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The Bartender says, “Hey the two of you make a nice couple, what kind of work do you two do?”  The HVAC Guy says, “ I design and maintain systems that keep organizations productive – I keep things cool in the summer, and warm in the winter – nobody complains, everybody stays focused and engaged in the buildings I maintain.”  He then turns to the lovely Investigative Reporter.  She stares at them both incredulously and finally says, I look into any situation and root out half-truths, scams and cover-ups – I make people aware of the real story and protect them from making big mistakes based on false information.”    The bartender, having seen his share of mismatched couples, rolls his eyes and says – “yeah, ok – good luck with all of that . . . ” and moved his way down the bar towards a group of what appeared to be HR professionals playing hooky from a professional development seminar . . .    Well, believe it or not these two very different personality types stayed together, and today, their daughter is the prototypical Compensation Manager!

She has merged the best from both of her parents – her Dad’s knack for dialing in just the right temperature, and her Mother’s hard-nosed, no nonsense view of the world.

OK, ok  –  a little context . . .   Fellow HR/Compensation Blogger  Chuck Csizmar posed a great question the other day:  What is your Comp Guy Persona?  I always read Chuck’s stuff and at the time I posted a reply, but since then I have been considering not only my “comp guy” persona but the future and “desired” persona of the Compensation Manager.

Back Story:   The economy is obviously down / stagnant.  Companies aren’t doing a lot with merit budgets.  Voluntary turnover is low to nonexistent.  A lot of theories are being popularized that pay for performance isn’t all its cracked up to be .  Survey participation is low.   Bonus plans are not paying out.

Is this the end of Compensation Management?  No!  These issues actually put an incredibly important focus on Compensation Design, and the onus falls on HR and the Compensation Manager to get this right – arguably, now it is even more critical to get it right then when things are going gangbusters from a workforce perspective!

If you set a rate incorrectly, or miss a survey anomaly, or don’t pay attention to your variable pay plan during the “go-go” times it is likely to get lost in the wash.   Make that type of mistake when your labor budget is teetering on the edge and you are likely to have the CHRO and CFO in your grill.

With all that said, I believe there are at least two things the Compensation Manager must do right now – #1 Address the temperature of the organization, and #2 be skeptical and investigate the whole story.

#1 THE TEMPERATURE OF THE ORGANZATION.   The role and persona of the Compensation manager must evolve, and I think the best foundation is that of the  HVAC Guy.  Yup, you read that right… the HVAC guy.

He is the guy that designs and installs the machinery and controls for regulating the temperature for the Organization.  He regulates the temperature based on:

1. The needs of the Business (factories versus offices)
2. The preferences of the employees (feedback, maintenance calls)
3. The external pressures (winter, summer)
4. The Expense / Costs (economical, sustainable)

As you can see the HVAC Guy is critical to keeping the business running.  He balances a lot of very familiar needs as a Comp Manager (business context, employee preferences, external labor market, costs).  If the environment is too hot then people get tired and slow; if its too cold, folks are bundled up shivering and productivity drops. But when the temperature is just right –  no one is complaining and the organization can concentrate on productivity, quality and execution.   Given the critical nature of compensation, labor budgets and workforce engagement, the Compensation Manager’s ability to “dial in” just the right level of rewards, under the right circumstances, becomes critical to the motivation of the workforce.  

#2 BE SKEPTICAL AND INVESTIGATORY OF YOUR MARKET DATA   I can’t tell you how many times I see the following issues brushed aside in today’s Human Capital environment . . .  We don’t need to worry about that . . .”  “We aren’t even going to increase pay this year, who cares what the survey says . . . “.  Well, the following topics may seem basic but can be very easily overlooked – but when budgets are tight, you better be positive you have the best market intelligence available, and be positive you are using it correctly.  This takes a lot of professionalism, effort, healthy skepticism and vim; especially in the face of a perceived lack of interest in the labor market by senior management.

So – back to a few basics – but given what I have seen over the last 2 years, I guarantee you these bear repeating in compensation departments across America.  Many of these points were developed in conjunction with my friend Steve Treder at Western Management Group, a fine publisher of compensation data.

