What is Fair Compensation?
What is Fair Compensation?
The Imbalance of Employee Value Proposition
By Gena B. McCown
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The most recent “it topic” among those in industry has been “culture and values”, the notion that if we want to improve employee turn over the solution is found in the culture of the workplace and values it espouses.?However, culture and values are just merely one leg of Employee Value Proposition.?All four legs are needed in order to achieve stability and improve retention.?Much effort has been put into three of the legs, yet compensation is still falling short.
What is Employee Value Proposition?
According to TalentLyft, EVP is “the balance of the rewards and benefits received by employees in return for their performance at the workplace”.?Brett Minchington defines it as “a set of associations and offerings provided by an organization in return for the skills, capabilities and experiences an employee brings to the organization”.?In simplest terms it the sum of everything the company is willing to give in return for performance and loyalty of those they hire.
The Four Legs of EVP
Imagine EVP is a chair, to be effective and hold up the company and team member, the chair must be balances.?All four legs must be intact, the same length, and in the same condition.?If we were to put all of our energy and attention into strengthening just one or even three legs, eventually the neglected will buckle under the weight and pressure.?It is no longer stable and the company and associate will fall. EVP requires balance.
The four legs of EVP are Culture, Benefits, Career, and Compensation.??Companies have long understood that in order to appeal to high caliber talent they must provide competitive benefits.?Over time, they also learned that employees brought in at entry level positions desire a clear pathway for advancement.?A leading reason for turnover has been a lack of opportunity to advance or grow in a company.?The topic of culture (values, environment) has been the focus du jour.
It stems from the foundation that if people actually enjoy their workplace, they will want to stay.?This can be defined as creating an inviting environment, as in the physical space they are working in or from.?As well, it is the mood or the emotional environment as well.?No one in interested in putting up with a toxic work environment any more.?They desire a fun place to work, one which is positive, recognizes achievement, and is emotionally stable.?Culture and values are also represented in the Diversity, Equity, and Inclusion initiatives being launched at companies worldwide.
Industry has a done a great job in strengthening these three legs.?Unfortunately, the leg of compensation is still being neglected.?So much energy has been spent in the debate of raising minimum wage and having lucrative incentive packages to attract talent that we’ve neglected to really put effort into how to keep these team members beyond onboarding.
The Gaps in Compensation
Companies have recognized the need to attract talent, and they do so with the first 3 legs of EVP coupled with an incentivizing compensation plan.?A great financial offer and signing bonuses become the icing on the cake at first look.?What comes next, however, shows a lack of effort to think beyond the welcome mat.
Once a new hire passes the thresholds, they are expected to perform at and above expectation. The company is seeking a huge ROI on that incentivization.?The team member, feeling thankful for this amazing company, lives up to those expectations and invests more time and energy into the company they were sold.?Until reality hits them in the face.
After a year of stellar work, they are rewarded with a 1.75-3% pay increase.?Chastised when the company or branch as a whole misses their global mark, even though that manager met and exceed their personal metrics.?No bonus for the work done because others failed their portions.?Then, you add insult to injury as the first opportunity to promote comes their way and this time the pay rate offered is laughable.?In other words, the only thing that was competitive in the compensation structure was the offer.?
In some regards, this is a real life depiction of part of the plotline of many childhood fables.?The unsuspecting and trusting are lured in with promises of fun and success only to find themselves in a lie.?Once the magic wears off they see the reality of the circumstances and are left with but two choices.?Option one is to succumb to their situation or option two is to plot their escape.?
In the workplace escape may come in the way of quiet quitting, job hunting for their next employer, of by way of the good old “take this job and shove it” epic walkout.?The problem for these workplaces is that the exits is rarely ever a solo act, even if it appears to be so.
The First Rat to Bale Out
In natural disasters, it is often said that if you are uncertain of what direction was the safest it was best to follow the animals.?When the Titanic sank, the rats on the ship started heading for higher ground.?As some point, the first rat had to make the decision on whether it was safer to stay on the ship or to bale out into the waters.?A former manager of mine shared a sports perspective that everyone on the team knew who the strongest and weakest player was.??
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If your team knows who their key performers are, they are constantly observing that person.?Whether in a direct mentorship relationship or simply watching from afar to learn how the key players are performing, eyes are on the star contributors.?When that star contributor decides to bale out from the rat race, it doesn’t go unnoticed.?Like the first rat who baled out from the Titanic, others will follow that lead.
It may not come in the form of some grandiose walk out, but it will happen.?Your key players have the confidence in knowing they are hirable and will land somewhere. The remaining team will start job hunting, taking interviews on their lunch breaks, and spending their evenings submitting resumes. The spacing of the exits may not seem obvious, but if you are doing exit interviews and paying attention to the time line, it can almost always be traced back to the key player who took their ball and went home.
True EVP is Stable
True EVP in any workplace is a stable structure where attention is paid to all four legs.?Where the company and its employees are sure footed and secure.?
The cool decorations, relatable executives, shout outs, celebrations, and all of the other components just don’t hold up on their own without having fair compensation.?Like making a cake without flour, sure the combined ingredients will bake into something…
… but is the outcome what you wanted??Are you willing to eat it?
The Sign You Are in Trouble
So, how do you know??What is the key indicator that your EVP is unstable?
Look to your strongest player.?Did that person already leave??Have the stopped putting in as much effort??Is this person suddenly taking more days off than usual??Anyone comment or notice this person is starting to distance themselves or disconnect from the rest of the team??Has something in the air around them shifted or seems off?
If these indicators are present, you are in trouble and your EVP is going to fail.??However, hope is not lost.?
Steps to Get your EVP on Track:
·??????Open Communication – Identify your key performers and seek regular feedback on their views of your EVP processes and provisions.
·??????Exit Interviews – Exit interviews are an excellent way to get unfiltered feedback. If done well, with sincerity, it may even result in a change of mind.?Either way, you learn what is and isn’t working in your EVP.
·??????Review Your Compensation Structure – This includes your hiring rates, raise structure, bonuses, and promotions. You want to be competitive and consistent.
·??????Value & Respect – Understand that compensation reflects how you value and respect your team members, but it’s not the only way.?Value and respect also includes healthy boundaries, work life harmony, and growth opportunities.
·??????Transparency – Your high caliber, high capacity workers almost always can sense when something is off, being left out, or danced around.?It’s better to be direct and transparent, than avoid and cop-out.
·??????Invest in the Right People – High EVP doesn’t mean that we are just throwing money at just anyone, we want the RIGHT people, doing the RIGHT jobs, at the RIGHT time.
·??????Flexibility - Algorithms are a tool not the rule.?If you identify someone you brought in at entry level as a high performer or contributor, understand you will need some flexibility in their advancement.?This is not a way to get cheap labor, you will need to adjust their compensation to a fair standard and not based on an algorithm’s output data.
·??????Be Curious – talk to people who LOVE their jobs, their companies, and their careers.?Find out why, what makes it so special and assess what you can apply to your company.