All The Wrong Reasons

By Alan Measures, MOOG

I’ve probably been spending too much time surfing the internet, but it seems like every site has links to some kind of helpful list; in just the last hour I’ve taken in “6 Unique Design Ideas for Small Conservatories” (interesting use of the word “unique”), “12 Awesome Business Ideas” and “The 13 Most Popular Dogs” – (why stop at 10?). So, in the same spirit, here’s an indispensable – and short - list of reward “facts” that turned out to be myths.

The flight risk
We’ve all come across them – the employee that is on the cusp of moving to that new, better role that our company just can’t afford to lose. I can recall only having been in a reward role for about a month when I was presented with my first case. Mike, a systems engineer, was sitting on two job offers but wanted to give the company a chance to respond before he resigned. It took a particularly generous interpretation of Computer Economics pay data to generate the case for giving Mike a pay rise, but it saved the day, and Mike stayed. As he did the second and third times the offers rolled in. I noticed on LinkedIn a few months ago that Mike had recently retired. From a systems role in the same company where I first encountered him.

Job titles aren’t important
Another one you are probably familiar with. “Call me anything you want – doesn’t matter to me. It’s what you pay me that counts”. It’s a point of view I’ve heard a few times. Usually from Managing Directors or Chief Executives.

My experience has been pretty much the opposite, and I’ve always believed in being as generous as you can with something that costs nothing. Although there are limits – just ask the people who were appointed as 'Retail Jedi’s'. I’ve never worked with a Chief Fun Officer - a different kind of CFO.

There must be market data for this job
I’ve had the privilege of working in a variety of industries amongst actuaries, engineers, accountants and geophysicists, where the uncertainties of everyday life can be diminished if not eradicated by gathering data. Unfortunately, because salaries are expressed as a number, this would often prompt managers in these professions to think that salary benchmarking was a science, rather than an art. And that my scepticism about our ability to price a senior thermonuclear plastics engineer in the ML62 post code was misplaced. And yet there are so many caveats to survey data that it’s hard to treat it as anything other than something of an estimate. Indeed, I once had a complaint from a delegate on a CIPD reward course about a session I did on reasons why market data might be less than wholly accurate. Proving President Garfield (remember him?) right when he said “The truth will set you free, but first it will make you miserable.”

Upper quartile pay for upper quartile performance
It’s one of those axioms that seem so inherently logical. The cream floats to the top etc. As someone who had designed and implemented bonus plans and pay for performance schemes, the high pay / performance mantra seemed plausible, even if it was hard to evidence in the businesses I worked for.

And yet as any West Ham United supporter can tell you, you can have a million pound pay bill out on the pitch, and still get relegated. (Even with 42 points, as happened in 2003. I always wanted my club to set records and unfortunately this remains one). The plausibility of upper quartile pay delivering equivalent performance took an even bigger knock when I was given the opportunity to advise some charities on pay – meeting people earning less than half of the private sector peers, and with three or four times the drive, talent and enthusiasm. I’m with Dan Pink when he says “the best way to use money as a motivator is to take the issue of money off the table so people concentrate on the work”.

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  • The flight risk?

    I'm sure we've seen lots of them in our careers, Alan.One I firmly recall from some years ago was a tax manager. Every year, for 6 years, he complained that he could add 40% to his provincial earnings by going into one of the big consultancy firms in London - he knew as well as I did that he would need to work 70+ hours a week to receive that level of salary, and that it would mostly be wiped out by housing and transport costs.....

    As for Q3 pay for Q3 Performance, I don't have a major problem with this, provided it's structured intelligently - i.e. Median base salary with a very strong bonus opportunity. any bonus pay-out must be based on real added value - the artistic part (not a science, as you say) is finding and callibrating the appropriate measures for "performance".....

    Another common myth in my experience is "increase his salary and he'll be happy". Adminittedly, it might work if the issue is genuine market misalignment. More often than not however, people move for other reasons (career progression, work atmosphere).