Compensation Transparency: Advice for Getting the Balance Just Right

When we think about tools like Expedia and Yelp, we realize the value of transparency in the marketplace. The
underlying issue is information asymmetry – when one party has more information than the other, that party
has additional leverage in a discussion or negotiation. Leveling the playing field between two parties in an
exchange helps both to feel like they got a fair deal, which is essential in an employment situation. This
specifically applies to compensation as well. There is value in openness, and companies that find the right
balance can reap the benefits of pay transparency

Research Supports an Open Approach: Research points out that companies where employees understand the pay philosophy are more likely to see engagement from employees. A sense of trust and openness at work can create bottom-line business results. On the other end of the spectrum, pay secrecy has proven to limit business impact. This combination of factors clearly makes the case that businesses need to seek transparency at some level.

Trends in Transparency: A wide variety of trends have contributed to this increased demand for compensation transparency. From the deep insights offered by tools like Charity Navigator (and other online transparency sites) to the media sharing stories of corporate corruption and scandal, many drivers have created an environment that is ripe for additional openness.

Delivering a High-Quality Employee Experience: The good news is that any organization can improve pay transparency. Using tools like transparency audits and frameworks, companies can deliver a culturally-appropriate level of openness that improves the employee experience. These methods help organizations to make decisions (both big and small) in search of the right balance of transparency.

The Business Case for Transparency

Several years ago, Dan Ariely, a behavioral economist and professor at Duke University, performed an analysis of country-specific organ donation rates. His findings showed that countries like Austria and Poland had higher than 99 percent donation rates, but countries like Denmark had dismal rates in the single digits. He wanted to find out what made each group different, because Denmark is very similar to its neighbors in terms of culture, religion, and other socioeconomic factors.

It turned out that the key influencer was not an intrinsic one at all. Each country’s Department of Motor Vehicles actually used a different method for enrolling someone in organ donation. For Austria and Poland, the enrollment form’s default was to participate in the program. For countries like Denmark, the enrollment form required them to opt into the program. That small difference led to significant impacts on organ donation and availability, and it offers a compelling lesson on how our default reactions can shape outcomes.

The lesson here is, given the choice, we should default to transparency. For some business leaders, it is reflexive to protect information, keeping it secret unless they have a good reason to share. While working as an HR leader, I performed plenty of coaching with my executive team focused on the concepts of pay transparency and business transparency in general. I always told them their default should be to share openly unless there are specific reasons not to. The benefits of this approach include greater awareness and engagement in the employee population.

If you’re interested in reading and learning more about compensation transparency, be sure to check out our free eBook on the topic underwritten by the great team at Salary.com, where this content was pulled from. I’d love to hear your thoughts on the topic!

Performance Management, Culture, and Business Results [New Research]

This summer at Lighthouse we’ve been working our way through a number of research studies, but to be honest one of the ones I’ve been incredibly pumped about is focused on performance management. It’s probably because I get a sense of the discontent around this practice regardless of where I go and who I speak with. It’s incredibly hated at so many companies by HR, management, and the employees.

But there are also companies that are using it as a kind of secret weapon. In the research (the full report will be published in September) I am seeing some very interesting points on how companies plan to approach the practice of performance management, and it’s encouraging me to focus on it not just as managing or reviewing past performance, but enabling great future performance.

