Dollars – Stanley M. Herman

Over the forty or so years that I have been a “people specialist” I have read many books covering the subject matter of the discipline. But I can truly say that no other book has made a lasting impression on me as I have traversed the vagaries of this so called “profession”,  as Stan Herman’s book – “The People Specialists”. Stan wrote this book in 1968 just when I was starting off in this business. The book is sadly out of print. Its a contrarian book. But it got me thinking and I have never stopped. I have referred to this book quite often over the years.

In this oped piece, I want to introduce the readers to what Stan talked about with respect to pay management. It is not a conformist viewpoint but does encourage thought, which I like.

Stan aptly titles the chapter “Dollars”. But in a globalized world it is Pounds, Rupees, Dinars, Liras and on and on.

He says, “MONEY IS FUNNY. Most people like it a lot. Wise men who speak with the voice of enterprise, say that money provides The Incentive, and that men’s hands and brains work best only when they see clear and immediate relationship between how hard they strive and how much they get paid.”

Well, I do not think this thinking has changed since Stan wrote these lines. As a matter of fact, this is main justification still given by Corporate Boards for the exorbitant pay packages that they dole out to the big wigs of corporate giants. The bailed out bank executives are hiding behind this principle as they rake in the big bucks while we all pine away in misery and anger.

Stan continues, “Other people say that money is not really much in itself, but rather, that its real importance comes from the fact that it is a symbol of grander or deeper things, like power, prestige, and security. The truly wondrous aspect of money, they believe, is that it can be made to represent almost anything people want it to represent”.

This is a profound a statement and still quite relevant.

The question then Stan discusses is how does this “money” we all are paid get distributed to all of us who work in various organizations. What is the rationality in the methods and processes of the great “giveaway”?

Stan muses then that some in the Human Resource field postulate that people are paid “according to their contribution”. Stan then says that, “from this pronouncement and its amplified echoes have grown the majority of the dilemmas, incongruities, and overstretched rationalizations of the salary administration specialty”.  “The trouble begins when you try to decide what “contribution” means, and it gets worse after you make the decision.”

Here is the main challenge in Stan’s words, “How, for instance, do you compare the contribution of the teacher versus the television announcer,  (as an update let us now identify the television “talking heads” – I am told Bill O’Reilly at Fox earns in the hundreds of millions of dollars – wow! – what is is his contribution can someone enlighten me, please?) the fireman versus the fashion model, or the President of United States versus the Chairman of the Board of (updated – the Chairman of the Board of AIG Insurance) General Motors? And then, how do you explain the differences in their pay?”

Then Stan goes on to provide us with a litany of discrepancies in dollars paid against a general rational consensus of occupational contribution. He then concludes “The Contribution hypothesis just does not hold up very well”.

I do not think that during the last forty one years that has gone by since Stan Herman first discussed this issue we have progressed an iota in rationalizing the contribution myth. It still glares at us with all its confusing obfuscations.

I now see with President Obama as our respected leader a new mantra being spread around by the neo-conservatives. I have heard this theme in some Town Hall meetings. The outcry now is that the leaders of  governmental bodies (the bureaucrats) are raking in the dough while we the masses are existing with our puny little. True maybe, but let me tell my neo-conservative friends, at least since Stan wrote his book, this irrationality in the distribution equation has not been solved. You, my friends keep listening to rabble rousers on Fox. Please go and discover how much they get paid. Do you really think their contributions justify that kind of dollars? Would you not want some of that dough also? What is different from the leaders of government and leaders of large business, or television and radio talking heads for that matter, as far as how much money they make. It is all greed my friends not contribution.

Stan sums it all up for us quite well, “The quest for a neat correlation between worth and reward is a natural one which fits nicely with most people’s idea of the way things ought to be. But the fact that they ought to be does not mean they are. Money value determinations are not products of fine, dispassionate measurements made in the dust-free, dehumidified atmosphere of a laboratory. Rather, they are continually buffeted and rebuffeted in the turbulent environment of the messy outside world, and not merely on a supply and demand basis, either.”

He also goes on to say, “The answers do not just tumble off those rugged but accurate free-competition scales, either. In itself, the market theory of labor pricing is no more adequate than the contribution theory. A great many factors – supply and demand, subjective and sometimes arbitrary judgements, agreements negotiated from positions of strength (or weakness), Government legislation, and even the ephemeral whims of social conscience – all influence the amounts of money people get paid”.

Thus I conclude by saying we as Human Resource professionals have not progressed in clearing up these murky waters much over the forty plus years since Stan wrote these words. But I do not regret the failure a bit. Because I know “beauty is always in the eyes of the beholder” and not the administrator. We have worked hard to maintain a “limited and transient orderliness”. Thats all we could have done.

No long-term savings from workforce reductions!

