Talent Management, Variable Compensation and Sales Productivity

As companies attempt to recruit, retain, and develop talent in a highly competitive market, a few important facts should be considered. The Baby Boomer’s continued exodus from the workforce, combined with a relatively robust economy in which unemployment is at a historic low since the great recession of 2008 are driving up compensation demands for employers. Exacerbating this challenge for employers is the demographic impact of Millennials who tend to change jobs (and careers) more rapidly than previous generations. So what should organizations do in light of these trends?

First, they should be creating compensation structures that reward exceptional performance, even as they should reduce the number of metrics on which those employees are measured. Simple, straightforward performance goals related to productivity, sales, efficiency, compliance, and turnover are a few to consider across a variety of roles. Additionally, businesses now eschew annual performance review in favor of performance check-ins. We recommend check-ins are brief, frequent, and ongoing interactions between management and staff during, many of which may include the use of a performance dashboard. In short, those dashboards are like vital signs such as blood pressure, respiration, heart rate which are consistently monitored when healthcare professionals are monitoring patient health. Yet unlike those healthcare monitoring needs, organizational check-ins, should be forward-looking. In such cases, past performance (say for a week, month, or quarter) discussions must include dialogue about what employees should do more of, less of, do better, or do differently in the future. Such check-ins, based on our experience and research should create a culture of both accountability and encouragement.

In their efforts to reward performance, employer’s efforts related to the oft-dreaded annual review and an average salary increase of 3% seem a poor investment of time and money. So while there remains a continued obligation for employers not to discriminate in their compensation programs, establishing measurable performance standards and tying exceptional performance to variable compensation is an important tool in the toolbox of employers. Yet it is important to note variable compensation is meant to be variable. As one company executive puts it:

“Variable rewards based on clearly defined target goals at the individual, departmental and organizational level can change employees’ mindsets from “this is what I need to do to please my boss so I can get a big raise or bonus” to “this is what I need to do to add value to the company,” Rubino said. For incentive metrics to work, “there must be a performance threshold beneath which no payments are made,” he added. “That’s why the program is called ‘variable.’ “

Second, to insure buy-in from their teams, employers should be allowing their team members to weigh-in on how their performance goals are established, allowing for flexibility with regard to the experience and expertise of their team members. Rarely does one size fit all when it comes to performance expectations. That isn’t to say minimum performance standards based on job roles should not be established. But, say in the case of a commercial bank a Relationship Manager I may have the same duties as in many was a more tenured Relationship Manager V. So the loan, deposit, and fee income production responsibilities of each class will vary. And those goals may vary, to some degree, based on the markets in which those team members serve.

To be clear, clear, the responsibility of a sales person is to grow the incremental revenue of an organization. That may mean they have some obligations to help retain clients (as in the case of bankers), but continually growing revenue and the number of clients of the organization should not plateau for any sales professional. Revenue growth is largely what matters when it comes to sales performance and variable compensation, commissions, bonuses, etc. And, in general, the more liberal the variable compensation plan is, the lower fixed salaries should be. In some cases, again, say relationship managers in banking, employees will have non-sales related responsibilities (client retention, portfolio documentation, compliance, supporting corporate values) so their sales may represent a higher portion of their relative compensation than in true sales roles.

Third, if employers want to retain top talent (especially younger talent) those team members must see a path for growth in their expertise and the potential for being rewarded. Yet such rewards need not always be financial. They can include additional responsibilities, inviting them into organizational leadership programs, providing them with a third-party coach or an internal mentor. Millennials, in particular, are concerned about how they can grow professionally and understand how their profession matters in terms of their purpose or intentions about life—and most don’t believe their talents are being adequately utilized. Smart employers identify their promotable talent and those into whom they will pour their energies in an effort to keep them on staff—especially those who are highly productive. Fortunately, such developmental strategies need not be costly. They can be as simple as engaging such team members in strategic projects, allowing them to observe and listen in to dialogue around decision-making, developing internal best-practices or case studies for the benefit of the entire organization.

Finally, we’ve founded wisdom in the adage sometimes you can do more with one big tractor than two little ones. This analogy, when it comes to talent means hiring two lower salaried employees may mean organizations accomplish less than if they hire one higher salaried team member. It’s possible pay two employees $50,000 a piece but get less return on that $100,000, than by hiring a single employee with a $75,000 salary if that individual has more expertise, motivation, leadership ability, and determination than the other two. We call that leverage. Looking for bargains in organizational hiring and talent acquisition strategies can result in a far lower ROI. Smart employers don’t always bargain-hunt.

If you’d like to know more about how Performance Strategies Group works with organizations and individuals to help build meaningful strategic plans, our executive coaching work, or how we collaborate to help them build better leadership and sales processes and skills, contact Principal Consultant, Jim Owens at jim@psghsv.com

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Performance Matters: The Boomer’s Guide to Coaching Millennials

According to a recent Gallup report, more than half of Millennials are looking for a new job.  And that same report makes clear as employees of that generation don’t want bosses. They want coaches—people who can help them develop their abilities and contribute to meaningful work. That means Baby Boomer’s in leadership roles need to approach them differently than they might have wanted to be lead themselves. So besides realizing not all Millennials (just like Boomers) aren’t all the same, what should Baby Boomer’s do if they want to effectively recruit and retain and coach Millennial.