Top 10 Research Highlights

  1. We keep hearing it in the news–performance management is shifting/changing/dying. It’s certainly not staying the same. Approximately 60% of employers have made changes (including both minor adjustments and major shifts) to their performance process in the last 24 months. Another 25% are planning to in the near future.
  2. Despite the common discussion, annual goals still rank as the number one way employers manage performance. This is followed by recognition, coaching, and leveraging strengths.
  3. While performance feels like a drag for many employees (anecdotally :-)), the number one reason employers still practice it is to improve individual performance for workers.
  4. Which seems kind of said, because just 4% of employers say that their approach is highly effective and enables greater employee performance.
  5. Nearly one in five companies say that their performance management technology is clunky and difficult to use, which hinders progress in performance management, measurement, and improvement.
  6. At the same time, two-thirds of companies say that their approach improves engagement levels for their workforce. This is very much split by the kind of culture a company has (more on this below).
  7. High-performing companies are 58% less likely to say their approach to performance management is ineffective.
  8. High-performing companies are 20% more likely to say their performance management philosophy improves engagement rather than diminishing it.
  9. Astonishingly, companies with a competitive or controlling culture were more than three times as likely to say their approach to performance management failed to deliver the results and may actually impede employee performance and engagement.
  10. The performance practice spectrum. We’re analyzing the data through the lens of performance management activities on a spectrum. On one end are the old-fashioned, unpleasant activities like forced ranking and annual reviews. On the other end are more positive, engaging practices such as development coaching, peer feedback, and more.

    What we see in the preliminary results is that companies with a more collaborative culture are more likely to practice on the positive end of the spectrum while firms with more controlling cultures are more likely to fall on the negative end. More to come on this as we explore the data!

These highlights, while intriguing, are fairly high level. Look for additional insights in our upcoming white paper and webinar (to be announced) that focus more deeply on culture, what high-performing companies do differently, and other key insights from the research!

Reinventing Recruiting: An Interview with Terry Terhark of randrr [Podcast]


Tried to find a new job lately? It’s easy to feel like a rat in a wheel, running faster and faster yet getting nowhere. Despite this being a candidate’s market, it’s easy to feel like you are never going to get ahead of the game.

In today’s conversation (click here to listen), Ben Eubanks interviews Terry Terhark, founder and CEO of randrr. randrr is a recruiting technology firm that is focused on meeting the needs of candidates and individuals by providing highly targeted job opportunities and career insights.

During the conversation, Ben and Terry discuss what’s wrong with recruiting today and how to meet the needs of today’s job seekers. In addition, Terry talks about the issues he sees that bleed across generational and demographic lines, hampering each company from being both efficient and effective with their recruiting efforts. Ben also points to some recent data from Lighthouse Research that focuses on talent acquisition priorities for 2017 and why they matter within the context of the conversation.

Here’s a brief snippet of the conversation:

Ben: So, would you say then that we’re in a candidate’s market?

Terry: I definitely think recruiters understand that today. And it’s not just in high pressure fields like we’ve seen traditionally such as nursing, software, etc. Now it’s crept into skilled trades, sales, and other areas.

There’s tremendous pressure. Recruiters understand that it’s a candidate’s market, but from a company perspective they don’t necessarily realize that opinions have changed. Even today some of the statistics that we have gathered show that the process for job search or recruiting is disappointing and frustrating. Nearly three in four polled individuals said their online job search is frustrating. Company behavior and recruiter behavior has to change to fit that.

Ben: This definitely reminds us of the recent case study with Virgin Media. The company was losing tons of revenue because it treated its “silver medalists,” or candidates it didn’t select, so poorly. Those individuals wouldn’t even shop at the company after that treatment, but the company turned it around and really points to that as a huge revenue opportunity today.

Terry: That’s the issue. We see that companies are getting an average of 150 resumes per posting. That’s virtually impossible to qualitatively sift through, yet many technologies people use encourage more applications/submittals both for candidates and for employers, which compounds the problem…

Click here to listen to the episode and find out what the answer is to this and other problems facing companies today.

To find out more about randrr, be sure to check out http://randrr.com

Thanks everyone, as always, for checking out We’re Only Human. If you’d like to hear previous episodes just check out our archive at https://upstarthr.com/podcast

The Secret to Alienating Your Employees Over Time

I recently learned a great strategy that I can’t wait to share with you.

Employee: Hey Bob. I know you are busy. I just have a few quick questions. A few of us came up with this really great idea for the party.

HR: No.

Employee: Um, well, okay. So, Jim needs me to help him with this thing…

HR: No.

Employee: All right, then, just one more question…

HR: No.

Employee: Come on, you didn’t even give me a chance!

