasking  becomes  “old  school” oday’s   blog   entry   is  not   specifically   oriented  on  equity   compensaQon,   but  is  instead   oriented  on  how  we  all  work  today.  I’m  talking  about  Cloudtasking.   Cloudtasking  is  my   new  term  for  working  while  immersed  in  our  mulQ-­‐media  world.  Today  I  noQced  that  I   was  listening   to   and  watching   an   online  presentaQon  on   webcasQng   best   pracQces   while  I  was  simultaneously   involved  in  a  text  conversaQon  on  my   Blackberry,   a  Skype   conversaQon  on  my  laptop,  and  a  review  of  an  old  PowerPoint  presentaQon.  At  the   MORE...LOCATION: DATE: Dan  Walter  is  the  President  and  CEO  of  Performensa2on  an  independent  compensa2on   consul2ng  firm  focused  on  the  needs  of  companies  not  in  the  Fortune  1000.  Dan’s   unique  perspec2ve  and  exper2se  includes  equity  compensa2on,  execu2ve   compensa2on,  performance-­‐based  pay  and  talent  management  issues,  Dan  is  on  the   board  of  the  Na2onal  Center  for  Employee  Ownership,  a  partner  in  the  ShareComp   virtual  conferences  and  the  founder  of  Equity  Compensa2on  Experts  a  free  networking   group.  Dan  is  frequently  requested  as  a  dynamic  and  humorous  speaker  covering   compensa2on  and  mo2va2on  topics.  Connect  with  him  on  LinkedIn  or  follow  him  on   TwiSer  @performensa2on.LOCATION: DATE: All  ar2cles  authored  by  Dan  Walter President  and  CEO Performensa2on  Consul2ng,  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