Employee Performance

The Disease of Seniority in Compensation Decisions

I love to work with clients on employee performance and compensation planning.  It’s a great measure of whether a company is truly interested in building a culture of accountability with a focus on performance and results.  One of the compensation issues indicative of whether a company will truly commit to building a culture of accountability is how they deal with the issues of seniority in their compensation decisions.

I’ll be honest.  I’m not a fan of seniority as a factor in most any decisions, but especially in compensation decisions.  I believe that seniority was once worthy of the weight and emphasis that was once placed on it.  And, in a practical sense, I understand why seniority is used nowadays as a factor today in determining, for instance, in what order employees get to choose their vacation time.  However, as a factor in who gets paid what amount, I can no longer conceive of seniority being a reasonable factor in determining compensation.

In this age of technology advancements, global competitiveness and market reinvention, there is no longer any correlation between paying people more because they’ve been here longer and their skills or job performance.  For instance, companies send out their transcription to Taiwan while technical assistance calls to computer manufacturers are being handled in India.  Outsourcing may be a hot political topic, but it isn’t going to go away in the global economy.  These are issues of technology and global competitiveness, not seniority.  In terms of market reinvention, ask some former travel agents who had many years of seniority how much their seniority helped them when consumers in droves began making their own reservations on-line.  Almost overnight, the concept of working through a travel agency was gone.  The reality is that the number of years of experience doesn’t mean what it used to mean in the marketplace.

So, as you make decisions this year in your company about compensation, why should seniority not be a factor in your compensation decisions?  The most basic answer is that your customers don’t care about the seniority of the employee who is helping them.  Sure, customers want to deal with someone who is skilled and competent, but seniority has no correlation to the customer’s expectation to be served well by your company.  If your company won’t serve them well, customers will go elsewhere without regard to the seniority of the employees.

Let me give you a recent personal example.  We recently went to a very popular local restaurant.  While waiting to be seated I could hear one of the owners (lots of seniority) and a long time waitress (lots of seniority) sharing similar stories about waking up that morning and dreading the day ahead and looking forward to closing time.  The owner then pasted on a smile, turned to us and walked us to our table.  Now, did I feel warm and fuzzy about how appreciated and valued I was as a customer of this restaurant?  Will it make me more likely to go back again compared to the numerous other restaurant choices I have locally?  And, what did seniority have to do with the level of service I received?  The point is that I could just as easily have received poor service from a brand new employee for a whole host of reasons.

The notion that employees who have been here the longest are the most skilled and are the best performers is obsolete.  There’s an old saying that asks whether a twenty-year employee has twenty years of experience or one year of experience twenty times.  I’m not saying years of experience won’t make an employee more helpful to customers.  What I am saying is that the correlation is not automatic.  An employee’s job performance in serving the customer will depend on their knowledge, skills, initiative, level of service, responsiveness, etc., not on how long they’ve been employed with your company.  So, if your customer doesn’t consider employee seniority as an issue in their level of satisfaction with your company, why do you?

Most companies use multiple factors in determining compensation.  So, what factor should be used to replace seniority as a factor in compensation decisions?  The answer is skills.  The key question is “How has the employee made themselves more valuable to the company than they were last year, last month, and last week?” 

At performance review time, give the employee a list of skills they could learn to become more valuable.  Then, tell them how their compensation will increase as they demonstrate proficiency in their new skills.  And, no, I’m not talking about giving them a raise every time they learn a new skill.  For instance, a new employee who works part-time will get more hours as they are cross trained in multiple positions.  More hours will mean more compensation.  Of course, some new skills will certainly mean a raise in their compensation.  New skills make employees more valuable in the marketplace and, if you want to keep them, you’ll want to pay them competitively.

So, as a manager of one or one-hundred, make a positive impact today in your organization.  Make your company more competitive by using skills as a basis for compensation decisions in your organization instead of seniority.  It will build accountability and encourage a focus on performance and results.  It’s also a great cure for the disease of seniority.

Training Is For Animals

Training is often seen as the answer to many organizational challenges.  Besides, it’s less expensive than hiring a consultant, right?  When you look strictly at the outlay of cash, training may be less expensive than many other alternatives.  However, when you consider the return on your investment, which should repay your cash outlay and lost productivity many times over, training is often money thrown into the furnace.