HR: (Smiles gleefully)

———

Let me tell you the secret to human resources: always say no. Whatever people want, just flat out turn them down. The great thing is that pretty soon, you can train them to stop asking for anything and settle for whatever you want to leave them with. They’ll stop bothering you and just get to work.

Clever, huh? Now you, too, can implement this kind of approach to human resources and make your stand for what you believe in.

News flash: if this sounds even remotely appealing to you, you suck and need to get out of HR.

This post was inspired by a recent conversation with an HR leader that was trying to help an employee with a major insurance crisis to cover his critically ill child. The response from one of her peers in HR? “It’s not our job to take care of them.” Ugh. Yes, we’re business leaders, but we’re also people too, darn it. Take care of your people and they’ll take care of you. Disregard, dismiss, or demean them and you will lose the best chance you have at being competitive in the marketplace.

Why is that so hard for some people to grasp?

2017 Recruitment Trends for HR Leaders

hiring-1977803_1280Recruitment trends are an ever-evolving concept. As fresh college graduates enter the cutthroat world of seeking for career opportunities, HR leaders must adapt with what they want so as to acquire the best candidates in the living world.

In 2017, the competition is a lot tougher due to the advances in technology and the ubiquity of social marketing. With the workforce becoming more and more progressive, recruitment strategies should be tailored the same way as well. After thorough speculation and analysis, we can expect what recruitment trends will be encountered by HR leaders this 2017. Continue reading

Your Uber Drivers are Cheating Because They Don’t Want an Algorithm for a Manager

If you missed the news this last week, a pair of researchers have published a report showing that Uber drivers are gaming the system in order to earn more money, reduce pickups, and fight back against what they see as a tyrannical algorithm. Here’s a blurb from PBS:

As University of Warwick researchers Mareike Möhlmann and Ola Henfridsson and Lior Zalmanson of New York University say in their best academese: “We identify a series of mechanisms that drivers use to regain their autonomy when faced with the power asymmetry imposed by algorithmic management, including guessing, resisting, switching and gaming the Uber system.”

Algorithmic management is, of course, the software Uber uses to control its drivers. As Mareike Möhlmann puts it: “Uber uses software algorithms for oversight, governance and to control drivers, who are tracked and their performance constantly evaluated.”

A joint statement from the authors elaborated: “Under constant surveillance through their phones and customer reviews, drivers’ behavior is ranked automatically and any anomalies reported for further review, with automatic bans for not obeying orders or low grades. Drivers receive different commission rates and bonus targets, being left in the dark as to how it is all calculated. Plus drivers believe they are not given rides when they near reaching a bonus.

Small wonder then that, according to Lior Zalmanson, “The drivers have the feeling of working for a system rather than a company, and have little, if any interaction with an actual Uber employee.”

So what are the drivers doing in response? Gaming the system by tricking the algorithm.

The researchers report that drivers organize mass “switch-offs.” The dearth of drivers in a given area then triggers the surge pricing mechanism.

The authors conclude by summarizing their findings, pretty much as formally as they began: “We found that [the drivers] actively tried to regain some of their lost control and sense of autonomy. We reported four observed driver behaviors. We found that drivers tried to guess and make sense of the system’s intentions. They utilized forums such as UberPeople to share these stories and gain social support. In many cases, these stories were echoed by other drivers, creating an urge to act. This resulted in a range of practices to resist the system, by switching to alternative systems and even gaming the system to their advantage.”

While the rest of us aren’t switching out our managers for an algorithm any time soon, it’s important to note some of the key statements in this piece that relate to all of us as employers.

The drivers have the feeling of working for a system rather than a company, and have little, if any interaction with an actual Uber employeePeople want to interact with people. That’s not Uber’s business model, but we’re seeing now yet another strain on the company based on a fundamental fact that humans are social creatures.

When you work for a nameless, faceless system (or algorithm), it becomes much easier to cheat the system and fight back. It’s different if you’re having weekly conversations with real people who care about you and your success. Remember this idea when you’re trying to find out how to connect your remote employees.