First, leaders must realize a paycheck alone won’t result in an engaged Millennial team member—or probably anyone else these days.  Those employees also want to know how their work impacts the organization’s stakeholders—owners, customers, other employees and their communities.  They want to know why and how fulfilling an organizational mission makes the world a better place—and how their working in that organization contributes to fulfilling that mission. There are endless possibilities for coaches to connect those concerns, including: how an employee’s work may allow the organization to be generous to community and non-profit organizations, or how their work might be helping make a safer, more reliable product that give its customer’s peace of mind.  The key here is tying the individual’s work and their own sense of purpose with the organization’s mission.   

Second, leaders have to get to know their Millennial team members as people, not as a monolithic generation.  Gone are the days when a good pension and health insurance meant an employee stayed with the organization for a lifetime.  Now, more than ever, leaders and managers must invest in building genuine relationships with their Millennial team members. If roughly 80%, as Gallup also indicates, of an employee’s sense of engagement (and thus, their productivity) comes from their relationship with a manager, then retaining productive employees means leaders must invest in understanding their Millennial employee’s goals and values, helping those team members to achieve their dreams and live out their values.  In doing so, these leaders can begin to coach their teammates in the context of that understanding, creating more institutional goodwill and reducing turnover.

Finally, these leaders should know annual reviews alone are a poor means of helping their Millennial team members understand their value to the organization.  Effective coaching is an ongoing and very personal process—the frequency and fervor must go beyond simply achieving tactical institutional goals.  It is built on a clear understanding of the employee’s goals and purpose and how they can best develop their skills and abilities, and how to develop them. In sports, coaches show their players how to execute a skill. Then they allow those players to demonstrate those skills.  Once they have observed that attempt, great coaches give prompt, constructive—and sometimes very straightforward—feedback in a relationship that is built on trust and mutual respect. 

Baby Boomer leaders should know that coaching your Millennial employees is simple.  It’s just not easy.  It will require a commitment of time, understanding, and a willingness for these leaders to accept their inter-generational differences in communication styles and values.Which means these leaders will have to adjust their strategies and tactics if they want to recruit, retain, and develop the Millennial generation talent. Doing such things will, with time, become a clear differentiator to Millennials—and for Baby Boomer leaders and their organizations—creating an environment where people the get to come to work rather than have to come to work.

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Performance Matter: Engaged and Productive Team Members

Recently, we’ve been doing some work with strategic planningclients. And a lot of our discussion is around attracting, developing, and retaining engaged productive employees. 

Based on our experience and research, engaged employees (the one’s who feel like they getto come to work rather than have to come to work) are more productive on almost every measure.   But what keeps them highly engaged?  Most of them say its because they understand their roles and are appreciated for their contributions to the organization’s mission.  Benefits, salary, and working conditions are, of course, also important.  But those things are really like milk, eggs, and bread in a grocery store.  They’re like minimum requirements for getting people to come in the door!

So if you’re trying to attract, retain, and develop top talent, you have to have those things.  So how can leaders differentiate their organizations from their competition if those items are largely a commodity to your team?

First, make sure every employee understands how their role fulfills a larger purpose.  If an accounts receivable clerk doesn’t realize how getting billing done accurately and promptly affects the organizations cash flow, they may just be going through the motions of getting tasks done.  But if they don’t realize their peers might not get paid if they don’t get those bills out, they won’t really see the larger value in what they do and they will be less engaged.

Second, ask your team member’s this simple question.  On a scale of one to ten, how happy are you to be working here?  Tell them a onemeans you’d be looking for another job if your salary was tripled and that a ten means you’d work here for free if you had the means to do so.  Once you have the answer, ask them this.  How can I help move that number closer to a ten? You will be stunned at what you learn.

Over the years, we’ve heard things like, “I really need a new computer,” and “I’d like to do something more challenging.”  Or they might say, “I need to be able to adjust my work hours a bit to help out with my family.” The mere asking of these questions will help people feel more valued within your organization. And it will make them want to become even more productive.

Obviously, there’s a lot more to be said about employee engagementand productivity.  And you have to be careful to pose the questions in the light of what you can control.  If it’s possible to deliver that employees request, do it.  If it’s not, make sure to explain why it isn’t possible.  More often than not, people will appreciatejust knowing why a change can’t be made.  But whatever you do, don’t just ignore their response.  You’re better off not asking than not delivering one of the two possible responses.

We will talk more about employee engagement in future.  So stay tuned!

If you’ve found this information useful, encouraging or might see a way we can improve it, please let us know.  And if you thought it was encouraging, forward it to a friend so they can subscribe. If you want to find out more about how Performance Strategies Group helps organizations sharpen their sales skills and processes, builds more self-aware and resilient leaders, or equip more productive teams, find us online at http://www.psghsv.com, or call Principal Consultant, Jim Owens @ 256-426-0305.

 

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