I’m sort of old. I remember the zenith of late-night TV as a series of fantastical advertisements that promised the impossible if you simply did the improbable. Of course, this came at a cost, but what price can you put on regrowing your hair, or being irresistibly irresistible?
Today, social media fills this hole. There are infinite “articles” about cocoa being able to boost your IQ by 15 points, or eating a diet of lemon, honey, and cayenne pepper for weeks at a time to “change your life.” Usually it is some “wonder food” or “new life hack” that promises to make all that ails you melt away into oblivion.
The HR and compensation industries are not immune to this phenomena. We have been tricked, cajoled, and otherwise consulted into believing all sorts of not-so-true fads. Like every “super-simple” comprehensive solution, these pay plans, performance review techniques, or whatever, are unlikely to be as effective as you hope.
Not so long ago nearly all of the “big” executive compensation consulting firms were touting Relative Total Shareholder Return (R-TSR) as the solution to executive pay misalignment. Just add this one ingredient to LTIP and your officers and shareholders will be happy! In the past six months, many of those same firms have explained how it is crazy to depend on ONLY Relative TSR. They are now focusing the majority of performance weighting on financial and operational metrics.
We have heard how giving merit increases is basically a remnant of past mistakes. The new focus is providing above average pay through short-term incentives. Simply create a super-cool STI program and your productivity and performance problems are solved!
We are all looking for better solutions to common problems. It is easy to be convinced by a well-written white paper (or blog article) that an easy new approach is the solution. We look at the “trends” that are being sold to us and see that same “new idea” mentioned again and again.
Even when our common sense tells us that this new idea is old, or unworkable, we lean toward it as our other responsibilities call for our attention. The lure of being back to our high-school weight or have the perfect skin of our favorite celebrity is often enough to make us act despite our reservations.
Some of these new solutions will actually work, others will simply create more work and more confusion. The only way to know the difference is to know your real issues and capabilities. Just a like a diet of lemon, honey, and cayenne is unlikely to fix the issues of someone addicted to gummy bears, a new STI program is unlikely to fix the issues of a company that has an aversion to measuring performance.
If you’re unsure, ask your friends and colleagues. Go to a local compensation meeting and find out IF and HOW the great new idea worked in practice. Your colleagues will be honest with you and you will learn things that would be missed.
Feel free to share any of the “great ideas” your company has tried, that turned out to be successes or failures!
Dan Walter, CECP, CEP is the President and CEO of Performensation. He is passionately committed to aligning pay with company strategy and culture and considered a leading expert on equity compensation issues. Dan has written several industry resources including a recent Performance-Based Equity Compensation issue brief. He has co-authored ”Everything You Do In Compensation is Communication”, “The Decision Makers Guide to Equity Compensation”, “Equity Alternatives” and other books. Connect with Dan on LinkedIn. Or, follow him on Twitter at @Performensation.
This post originally appeared on Compensation Cafe
Author: Dan Walter-Performensation