Nowadays, more than ever,  we see a widespread use of a very short-term business practice – workforce reductions. This practice is quite in vogue. Business pundits have even coined extraordinary words to describe this practice. Words such as rightsizing, restructuring, downsizing, delayering are now making this practice sort of legitimate. Delayering is a wrong word. Because are we talking about delays or layers? And the dictionary does not have a word called delayer. The widespread global use of these practices has  climbed steadily over the last two decades. This has resulted in a wider acceptance of these practices as a common management practice. But when is common practice used along with common sense.

The contention of this essay is to suggest that such a practice is “evil” from the human side of the enterprise. The widespread use of reductions in force has emotional, psychological, economic and social consequences that are far reaching. Use of this management practice destroys people and communities.

In addition to the devastating human consequences, I contend that this practice does not fulfill its intended purpose and that is to save money. Sure it saves expenses in the short-term. It makes income statements look good now. But I am not sure about the impact on the balance sheet. Of course, accountants in their narrow minded thinking are yet to look at human capital investments as assets and not expenses.

Thus the use of this practice can make business leaders look competent in the eyes of shareholders in the short-run. But if you invest capital for the long haul this practice does not save money. On the other, hand it lands up increasing long-term costs. Yet it seems that this business practice has become a reality in business modernity. Especially in bigger organizations.

I contend there are long-term consequences and costs directly associated with this practice. Very few organizations have creatively explored alternatives to save expenses before letting the axe fall on employee livelihoods.

It becomes “evil” and cruel more so when we have seen instances of business leaders who have massacred their organizations through repeated downsizing exercises and at the same time earned enormous sums of compensation and also fame and glory. Examples of such so called business leaders are Jack Welch and Carly Fiorina. Ms. Carly according to HP insiders has the dubious reputation of a CEO who destroyed HP’s culture of no lay offs. She strode into the HP culture as an outsider and reduced large numbers of excellent long-term HP employees. In the process she destroyed a legendary company and then when she was fired, she walked off with a $60 million severance package. What makes her worth that much? This is a question we will ponder in this blog later.

My contention and arguments are based on my long years as a HR specialist. Of course, I participated in the devastation of human lives by laying off hundreds as well. But also as an analytical person I have found that long-term cost savings accruing out massive lay-offs is not a reality.

I will lay the ground for this argument in this blog.

Thirty-nine years ago fresh out of university with a MBA in hand I started working as a Research Analyst in the Corporate Personnel Research department of a very large computer company. By the way, this great company has been buried in the cemetery of failed companies forever. One can argue through repeated workforce reductions this company facilitated its own demise.

My first assignment as a twenty five old new MBA was to do the analysis for the planning of a workforce reduction exercise. I was the number cruncher preparing reports for management as to how much will be saved in the short-term if the company laid-off x, y or z numbers of people. I must have crunched good because within fifteen days of my starting a career, the company laid off of four thousand employees. This included all the members of my department. But I was spared, I guess I was the cruncher. What a way to start your work life?

But that very first experience has left me scared forever . The scaring is evidenced through a deep concern with job security and self preservation. But also at that time I used my freshly acquired knowledge of a concept called “human resource accounting” to develop a financial model which can prove that over an extended period of time RIFs do not save any money at all as a matter of fact they cost more. I used the present value concept to develop this model.

In this blog I present the conceptual framework for this model:

Principle vs Reality – conventional wisdom (may not be true) vs a research based conclusion – An Exercise in Freakonomics!

—Savings from lay-offs (immediate short-term impact):

> Direct Labor Expenses (-)

> Associated Benefits Costs (-)

—Additions to Consider:

> Separation payments (+)

> Replacement hiring costs (+)

> In/Out additional Compensation Costs (+)

> Replacement hire training costs (+)

> Replacement productivity ramp-up costs (+)

> Loss from unused office and other facilities (+)

> Key employee additional retention costs (+)

> Remaining employee demoralization cost (+)

> And there are others also (+)

Now do a PV analysis:

yr 1                        yr2                    yr3                      yr4                    yr5

Savings

Costs

Net Savings

PV Net Savings or Costs @ an appropriate discount rate

I contend here if one calculates the impact of workforce reduction exercises using this model, one may see a different reality.

Readers who are further interested in the model can contact me on my email address bbiswas@aol.com

Changes in the Wind!

Here is a question:

What in your opinion will be some of the major shifts in occupations/jobs/careers as we move through this  century?

There are major changes in the winds in this Internet age. Here are some of the shifts:

1. There is now a concept called career self-sufficiency or career self-reliance. These concepts will be of paramount importance. This concept suggests people should take responsibility of their own careers.

Gone are the days when you join and then stay in an organization for a long time. A life long career in an organization is a thing of the past. You have to consider yourself as self-employed all the time. This is clearly the mind-set that people need to adopt during these tough economic times.

