Leading Workplace Change™

The months of July and August brought us a great deal of news about how much people are getting paid for what they do.  As a society, we are in agreement about little on this topic - and most importantly about whether executive compensation should be connected to the overall health of our economy.  Some of the highlights include:

• talk of big bonuses at  Wall Street banks
• debate about “guaranteed bonuses” for folks no matter how they perform
• concern about excessive pay in general for business executives

But the most concerning news from an organizational culture perspective, is that these headlines were reinforced by a recent executive compensation study called – “Balancing Risk, Performance and Pay.”  The Study looked at compensation practices for 2008 and 2009 at two-hundred (200) of the largest companies that comprise the S&P 500 Stock Index.  And in short, the most telling finding is that there is a shift away from long-term incentives that focus on the overall health of a business and more focus on short-term incentives to increase cash flow and stock price.

These findings about the big companies took my breath away, so I decided to call a colleague who works in compensation for small to medium-sized companies and heard something different.  His take is that companies are focusing more on “how” to pay people rather than on “what” to pay them.  He talked about how companies are looking for ways to manage their compensation as a form of investment – both in their people and in their company for the long-term.

My experience is that organizations have been struggling with how to structure compensation for many years.  The underlying cultural beliefs of organizations guide their compensation decisions, and they are varied and not easy to shift.  During the last ten (10) years, there clearly has been more of a desire to link pay with performance.  Though, the reality is that the U.S. is not as merit-based in our compensation practices as our national myths about democratic principles would like us to think. 

Here are some recent quotes from leaders about their organizations’ compensation practices and beliefs that highlight the range of realities.

• Salaries are low here, but benefits are good – just need to put in your time and pay increases incrementally
• Not much difference between compensation for those who do stellar work & those that do OK work – pay increases based on a bell-curve
• Our management failure is that we don’t truly recognize performance – it is all about “who you know”
• Results are often valued more than the means – it doesn’t really matter how you get there – you just have to get there

Though no matter the variety of underlying beliefs, it is apparent that our push as a society to accelerate growth, by linking individual pay to performance caused some organizations to become short-term focused.  The allure of personal gain overwhelmed the complex task of including into individual compensation packages – objectives for the long-term health of a company and for our economy in general.

Tags: Values Inform Culture by Terri – older, but wiser white lady
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As soon as I wrote my last post about the workplace culture of a presidential campaign staff, a friend referred me to Tom Dickinson’s 7/10/08 post in Rollingstone.com called “Obama’s Brain Trust”.  This post explores the ins and outs of Barack Obama’s campaign staff.  Upon reading, it reminded me of a few ah hah’s about how a workplace culture can make or break a leader’s legacy.

Leaders are the primary creators of a culture for their organization – some do it unwittingly, by just acting the way they do.  Others are very mindful and clearly articulate their personal beliefs and model their expectations about how people should act in the organizations they lead.  It appears that Obama’s approach is one of mindfulness as seen in the following quote from Dickinson’s post.

“When I (Obama) started this campaign, “I wasn’t sure that I was going to be the best of candidates. But what I was absolutely positive of was that there was the possibility of creating the best organization. The way great things happen is when people are willing to submerge their own egos and focus on a common task. That’s my old organizing mind-set. It’s not just a gimmick, it’s not just a shtick. I actually believe in it.”  

You can see from this quote that Obama is talking about his expectations about how people should act and he tells them why – based upon past experiences that proved successful and personal beliefs.  What also struck me while reading the post was how mindfully Obama models how he wants others to act in his organization as seen by this quote from one of Obama’s staffers.

“When he (Obama) is running a meeting, he does more listening than talking, asking questions and taking the temperature of everyone in the room. Regardless of wherever you fall in the hierarchy, he listens to you as though you are the campaign manager. He focuses, he prods, he pushes, to make sure that he fully understands your position. That sets an important tone as well: When you go into a meeting expecting to learn and not dictate, it fosters camaraderie.”

Mindfully setting the tone is a primary role for leaders – most focus on the behaviors that enable strategies and for Obama this includes how his campaign team works together to execute.  It is a balanced internal and external focus and usually the make or break practice that allows leaders to create legacies and presidential candidates create political machines.

Tags: Uncategorized by Terri Kruzan
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Here is a story that is representative of findings from our field work. I recently worked with a cross-section of employees within an organization to help them identify their organizational culture.  Let’s call them, the Culture Team.  We discussed one of the findings – that job security and advancement are more likely to be determined by “knowing the right people” than it is by job performance.   

An employee quote that seemed to define this culture characteristic is – … we tend to not be a meritocracy.  Capabilities and performance are less important than personal relationships, friendships, history and tenure in being personally successful here.

The longer-tenured members of the culture team looked confused, and noted there was talk about putting in a pay-for-performance process.  While an articulate young man could not help himself and burst out with – “this is crazy, I want to be measured by what I do, not by how well I network and make other people look good!” 

The room fell silent and finally, an older female Team member said – “yes, our culture does honor the use of relationships to get our work done and it is not all bad.  Working together well and having interpersonal skills in how to relate with people is important for our success – we are in the service business.”  

The discussion then moved to how quickly the organization is growing and how the work is getting more complex and that there are more younger people here from many different backgrounds.  The discussion concluded with the thought that using relationships to get our work done probably worked better when the organization was smaller, more homogeneous and a simpler work place.  

The Culture Team agreed upon the need for balance – and that the first step for culture change was for leaders to start talking about the importance of setting clear goals and measuring results while working together.  And, the new pay-for-performance system must be clear in its rewards for people who meet performance goals as well as for building relationship skills.

Tags: Networked Organizations, Uncategorized by Terri Kruzan
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