  • WHO ARE THE PARTICIPANTS IN THE SURVEY?
  • Smart employers want their labor market competitors to be in each survey they’re in
  • Engage yourself into the process
  • Assert your influence
  • Personally invite the participants you want into the survey
  • WHERE DOES THE DATA REALLY COME FROM IN THE SURVEY?
  • Sources of survey data are all around us
  • It’s easy to assume that a particular set of compensation market data is authoritative
  • It sure looks official, arrayed there so neatly and attractively

  • HOW HAVE THE JOBS BEEN MATCHED IN THE SURVEY?
  • Never assume that every survey participant’s jobs have been correctly matched
  • Insist upon knowing the job matching procedure for every survey you use
  • If the survey holds a job matching meeting, attend it!

So – are you the son/daughter of an HVAC Guy and an Investigative Reporter?  

If you are a fellow “Comp Nerd” I hope you have at least some of that DNA in you – today’s Compensation Manager must behave like an HVAC Guy, but with the skepticism and business savvy of an Investigative Report.

Do you have what it takes?

Do you agree with the persona?

Please let me know!


A very well respected Singaporean HR professional (and a true friend!) once told me a story . . .   a story of a frog sitting contently in the bottom of a well.

The tale goes something like this  (it is a little long; will take about 3 minutes to read, but I did not want to paraphrase – just read it!)

Once there was an old frog who lived inside a deep well.  Frog was so happy with his home.  One day, Frog was sitting on a ledge near the wall of his well appreciating the sky when he saw an unexpected visitor at the corner of the big round sky. It was a big turtle from the Eastern Ocean that Frog had never seen before.
“Hi there!” Frog croaked. “I don’t believe we’ve met before! Please friend, please come into my well and pay me a visit. My well is the best place in the world, and I’m sure you’ll be very comfortable here.”  Turtle looked down inside the small well and said, “I’m sorry Frog, I don’t think I can make it down there – I think I’d get stuck!”
“But of course you can fit in my well!” said Frog, “It’s very spacious! And you don’t look too big to me.”  “That’s because the opening to your well is so small, you can only see my face. You still can’t see the rest of me!  But you’re right, in comparison with my friends from the Eastern Ocean, I’m not very big.”
Frog’s eyes bulged. “You mean there are creatures outside of my well there that are bigger than you?”  “Much bigger!” Turtle said. “Here you have tadpoles, but in the Eastern Ocean we have whales! Here you have goldfish, but in the Eastern Ocean we have Sting rays, sharks, and schools of small fish that are so big that they look like clouds. The Eastern Ocean is so big that it can hold all of those things and we never feel cramped. We can’t see the end of the Eastern Ocean like you can in your well.”
The Frog fell off his lily pad in shock. Then he climbed back up, a little unsteadily. He stared at Turtle for a moment in disbelief, and then said, “I’m not sure I believe you. I don’t think there could be anything that big, and certainly not as nice as my well.”
Turtle smiled, “Then I’ll take you to see it.”
It took all of his strength but by hopping off of the walls, Frog was finally able to jump out of his well and land on the dewy grass beside it. But once outside, Frog couldn’t stop sneezing and squinting.
Turtle asked, “Do you feel alright, little friend?”
The sun was so hot on his back, but eventually Frog nodded. “I always thought that the sky was round and that it was the size of my well’s opening. I never knew that it was so huge – I can’t even see its edge! And the sun! It blinds my eyes! I never knew it was so powerful!”
“Now do you understand why I said the well is small?” Turtle said gently. “Certainly your well is a great place to live, but there are many great places on the earth – some much greater than your well.”
Frog just hung his head in embarrassment. He knew he would still enjoy his life in the well, but now he realized that he and his well were a small part of a very big world.

 

So, what does this mean to us in the HR and Rewards world?

Let’s say our friend Frog were a Compensation Manager for a Division of a large Company – I suppose he would:

  • Design rewards without the full context of the business strategy and what the business is looking for from the workforce.

  • Focus solely on his Division and its needs – without regard for the broader global issues his Company faces in terms of rewards philosophy.

  • Never seek input from his friend Turtle (no, not that Turtle) who works in Recruiting and has insights to the external market; would never listen to his friend the Bird (no, not that Bird)  the HR Generalist when he provide stories of internal issues and inequities.

  • Not consider other industry’s practices or look for new ideas from the rewards community

  • Always answer, because “That’s the way we’ve always done it”.

Now – how do you perceive the story of the Frog in the Well as it pertains to . . .

Your work?

Your Company?

Or even . . .

 . . .  You?

