Horizon Point Consulting

Author: Mary Ila Ward

Do You Need to Raise Your Wages?
Steve Boese had a great blog post recently titled “CHART OF THE DAY: Your semi-regular labor market update”. In it, Steve shares charts that show the unemployment rate dropping below 4% for the first time since 2000 and the average time to fill for positions continuing to trend upward. It’s a great post, read it. If you’re a business owner, HR pro, recruiter or anyone that remotely has a pulse on hiring, it gives credence to the pain you are probably already feeling.

Where can we find good people to fill positions? Heck, I had someone tell me the other day, “I don’t know where I am going to find the bodies?” Forget great or good employees. This guy just wanted people that have a pulse!

Of all the information in Steve’s post, I found the following quote most relevant:

There is more to this story, and I need to take some time to look at what is happening with wage data, labor force participation, and the openings and quits rates, but these two charts and their data are both pretty revealing.

By the number of calls we have been getting recently for compensation studies and an increased rate of participation in the ones we typically conduct, I will tell you wage rates are being considered as a part of this equation, and I think they should be.

In general, wages have not risen in comparison to cost of living and especially productivity. Many people will argue that this is contributing to the erosion of the middle class and the widening of the gap between the have and have nots. Some will even say this wage problem will cause our next economic and social collapse. You can read more about this and find more resources related to this topic here: Economic Policy Institute: The Productivity- Pay Gap.

This isn’t a post to exert a specific economic philosophy, but a post for business leaders to consider how much pain can you bear? The definition of insanity is doing the same thing you’ve always done- i.e.- paying the same thing you paid during the recession, which is now ten years ago- and expecting a different result.

You can change a lot of things when it comes to increasing your competitiveness for people, but one of the most cut and dry things you can do is raise your wages.

If you’re struggling with this:
1. Get market data and see where you fall on the wage spectrum by geographic location, job title and other relevant criteria.
2. Based on your comparison:
  1. If you are leading the market, you shouldn’t be feeling as much pain as others. If you are, you need to examine what is causing this. An employee engagement survey may be a good place to start.
  2. If you are meeting the market, can you afford to move your wages and/or other direct and indirect compensation offerings up a notch to attract the best active and entice some passive job seekers? If you are in this bucket, I would suggest looking at a variable wage component like a bonus structure to move your packages up a notch and tie it to business outcomes. Do an analysis of what an increase in varying degrees would cost you relative to what turnover and positions going unfilled for a long time costs you. If you want to talk details about how to quantify what turnover and unfilled positions are costing you, email me.
  3. If you are lagging the market, can you afford not to move your wages up? Whereas in the matching the market scenario, variable compensation like a bonus structure may be the best way to get competitive, if you’re lagging the market in base wages, something like this probably isn’t going to help you all that much. Again, do an analysis of what an increase in varying degrees would cost you relative to what turnover and positions going unfilled for a long time costs you. Again, if you want to talk details about how to quantify what turnover and unfilled positions are costing you, email me.
There are micro and macro forces that impact your ability to hire and retain people just like there are macro and micro forces at work in whether or not your business is and can remain profitable.

With the market (aka the macro) strong in economic indicators leading to what should be increased profits for most, it is imperative to examine where you are in wages relative to that macro picture. It will help you make wise decisions that will sustain your profitability through the talent you recruit and retain.

Are you lagging, meeting or leading the market in wages?

Like this post? You might also enjoy:

The Conundrum of Incentive Pay

What You Pay Does Matter
May 29, 2018
6 Ways to Design Your Performance Management System Around Company Values
“….In other words, only 10 percent of organizations have be goals (what Andy Stanley means by a set of values that guide our decisions) effectively integrated in their daily practices. Mind you, many organizations write about their mission, vision and values in their annual report, but that’s only lip service unless those be goals are integrated into their recruiting, training, evaluating and promoting. How can an organization claim that its be goals are important when none of its leaders’ performance evaluations or pay is based on adhering to those values.”

I was recently in a meeting talking about performance management systems, when a colleague told our mutual client that the company she saw do this best was one of her former employers. She said all people related practices and decisions were designed around the company’s core values.