You have to take charge, manage your own career choices and not rely on any single organization for your career aspirations. Self marketing will be a key skill to learn and develop in the coming years.

2. Behavioral competency as opposed to hard skill and knowledge will become more of a key career determinant. This will be the emphasis as opposed to positions held and companies you worked for. There will be a movement from hard skills to soft skills. People who demonstrate success in a behavioral competency framework will have continued job success and stability. This maybe a result of the softening of the workplace, where effort put in can have equal value as results achieved. Competency based career stability along with career self-reliance will lead to success in managing your own career.

3. Entrepreneurship will also be a sought after career. Working for one’s self is far more desirable these days compared to twenty years ago. People who take risks assertively will do well in careers. Risk taking, a self employed orientation are all highly desirable traits for career success these days.

Then there is the new concept of buying a job. People who remain chronically unemployed can always consider buying a small existing business or a franchise. And if you stay focused on these ventures, then surely there will be career independence and career security. The Internet has created many “At Home” business opportunities. Trust me, owning and running your business does have many advantages but many disadvantages. But in the long run with a “stick to it attitude” there is much more success and stability. But you have to develop a daring and risk taking attitude.

To tell you the truth I for one, if forty years ago considered running a small business and had stayed focused on it, then at the end of my career I would have been a much happier character. I have friends who migrated to the US worked as a dishwasher in MacDonald land, saved as much as they could and then became a minor owner of a franchise. They learnt every bit of the business and through government sponsored loans bought franchises and now they manage and own seven or eight franchises. They are happy campers. On the other hand i see people who have worked for others and are under constant pressure to please someone else they land up becoming physically sick through constant stress exposure.

4. I have observed in my consulting and in house work that because of the uncertainty of the economic times with the persistent threat of down-sizings, lay-offs, restructuring, delayering, reorganizing, top management changes and what have you ( a totally unstable work environment) there is a particular skill one has to develop in order to stay alive. This skill is called organizational politics. I think this competency or skill needs to be learnt as a prerequisite for successful organizational existence. The need to possess this skill has markedly increased in my view in the last fifteen or so years. And now in some organizations this competency is more required than job knowledge and job related skills. I find this new phenomena the world over.

I advise most readers to read a book on this subject called “End of Work” written by Jeremy Rifkin.

Some musings about career success!

Given your long years of working and your field of specialization can you expound on the work principles that have worked for you and those that have hindered your career.

This is a great question. First of all new career aspirants who carefully study the answer to this question and develop for themselves an understanding of the “practical intelligence” principles that go into career success will have great advantage. But one has to deeply ponder these issues and develop for one’s own self a modus operandi when faced with these issues and concepts.

So here those principles that I have found, universally works. But note that, I have not necessarily applied them to my own career, for known and unknown reasons.

The art of listening: This absolutely works. Those of us who can creatively listen and dissect what the other person is saying will clearly have an advantage. I always say, “lend your ears to everybody, your tongue to nobody”.

The art of creative association: You really will be successful when you can associate with the right types of people for yourself. This does not mean only rich, successful and powerful people, but it means people who are genuinely willing to care for you, be a true friend or mentor, who really wants to associate with you because of you and not because of any ulterior motive. Do not associate just because it makes you feel good for the moment. Try and develop life long associations. Please remember finding such people in your professional life is a continuous challenge and having the ability to judge somebody’s intention as it relates to you is a true art.

Understanding organizational politics and positively working with it: One should not ignore the politics or be naive around it, but having the ability to understand what is going on around you and then working within it to your advantage, is a clear personal competitive advantage.

Being able to capture the opportunities positively that come before us all the time can be of great help in career success. Being creative about seizing these opportunities is a real positive ability. 

Being credible: Keeping one’s word, executing as per plan all are positive principles that work.

And now here are some principles that I do not think work:

Genuine straightforward openness does not work: No matter what one says people do not like people who are direct and confront people with situations directly. Everybody has hidden agendas, therefore when one confronts, one usually ignores the other person’s hidden agendas. So one has to learn the continuous art of soft pedaling, saying things without confrontation, saying things carefully and indirectly. A real art and often quite stressful and demanding. But it has to be done in a corporate setting.

Being trusting without questioning does not work: Here you have to always cross all the “Ts” and dot all the “Is”. Often times when one thinks it is safe to assume, this that or the other, that is when one gets hurt. So the continuous principle of buyer be aware is a good principle to follow.

Over analysis of situations does not work: You have to go with your instinct often. If it feels good deep within, then one should go for it!

Speaking, revealing ones thought and plans, bragging or overemphasizing ones achievements all of these behaviors can hurt rather than help: If you can get others to speak highly about you instead of you having to do it, then you have got it made in a shade. Not speaking openly but being able to find those chances when speaking openly really matters is an important skill one has to learn early in one’s career. 