In 1968, Stanley Kubrick released his epic science fiction film  2001: A Space Odyssey .  According to reviewers and movie watchers over the last 40-plus years,  the film attempts to deal with the elements of human evolution, technology, artificial intelligence, and extraterrestrial life.  Ok sounds good – but no amount of midnight movie viewing is going to explain the ending to me . . .  But maybe that was Kubrick’s point – to be so purposefully vague to leave us wondering about our existence and our future.

As I think back – and as I relate this to HR (yes – there is a tie into to HR here! ), there was a scene that always stuck with me . . .  that of the poor ape-like early humans foraging for food in the African desert.  Another tribe of man-apes has driven them from their water hole.  Defeated, they sleep overnight  and awake to find a black monolith has appeared in front of them.  They approach it shrieking and jumping, and eventually touch it cautiously.  Attendant with the discovery of the “monolith” (and conveyed through its power), they discover how to use a bone as both a tool and a weapon  . . . which they later use to reclaim control of the water hole by killing the other tribe’s leader.   Triumphantly, the ape-man chief throws the bone – insert tool –  into the air, switching (via Kubrick’s magic) from a bone to an orbital satellite millions of years in the future.

That’s one surreal, disturbing and vivid evolutionary advancement!

Now – allow me to juxtapose  -  I recently read an article by Kyle Lagunas  at Software Advice entitled  Strategic Human Resources Management 101:  A Primer for Success.  Kyle paints a picture (albeit far less surreal than Kubrick’s 2001) of the evolution of human resource (not human beings) and technology.   The gist of his article is this:  Once an HR organization (of basically any sized employer) has streamlined processes and moved towards cost effective technology solutions – they can then begin to take the “big leap” and evolve into a consultative HR organization that “address talent and strategic change-oriented issues.”

Kyle’s makes a convincing argument referencing data from the Hackett Group and from practitioners, surmising that  for HR to move past being viewed as a staff function (overseeing issues such as employee data and company policies)  it must design and enable processes that take activities such as hiring, compensation and talent management, out of the HR silo and make these process easier to share across the organization – advising on and adding value to key business decisions.

“The adoption of web-based HR software has been a key driver in the development of strategic HR.   Best-of-breed HR software solutions keep both managers and employees actively involved in managing, tracking, and sharing information.  By automating core HR processes, organizations can focus more of their time improving the organization from a strategic perspective—such as hiring better people, setting performance goals and improving talent effectiveness. “


So, what will mark your evolution to strategic HR?  Is it Process and Technology?

Have you taken a hard look at the processes you manage – are they holding you back?  Would technology help?

How do you share data and information across your organization to better enable managerial decision making?

Of note:  no Oscar for Best Makeup existed until 1981. Nonetheless, it is considered ironic that in the same year that 2001 was released, a special honorary Oscar for ape makeup was given to Planet of the Apes, but the more realistic ape-makeup in 2001 was ignored. Arthur C. Clarke quipped that the committee may have not realized the apes in 2001 were actors (actually professional street-mimes.)

Its more than just an old Sesame Street riff . . . its the essence of an important term that is getting commingled inappropriately into compensation and rewards conversations.   Let me explain . . .

Recently, I have seen a surge in the amount of blogging, chattering and arguing about inflation (insert cost of living) and wages (insert cost of labor).  My fellow blogger Chuck Csizmar  wrote a nice post about 2 years ago on this topic; but, I need to add my twist to this too!

I have to admit that this has been a long standing pet peeve of mine . . .  Working as rewards professional for many years has done things to me; perhaps its made me more jaded (sadder, but wiser) but I suppose the one thing it has certainly done is shown me what an employer can influence from a strategic perspective, and that which it most certainly cannot.  So, when I hear HR professionals, employees and employers discussing the following terms in a mish-mash of convoluted misunderstanding, I get a little nervous about the outcome . . .   inflation, the consumer price index, cost of living differences, merit increase budgets, pay raises. . .

Let me explain . . .

We have to be careful mixing cost of living (inflation/CPI) and the cost of labor (wages). These are two very different things.

In simple terms, the cost of living is the price we pay for things like a loaf of bread, a container of milk and a stick of butter.   These costs and the indices that study and describe them are typically heavily influenced locally by housing / rental rates and generally by the price of oil / gas.  The cost of living can vary widely by City and State (New York, San Francisco and Honolulu are very high; Louisville, Omaha and Albuquerque are low).

