The main focus was on compensation and that doesn’t begin to cover it.

Unfair treatment from pay to perks to training to strokes to any form of attention will create problems.

Note: I didn’t say ‘might’ or ‘may’ cause problems, but will cause them.

Not just engagement, motivation and retention problems, but also problems with creativity, innovation, initiative (AKA leadership) and especially trust—there won’t be any.

So let’s be clear.

There is no acceptable reason to treat any of your people unfairly.

How do you know that you are being unfair?

I have never met or heard of any managers who didn’t know deep down that they were being unfair.

They may ignore their actions and practice extreme awareness avoidance regarding their reasons, but they know.

The solution is simply to stop; there is no fancy action list; no books to read, no research to do.

You know when you do it, so you’ll know when you stop.

Simple—yes; easy—no. But it has to be done if you want your team to excel.

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Post from: Leadership Turn

Unlike the managers I described in that post, good managers know that unequal pay, but they also know that it’s not just a matter of title/grade.

Not everyone with the same title deserves the same compensation—in fact, to do so would be extremely unfair!

Most companies establish a range for each job and some guidelines within each range, but the guides frequently fall short of what’s needed in the real world.

How do you draw the lines to achieve fairness?

You might think that ‘fair’ is some kind of universal one-size-fits-all yardstick, but all the people I’ve talked with over the years define ‘fair’ relative to themselves and those around them.

Developers working in a small local company didn’t compare their salaries to the developers in IBM, nor to their bosses. They compared them to their peers, i.e., similar job, experience, background, company, industry, location and, lastly, title.

Workers are well aware that every position has a salary range; what they want is for their level within that range to make sense.

The problems arise when the person they sit next to gets X more dollars or a promotion for reasons such as those mentioned yesterday, reasons having nothing to do with skill, experience, attitude or actual work.

This is the critical knowledge that helps you develop working guidelines for your company’s ranges.

Let’s say that ABC Corporation uses a three-level structure in engineering: engineer I, engineer II, and senior engineer and that there’s a $20K range within each level. They currently have five people who are Engineer II. The salary range is $60K – $80K. Of the current people:

• Judy was recently promoted and is at $62K;
• Jim, $68K, and Craig, $72K, both have been working for six years. Although Jim has an MBA, he started in sales engineering while Craig had three years’ experience in a specifically needed skill when he was hired.
• Tracy is making mid-seventies with five years of direct experience; and
• Kim, at $80K and due for promotion, has a Masters’ and 17 years of experience, 5 of them in ABC’s field.

Although they’re all Engineer II, because the salary differences are based on factual points, not charm, politics, or managerial whim, the group is satisfied that they’re being treated fairly.

As usual, it’s not rocket science, it’s common sense—but I’m starting to think that common sense is rocket science these days.

But fairness is about more than just pay; please join me next Monday for further discussion.

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I realize that housing is a touchy subject these days, but over the last few decade as houses got bigger and bigger I found it weirder and weirder.

There’s no way to ever convince me that any family or person, really needs a seven thousand-plus square foot house in order to live comfortably—let alone 10,000 and up.

The item I remembered article was  an UpFront blurb in Business Week that I found hilarious.

The research was done by Finance professors David Yermack of New York University and Crocker Liu of Arizona State University and their conclusions casts housing excess in a new light.

The bigger or pricier the house…the greater the risk of lackluster shares.

If [the CEO] buys a big mansion, sell the stock. Many of these guys have been super performers, but at some point that stops, and they reap the benefits.

Seems reasonable to me.

Remember the old saying? Something about boys and the price of their toys.

Seems like the toys’ values are going up, while the boys’ values (and value) are decreasing. (Note: As used here, “boys” is genderless.)

I doubt that the current housing market has changed that particular mindset.

So the next time you go to invest, be sure to plug in the size of the CEOs home when evaluating a company and, thinking about it, the same probably applies to the entire C suite.

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Another article from McKinsey shines a spotlight on managers’ need to “master the disciplines of uncertainty,” because it isn’t going away any time soon.

The market may have torpedoed you and me, but it’s done far less damage to the corner office. “Compensation for top executives at many of the nation’s largest publicly traded firms was essentially unchanged last year, even as the stock market plummeted.” Why are we not surprised?

What has changed? An article in the WSJ Online tells us that COO positions are going the way of the dodo bird because CEOs want to be closer to the action and more involved in day-to-day operations. But Jay Galbraith says, “One unspoken reason COOs’ numbers may be falling may be simple fear. As the pressure on CEOs heats up, at least a few simply don’t want such an obvious successor in place.” Again, why are we not surprised?

Economics is one of the few business area that make my eyes glaze over; not from boredom, but from an inability to understand it—believe me I’ve tried. Last week I said that How Did Economists Get It So Wrong? is a must read to understanding what happened to the global economy. For those who wish to dig deeper, two new books on the oft-maligned John Maynard Keynes were reviewed in Business Week (they do understand economics:). “John Maynard Keynes ought to be named Man of the Year. Governments around the world have successfully, if messily, resurrected many of his insights from the 1930s to thwart economic collapse. Foremost is his idea that easy money and government spending can rescue an economy in free fall—with credit frozen, businesses panicked, and consumers paralyzed.” I’m sure this won’t be popular with the free market crowd.

Enjoy!

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The list of executives paid for non-performance in 2006 pales in comparison to CEO pay in 2008.

We’re all taught the value of hard work, exceeding goals, giving our all, but some have found a better way—a loving Board.

Non-performance bonus money isn’t new; in 2007 Coke had a $2.9 billion noncash charge in the fourth quarter, so they cut 3500 workers and their execs missed their performance bonus targets, but the Board stepped in, giving “…millions of dollars in “discretionary cash awards.”

And no matter how good a leader is, does any performance warrant an average of $144,573 a day for 13 years?

The explanation (excuse?) for these giant pay packages is the same one that kids have been using for generations—peer pressure.

Boards claim they can’t hire the best (AKA biggest name; best negotiator) without these outsize pay packages, but there are hundreds of skilled executives that could be had for less and who would probably do more.

For all the public outcry against outrageous pay there is none against the directors who don’t just approve it, but spend their effort outbidding the other Board.

When are they going to show some real leadership instead of whining and complaining about government interference?

And when will the washed and unwashed start putting the blame where it really belongs?

Little girls are made of “sugar and spice and everything nice;” little boys are made of “snakes and snails, and puppy dog tails;” and many (not all) “leaders” are made of ego and greed and the skill to mislead.

What are Boards made of?

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