We found that [the drivers] actively tried to regain some of their lost control and sense of autonomy. Is it any surprise that workers would like some sense of control or autonomy in their work? It’s a foundational management and leadership premise to provide autonomy to workers, yet Uber tries to treat its drivers like nothing more than the robots that power its algorithm and platform.

Do we really have to have a newsflash that reminds this company that people are, um, people? They have hopes. Dreams. Desires. And they will find a way to get them if they feel like they are not appreciated or supported appropriately.

Drivers receive different commission rates and bonus targets, being left in the dark as to how it is all calculated. Plus drivers believe they are not given rides when they near reaching a bonus. One of the first lessons you learn in HR? Don’t screw with someone’s pay. Whatever you do, be transparent and don’t make people guess about how their compensation works, or you run the risk of creating a black hole of negativity and gossip that will swallow the company whole.

In a previous job a big part of my compensation was a quarterly bonus that my family depended on. It never failed that each and every quarter the deadline for payment would pass, I would raise the question, and eventually it would get paid. But why make me or any other employee have to go through those hoops for that? It makes me wonder if I would have ever been paid ANY of it if I hadn’t brought it to their attention. When it comes to how pay is structured, be clear about the expectations, be transparent about the process, and for goodness’ sake pay people when you say you will.

Okay, that’s enough from me. What are your thoughts on this specific issue or these general issues? Am I on point? Off the mark? 

Technology, Innovation, and Growth: Florida’s Business Climate

This is a sponsored post written by me on behalf of Enterprise Florida. All opinions are 100% mine.

Within the United States, there is an incredible amount of innovation and value driving local and national economic trends. One of those areas where this is happening in a notable fashion is Florida. Today we’re going to take a look at some of the interesting trends in the state as well as some of the companies that are doing interesting work.

Diverse People and Talent

The pipeline of Florida Talent is incredibly diverse. For instance, the number of technology firms in the state virtually ensures that the working population is going to have relevant, high quality skills.

Another high quality source of talent? The military. A few years ago I hired a team of individuals for an international project and picked a former Air Force pilot from Florida to lead the crew, because there was nobody else as qualified for that leadership role. In addition, universities across the state are pumping out highly educated workers ready to make their mark on the world.

We know that diversity drives business results, according to McKinsey’s research, and Florida clearly has the capability to field a truly diverse workforce.

Powerful University Partnerships

Speaking of universities, the higher education system in Florida is keenly focused on partnering with in-state businesses to ensure that graduates have the necessary skills for success, not just a bunch of outdated knowledge. This is key to driving Florida Innovation across the entire state. For instance, two of those partnerships that are connecting the next generation of students to the groundbreaking innovation happening at two enterprise firms:

  • GE Wind Energy in Pensacola + UWF College of Engineering
  • SAFT in Jacksonville + UNF College of Engineering

The partnerships are incredibly valuable for all parties involved, and it’s clear that this is a core element of success for these firms.

Thriving Hi-Tech Businesses

Finally, the Florida Business sector is full of innovative firms that are leading high profile projects. Some of the names you might recognize:

  • Blue Origin-rocket manufacturing and launch facilities
  • SpaceX-rocket facilities
  • EA Tiburon-video game software development
  • United Launch Alliance-joint venture between Boeing and Lockheed Martin

Additionally, startups are opening in Florida due to the business-friendly tax climate and the availability of talent. For instance, randrr, a recruiting technology firm focused on matching individuals looking for their dream career with companies seeking high-quality talent, moved from another state to open its headquarters in Jacksonville.

Keeping the talent at these firms is a priority, and that’s why the state encourages a high touch focus for employers. From the recruiting and onboarding to the training and development aspects, each step along the way is an opportunity to engage and create a valuable employee experience.

Growth Potential

Not only does the state already have a wide variety of resources and successful enterprises–it’s also poised to grow. For instance, Florida is ranked fourth in the nation for high tech employment opportunities, according to CompTIA. Employers that are looking to expand and grow should consider Florida’s track record and credentials when considering new locations. The video below offers additional insights into the state’s value proposition.

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