In simple terms, the cost of labor is the price an employer can expect to pay for a certain skill set, or a certain job in a certain job market.  These costs are studied by the Bureau of Labor Statistics and a variety of Compensation Surveys.  These costs are heavily influenced locally by supply and demand (e.g. software engineers in San Jose are in high demand; oceanographers in Boise are not).

Now, allow me to give you a few rough examples….

  1.  Above I mentioned Honolulu has a high cost of living.  However, the supply of waiters, bar tenders and surf instructors remains high, and therefore the cost of labor stays low.
  2. And how about this –  Louisville has a low cost of living, but demand for Horse industry personnel puts a premium on that specific job’s cost of labor.
  3. Now how about this (the story you are about to hear is true only the names have been changed to protect the innocent).  You run a call center in, among other places, Muskogee, OK.  You are able to employee a talented workforce of inbound call center employees at a reasonable rate (relative to other parts of Oklahoma and the USA).  Both the cost of labor and the cost of living are relatively low.  You compete against Wal-mart, some fast food chains, and the city/county government for talent.  Now, what happens if a competitor opens another call center in town?  What competitive pressures will you face?  Will wages go up for good call center folks?  You bet they will.  Will housing and gas prices go up?  Nope.

IMHO, an employer (a business) cannot be responsible for providing wage increases for diverse sets of jobs over different geographies that somehow cover the cost of living.

However . . . Employers should make business decisions that are consistent with their principles and compensation philosophy within the context of their landscape (geographies, skill sets, etc.).   If an employer wants to stay competitive, then it better well study the labor market and plan accordingly.   A well developed and communicated compensation philosophy (e.g. 50th percentile for software development in the Silicon Valley, or whatever), and the attendant research and analysis that goes with that – openly preached by your HR folks , managers and executives – will go a long way . . .

 

So, as an employer, which do you really care about when it comes to making decisions on pay budgets, increase philosophy and salaries for new hires?    The Cost of Living or Cost of Labor?

What do you say when your employees ask for a “cost of living increase”, or when they say their raises this year can’t cover inflation?

Please post a reply – I would love to hear from you.

In 2008, it was estimated that 77 million Americans had watched the series as children. As of 2009, Sesame Street has won eight Grammy Awards and 118 Emmy Awards—more than any other children’s show.

Founded in 1921 and publicly traded since 1925, Newmont is one of the world’s largest gold producers and is the only gold company included in the S&P 500 Index and Fortune 500. Headquartered near Denver, Colorado, the company has over 34,000 employees and contractors worldwide.  With approximately $10 billion revenue Newmont Mining Corporation is primarily a gold producer, with significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico.

Leading the total rewards and global mobility function for Newmont Mining is David Kristoff.  David grew up in a premier technology firm, Sun Microsystems, but for the last year and a half he has led the total rewards organization for the largest gold producer in the world:  Newmont Mining.   David was nice enough to buy me a Sobe the other day, and he also agreed to talk about his career, his thoughts on the rewards profession, and what he and his team are currently working on at Newmont.  Here are some highlights . . .

David, who would you choose to portray you in a movie about yourself and your work?  Surprisingly David had a quick answer to this one:  Will Farrell .  David feels Will’s quick, and extremely dry wit would best fit his style.  

I asked if it had anything to do with executing “the perfect cheer“, but David maintains  its his style and delivery – its dry, its fast… and you have to think for a few seconds to make sure you are with him.  Additionally, those of us who know David know that he, like Will Farrell, plays a little known musical instrument, which I think the real reason he wants Will Farrell to portray him.  


Q:  David,  Compensation is to benefits as _______ is to ____________      David offered that Compensation is to Benefits as Tires are to Rims (did I mention he is cyclist?).  You see, you need both in the employment proposition in order to be effective – one doesn’t work without the other – you won’t get very far on just one.    

Q:  Tell us a little bit about what led you into the HR/Rewards field – was this something you had always dreamed of growing up?      Like many of us, David got into total rewards completely by chance.  He was really targeting to be an employment attorney – one canceled summer internship lead to an internship in Sun Microsystems’ compensation department.  After the internship he went back to Cornell, and the following summer he started a 13 year career in Compensation at Sun.   Happy that internship with the NLRB got cancelled?  I don’t think the NLRB offered stock options like Sun . . .

Q: In terms of your HR career, have you had a mentor?  What about a nemesis?  What was it about these people who influenced you?  David admits that he has had both; and, feels both are important in the development of a strong rewards professional. He says, “Both challenge you to work better/smarter and to grow in different ways.”