Most training is so poorly designed that it is clearly a waste of every dollar spent on it. 

Trainers have learned how to use PowerPoint slides.  They’ve learned how to use stories to make concepts stick.  Some trainers are even very good presenters. 

But, oh so often, trainers fail to make the link between the knowledge they share and the change in beliefs that has to happen in a participants mind that will, ultimately, change a the participant’s behavior.

Here’s the formula:  Knowledge that changes beliefs will change individual behavior.  Change enough individual behavior and you can change organizational performance.  And, since organizational performance determines organizational results, effective training should help an organization improve it’s results. 

When selecting a trainer, ask for references who will say that the training provided actually helped improve the organization’s results.

Next post:  Do you need training or consulting?

Don’t Confuse Motion With Progress

“David, how’s it going?”, the seasoned leader asked his newest manager. 

“Wow, I’m swamped, but lovin’ it”, said David. 

“Tell me about what you’re working on,” the seasoned leader asked with a hint of where the conversation was going.  David reviewed his long list of activities for his boss.

“Can I make a suggestion David?”, asked the boss.

“Of course,” said David.

“Don’t confuse motion with progress,” the seasoned leader offered, recalling how he learned the same lesson some thirty years ago.  David looked at his list. 

“In light of that advice David, which items on your list are most important?”, asked the boss.

“These four items will help us make the most progress,” David offered excitedly knowing that he was learning an important lesson.

“Great, work on those,” David’s boss said with a smile as he looked at his watch and noticed that only six minutes had gone by.

Effective and results focused leadership in only six minutes?  Absolutely.  When we get busy, we all can get trapped by the to-do’s that pile up.  Make your to-do list, review it for which items will help you make the most progress and then focus on those things.

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To your success!

A Leadership Teaching Moment

“Why do we have to increase our revenue target for next year?”, the young supervisor asked his boss frustrated because he thought the budgeting process was over three weeks ago.

“Because of the Golden Rule,” the boss replied.

“The Golden Rule?”, the puzzled young supervisor replied.

“Yes,” the boss said.  “The people with the gold make the rules.”  There was a pause.

“How can they sit up there and arbitrarily increase our targets?”, the young supervisor said rather boldly.

“Great question”, the boss replied.  “Because of the shareholders”, the boss replied knowing that a teaching moment was about to take place.

The young supervisor was very puzzled.  “Aren’t we a private company?”, the supervisor added.

“Yes we are”, the boss said.  He went on.  “But the five shareholders who own the company have a choice to make on where to invest their money.  Should they continue to invest here where there is a risk that they could lose some of their money and where their return is not guaranteed or should they sell the company and put their money in the bank and get a guaranteed return?  We have to make the case to the shareholders that investing in the company again next year is the best return on investment for them.”

“Wow, now that makes more sense,” the young supervisor said enlightened by his boss’ teaching moment.  “So, what can we do to increase the revenue target for next year?”, he added.

“Let’s go back over the numbers and see what we can do”, the boss said now confident that his new young supervisor was committed to this organizational goal for the first time.

For more insights on how to effectively link employees, process, organizational results and return on investment in organizations, check out our other blog articles here.

Organizational Change - An Everyday Occurrence

If you thought all the talk about “organizational change” was a fad that would pass by like many of the other tired fads (quality circles, ropes courses, personal coaches, managing up, etc.), the “Great Recession” has changed that.

I just got off the phone with yet another CEO who wondered out loud when the pace of constant change brought about by the “Great Recession” was going to end.  I told him what I tell all of my clients.  Organizational change will be a constant presence and to pretend any differently will negatively affect employee performance and organizational results. 

We, and our employees, all want the merry-go-round to stop so we could get off and rest.  But it’s not going to stop.  At least not for a while (until we get near the peak of the next economic expansion).  So how do we cope?

Three Organizational Strategies

1. Treat the organizational change process as a human behavior process, not an organizational structure project.  These are people, not boxes and lines on a chart.
2. Set the expectation that your leaders will guide their people through the process instead of telling them to “sink or swim.”  You need those who can swim to step up.
3. Find a way to embrace on-going organizational change as a key component in your company culture.  Make change normal.