She said, it was hard trying to explain to the unemployment office that someone was terminated for “a core values violation”, but they did it every single time because a core values violation was the only reason anyone was ever fired.

Yet as the quote above states, very few people design their performance management system and practices around values, even when we find that doing things this way, well, adds tremendous bottom line value (pun intended):

“The surprising thing is that it has been proven that companies with be goals (values) do better financially over time. If you don’t believe me, read Built to Last by Jim Collins, in which he demonstrates empirically that companies with an unchanging set of core values and behaviors (be goals)- while still being open to changes in their day-to day practices (do goals)- outperform those that don’t have this attribute.”

So how do you integrate values into performance management?

6 Ways to Design Your Performance Management System Around Values

First, clearly define your set of values and the competences/behaviors that demonstrate living these values. You can use a case study approach we described in an earlier blog post to design values and tie behaviors easily to them.

Your employee handbook should be designed around values. The values- be goals- should be stated first and examples of how to live the values should be given. Company policies should be linked back to values. It should be more focused on we do this here or we behave this way here, instead of a running list of what not to do.

Take the handbook case further by designing videos that illustrate actual employees living the company values. You can embed these videos into your handbook and/or use them on the first day of onboarding to facilitate a discussion about company values.

If you have a formal performance appraisal system, the dimensions should be your values. Use a three-point scale – meets, does not meet, exceeds – and again give behavioral based examples or anchors to show what it would mean to meet, exceed or not meet expectations.

Design your rewards and recognition system around company values. One of our former clients does this through an annual all company values awards ceremony where peers nominate people for values awards. At the event the winners are announced and given a gift that directly relates to the value the person demonstrates. They become the values champion for that year and help others grow in living the company value they demonstrate so well.Another client does this through quarterly values awards that are also peer nominated. The company owner presents the winners with the award by giving them personalized gifts based on the winners “favorite things” that have been gathered when they are hired.
If you have another system- whether it is formal or informal, integrated through tech system or not- make sure it is structured around values.

If you think you need to fire someone or put them on a plan for performance improvement, consider how their poor performance relates to a violation of your core values. When you talk with them about performance improvement or termination, describe the reason for doing so in terms of the value(s) that have been violated. Designing any PIP forms or tools you may have around values can help facilitate this.

If it is hard to do any of these things around values, you most likely don’t have a comprehensive set of values in place and you may need to reconsider what is lacking as it relates to things that warrant rewards for great performance and the opposite for poor performance.

How do your company values help you be successful?

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What are Company Values and How do you Create Them?

A personal account of performance management that works… and doesn’t

Experiences Over Stuff: The Better Rewards and Recognition Strategy

The Changing World of Work: Is the Policy Going to Die?
May 22, 2018
What are Company Values and How do you Create Them?
We’ve been spending some time here at The Point Blog highlighting some of our company values.

But what exactly do we mean by company values and how do you form them? Many people, I believe, misinterpret what organizational values are and should be. This leads leaders to stay away from setting them, limiting their ability to drive organizational competitiveness through a common company language and culture.

So, organizational values are:
1. Not moral in nature. They aren’t right or wrong in a universal sense.
2. They are however, right or wrong for your organization.
3. They should be guiding principles that govern behavior. They should be able to help people discern do this/don’t do this by calibrating against one or more company values.
4. If done right, the values should lead to a competitive advantage for an organization.
So if you need company values, how do you create them? Here’s the process we use with our clients:

1. Case Studies.   We start with a case study process. Based on the size of the leadership team charged with coming up with the values, we ask small groups (of no more than four people per group) to create a case study of two great things that have happened in the organization and two total fails.   The groups then report out to share their case studies.   If you would like a copy of the worksheet we use to get people to develop the case studies, email me.

2. Behavior identification and classification.  The case studies are shared by each group and someone from our team listens. On flip charts we begin to map out key behaviors indicated through the case studies. We take the negative case studies and ask them to identify or state the opposite, positive behaviors so that everything is mapped out in a positive framework.

Once participants begin to see us doing this, they catch on to the process and begin providing us with words for the behavior map usually without even being prompted.   We then take these phrases and words and ask people to identify trends. Many things come together to actually mean basically the same thing, and we combine or strike out words and phrases to generate themes.