 He declined to go into who the specific nemeses were, but offered that Bill MacGowan has been his career mentor; offering him latitude to  do more things, take risks, push the boundaries and to really put him in “burning platform” situations.  

Q:  What is the difference between “personnel” and “human resources”?   Simply, David sees “Human Resources” as the alignment of how Senior Leadership incorporate talent management into the business plan – like any other resource they might incorporate.  Personnel is the tactical management for that resource/asset.

 

Q:  What about “pay” versus “rewards”?   The way David sees this one is that “Rewards” is the connection to the company’s culture (is it a high performance, high differentiation firm, for example).  Whereas “pay”  is the basic state, the hygiene factor.

Q:  What do you see as the natural evolution of the Rewards function within HR?  Can you predict the future?     David predicts an evolution away from “pay and rewards” and more towards models where we as professionals truly support an integrated Talent Management / Total Rewards approach.  Along these lines, David notes that Communications are the center point to the integration of Talent management and Total Rewards – therefore, technology will play a big role in keeping this simple, effective and efficient.  These communications are of course enablers to managers and employees, but David notes that communications amongst Rewards professionals and industry groups are critical as well – and social media and technology are pushing this to new levels.   Specific to social media, David’s team will be focusing on a Compensation Portal at Newmont with monthly updates to employees and managers and as well as “podcasts” to managers on “how to differentiate pay”, etc.  – that’s good stuff!

 Q:  What’s up at Newmont Mining, and what are some specifics that you and your team are working on?  What is it about your industry or company that creates these Rewards demands?         David has now been in the mining industry about 1.5 years, and his first reaction to this question was that Mining is like the Tech industry in the late 90’s .

  • They are redesigning LTI schemes
  • Moving certain critical and unique positions off of standard corporate bonus schemes
  • Lots of challanges with compression from new hires
  • Mobility – they are a very global firm with a lot of talent movement
  • A general maturation of this industry towards more sophisticated HR/Rewards resources and practices

Just Rewards…

Elliott Avenue and I would like to thank David for his time and candid insights into the rewards profession, and for doing it with a sense of humor. 

Watch for the next installment in this series, and of course please provide me with your feedback and ideas . . . who knows, you, like David, may just earn your “just rewards” too!

  • How do David’s comments fit with your insights or experiences?

  • Are commodity based natural resource firms like the Tech firms of the 90s?

  • Could Will Farrell ever play a VP of Total Rewards?

PS.  Will Farrell garners approximately $20,000,000 per motion picture  (David, I could live on that “tire” and forget the”rim”)


Laurie is a fun and insightful blogger and speaker on “everything” with a little bit of HR sprinkled in.  I encourage you to check out her blog “The Cynical Girl”   Which is also a great song by Marshall Crenshaw

Ultimate HR/Career Blog List for 2011: V3.0  

Ever been asked for your definition or your philosophy on work life balance?  Everybody seems to have a different take; but it usually has to do with really maximizing your personal time, and at the same time delivering on the work that has to be done for your employer.

I have thought a lot about this over the years, and have always sort of struggled… because to me, work life balance isn’t a separation of activities – its more of a way you conduct your life, regardless of what you are doing.

Recently I stumbled on a quote from James Michener whom I can honestly say has to be one of the best writers ever – certainly in my top 4 or so –  wow can that guy tell a story!  Hawaii, Centennial…  classics!  This quote absolutely stuck with me – and I think fits the best with how I would define work life balance.

 

“The master in the art of living makes little distinction between his work and his play, his labor and his leisure, his mind and his body, his information and his recreation, his love and his religion.  He hardly knows which is which.  He simply pursues his vision of excellence at whatever he does, leaving others to decide whether he is working or playing.  To him he’s always doing both.”  – James A. Michener

 

How do you define work life balance?    Mine?  I hardly know which is which – you decide which I am doing…

 

 

A little bit more on James Michener…
His novel “Tales of the South Pacific” won the 1948 Pulitzer Prize for fiction. Michener studied and taught (1936 – 1941) at Colorado State College of Education (now the University of Northern Colorado) before leaving for Harvard, World War II, and a prestigious and prolific writing career. He came back to Colorado to research “Centennial,” his novel about a fictional Colorado town that eventually spawned a 26-part television miniseries. Michener returned to Greeley for the last time in 1972 for the dedication ceremony of UNC’s James A. Michener Library.
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