If you do these things, employees will perform, leaders will lead at a higher level and the organization will deliver improved results.  In doing so, you’ll build proactive competitive advantage that can’t be matched by sale prices, staff cuts, search engine optimization or the status quo.

For more insights on building organizational performance and breakthrough results, check out our other blog resources at www.orgresults.net/newsblog.  To find out how we have delivered results for organizations like yours, visit www.orgresults.net or contact our Founder and President, Jim Connolly here or call him at (309) 828-9060.

“Sink or Swim” Is Not In The Leadership Effectiveness Manual

True Story

The student asked the teacher, “Could you say that again?”

“Your homework for tomorrow is page 141, problems 1-16.”

“But, we haven’t learned that lesson yet.  How can we do the homework?”

“When you present the homework problems on the chalk board tomorrow, we’ll go over them.

“The student responded bravely, but hesitantly “Isn’t that backwards?  Aren’t you supposed to teach us first     before we do the homework?”

The teacher frowned in displeasure and said, “This is a sink or swim world, young man.  Get used to it.”

At that the bell rang and students filed out.  The student turned to one of his friends and said, “I thought his job was to give us all a chance to get an A, not set us up for failure.”

Is “sink or swim” part of your leadership style or a common leadership style in your organization?  It’s an expedient way to lead, but not an effective way to lead.  And, if you lead this way, there is no chance for achieving industry leading results.

Some people justify it because of the demands of time.  But, it still results in ineffective leadership and mediocre results.

If you are an ineffective leader and you’re committed to do something about it, contact us.  We can help.  If you’re not committed to do something about it, please contact one of our competitors.

Image Credit: Juho Holmi

Employee Performance Drives Organizational Results - A Reminder

A group of Fortune 500 managers was beginning several days of training together. 

“As we go around the room,” said the facilitator, “tell us how doing your job well increases the profits of your company.” 

There were 25 managers in the room.  Only five could make a credible connection between their jobs and the profits of the business. 

Had they been a jazz group as poorly organized, it would have sounded liike the first day of fourth-grade band.

What Followers Want From Leaders

What do followers want from leaders? 

It’s very simple.

“Don’t wait until after the fact and give me a grade.  Instead, please take the time now and show me how I can get an A+.” 

Is this how things work in your organization?  If leaders take the time to show followers how to get an A+, the employee wins and the company wins, right?

If this is not how things work in your organization, contact us to help you discover gold inside your company.

Do You Need Training or Consulting?

As promised in my last post, I said the next post would answer the question “Do you need training or consulting?  This question came up at a dinner meeting with a long time client.

In short, if you need new knowledge or skills, effective training is likely the answer.  On the other hand, if you need expertise, you would do well to contact a consultant that specializes in the area of expertise you need.  Of course, in some cases you need both.  However, avoid assuming that a trainer or a consultant can provide both.

What’s the goal of getting advice/expertise from an expert?  To gain insights into how a process works, get expert advice about which model would be best for a specific situation or use the expert to provide a service that you can’t or shouldn’t provide internally (i.e. behaviorial interviewing, strategic planning), etc.

What’s the goal of training?  Once you have the expertise you need, implementing it successfully is critical.  New knowledge and/or skills are introduced to impact the beliefs and behaviors of employees in order to improve their invidual performance.  When enough employees improve their performance, organizational performance improves as well.

Both training and consulting, when done effectively, provide value in improving organizational performance.

I hope you found this post useful.  There are more than 30 other articles/posts on our blog.  Feel free to use them to improve employee and organizational performance in your organization.  If I can answer a question for you, please let me know.

The Single Best Predictor of Sustainable Organizational Performance

Wouldn’t work be easier if you coud do the work of all of your employees?  Well, of course, it’s not possible for any of us who lead people to do the work of all of our direct and indirect reporting employees.

So, if we need others to help get the work done, wouldn’t THE single best predictor of organizational performance be our effectiveness at getting the work done by working with and through others?  And, to do so more effectively than our competitors.

If this is the case, why is it that we spend so much more of our time focusing on measuring sales, gross profit, operating profit, productivy, etc. than on the time we spend improving THE one thing that predicts all of these results?

Leadership effectiveness is THE single best predictor of sustainable organizational performance. 

How will you use this insight to improve results in your organization?

Check out our blog for more free insights into improving employee performance and organizational results.