3. Value Emergence. What emerges are values that create an environment that allows for certain kinds of behaviors and prohibits others. The themes more often than not distill down to 3-6 value words or statements. We ask participants to take this list back with them and reflect on them. After about a week we regroup and finalize the values.

4. Drive company culture through values. Most often, we then set goals and people-based initiatives off these values, creating a culture driven by values.

The goal of this entire process is to identify common ways of working and a common language through values that drives competitive advantage for an organization.  The values are already there and/or a sought after state for the organization, we just pull them out and define them so initiatives can be designed around them.

We’ll spend some time on the blog over the next few weeks giving examples of how people practices and programs are designed around values. We’ll show how they come to life for an organization.

What are your company values?
May 1, 2018
8 Ways to Display a People First Mindset
We’ve been working on training to help people implement tactical ways to demonstrate a “People First” or relationship-driven mindset. It started out as something to meet a need for a retail client and has turned into a professional development topic for an entirely different industry.

In a world where every business is trying to figure out a way to distinguish themselves and create a competitive advantage, treating people like people is a good a place as any to start.

To do this, the critical piece is to identify and meet needs.

To create an environment where this can be done:
1. Make eye contact.
2. Smile. Making eye contact and smiling at someone invites them to engage with you. This is step one in opening the door to identify and meet a need.
3. Open-ended questions. Ask questions that don’t solicit a natural “yes” or “no” response. For example, not “Can I help you?” but “What can I help you with today?”
4. Let people take ownership. In the case of a retail business, one of the distinguishing advantages to buying in a brick and mortar store instead of online is that a person can see and touch the actual product. Let people take ownership of the product. Give it to them and let them hold it (but only if you know it meets their need, not to force it on them). In a situation where there isn’t a product to take ownership of, let people take ownership of their experience so they can guide and mold the experience to meet their need.
5. Learn and say/repeat name. We aren’t naturally very good at remembering people’s names because when we meet people for the first time and ask them their name, we are subconsciously thinking about the next thing we want to say, not focusing on remembering their name. Being conscious of listening to and recalling someone’s name can be a game changer because most people don’t do it. When you address a person during your second interaction with them by using their name, they remember it because it is often novel for that to occur. They are more likely, then, to engage with you to express their need(s).
6. Break the rules. There are policies everywhere you turn. When you break the rules to be able to meet a need, people remember it. As long as you aren’t putting more people at a disadvantage (see number seven below) by breaking the rule for one, break the rule if it meets someone’s need.
7. Stand your ground with respect. Sometimes putting people first means politely but forcefully correcting bad behavior. This could include “firing” some customers, employees, etc. When we cater to the vocal and negative minority, we aren’t putting people first. We’re being a coward.
8. And finally, DWYSYWD. Read more about that here.
How do you put people first?
May 1, 2018
How to Move Your Goods to Greats
Our previous post, “Leaders, Focus on Moving Your Middle – Play Offense, Not Defense”, emphasized the importance of focusing on moving your middle majority to high performers.

But how do you do that? How do you get your good players, or your B players, to become A players?

They all can’t be converted, but those who have usually have a leader that:

1. Sets high expectations. This comes in the form of setting challenging goals and holding people accountable to them.

2. After high expectations are set, the leader then provides Assurance and Confidence. This involves saying things like, “I know we’ve set challenging goals, but I know you are capable of achieving what we’ve set out to do. This is why I’ve given you responsibility to do this.”

3. Finally, Direction and Support is provided. This involves:
- Being approachable and available when needed.
- Providing stretch assignments to help the individual grow.
- Creating exposure to risks and failure. As a leader, you should expect failure and help people be comfortable with it coming. This could include asking people when you meet with them regularly about how they failed during the week. This shows you expect it and you want to know what was learned from it.
When a leader can successfully set high expectations, provide assurance and confidence as well as direction and support, it leads to increased self-awareness for an individual.

This then allows for authenticity to be shaped through hard work, determination and challenging assignments.

Finally, and most importantly, you’ve then done what leadership is all about. You’ve modeled how leaders create more leaders – completing the full circle of equipping someone else to move others (not just themselves) from good to great.

How do you grow people to become star performers?
April 24, 2018