To conclude, I highly recommend that everyone seeking career and life success should read Malcolm Gladwell’s new book “Outliers”. In this book among many brilliant insights Malcolm talks about the concept of “practical intelligence”. Having read it and understanding Malcolm’s unique explanation of this phenomena I have to say I totally agree with him. Throughout my corporate life I have observed that people who are successful are not those with “cognitive intelligence” but those who possess this unique “practical intelligence”. Malcolm defines “practical Intelligence” as “knowing what to say, to whom, knowing when to say it, and knowing how to say it for maximum effect”.

The Joy of Work – the true intrinsic reward

Modernity in the world place has ushered in a new dimension in the motivational framework within the working world. In the old days of “leave it to Dad” employees were mostly motivated by what extrinsic rewards they received from their employers. As such, we compensation specialists limited ourselves to design and implementing programs that paid out – cash, benefits or equity – a purely economic transaction. But now more so ever employees seek intrinsic rewards also. Intrinsic rewards truly nowadays motivates. Thus I introduce to you the reader the “true intrinsic reward”. This is joy at work. In other words we seek joy at work from our world of work. Lets elaborate:

Times are tough in more ways than one. It seems to me that this is the worst period in the working world that I have witnessed during my forty year working life. Millions have lost their jobs and are continuing to so so.  Organizations are engaging in a kaleidoscope of work and job elimination programs. Human Resource personnel and senior executives with the help of high paid “not knowing” consultants have come up with creative words to brand these nefarious activities. Words such as delayering, down-sizing, right-sizing, out-sourcing, to name a few, form is foreboding landscape. In this work life threatening environment I offer hope in the Now! It is time to refocus to renew our work lives. For out of doom and gloom there is opportunity to rejuvenate our “work  day world”  existence. How do we do this? By building the “joy of work” into our work life paradigm.

We do this because our spiritual selves implore us to create a joyful life in what we do daily to earn a living or even  in our extracurricular activities. It is upto us to create the joy condition in our daily lives, most of which is spent in working for a living. And those who do not have traditional jobs now need to create joy in whatever they do to maintain and sustain our human existence.

So here are my humble suggestions. The intent here is to provide “food for thought”.

  • No matter what we do to “bring home the bread”  does not provide us joy then I suggest that we find a side avocation that does turn us on (a narrow definition of work in modern days is that which we do that provides us monetary compensation). This can be a hobby, a sport, volunteer work (nowadays volunteer work is one  of the creative ways to find regular employment), reading, yoga or whatever. I recently read a book where one of the principal characters worked in non-joyful work environment all his life, but he came home every day and spent time in his garden, the creation of which gave him great pleasure and joy. In other words, never be a couch potatoe. If you systematically dedicate time to a side avocation then I assure you will find “joy at work” no matter what you do for the “green back”, or the “dinar’ or the “rupee” or the “birr”.
  • Steve Covey’s seventh habit has helped me a lot to traverse the trials, the tribulations, the ups and downs of our paycheck world. He recommends “sharpening the saw”. Keeping yourself fresh and “cool” by excercise, reading, meditation, knowledge accumulation and contemplation. These activities sustain our souls and this creates “joy of work” within.
  • Keep your fun meter on red hot. Do not take things too seriously because the “hurdles” are continuous and relentless. So what  does one gain by taking things personally and seriously. I did not adopt this principle during my working life and as such I suffered because everyday when I went into work something or the other aggravagated me. Get my mercury up! But if I had learnt to stride it out then I would only see “joy”. Seeing “joy” around you is also a great talent to develop and cultivate.
  • I also suggest spending time with “extravagant” friends. These friends are those that do not need anything from you and you do not need anything from. They are “spend time” buddies. Dont have too many of them. One, two, three is enough. Why do I say that these extravagant friends are important to finding “joy at work”? This is because they will give unadulterated advise on what troubles you in your paycheck world. They will not judge you, condemn you or criticize you negatively. They are “extravagant” friends and they will have your interests in mind. They are  real “soul mates” and not tied into your bloodline. They create joy for you.

Finally, now more than ever think about creating your own “joy at work” condition. In tough times times one can really contemplate our true internal needs. If times were good we would be lulled into excuberance and thus miss our “inner needs”. But in bad times we are often forced to face realities both material and spiritual.

Creating joy at work cannot necessarily be created by our employers. It is an internal condition. We, the employee, need to take care of this important need.

My blessings and Jai Ho!

Negotiating Tips For Consultants!

A lot of us are working as consultants these days. We do not have the rights and privileges of an employee. A lot of us are sole practitioners. How do we insure that we do not get lost in the shuffle when it comes to getting the right compensation and that we get paid on time as per the stipulations of our contract.

I am hearing more and more of an issue with regards to this subject. Consultants get hired often when the company has an immediate need or there is a pressing problem confronting the organization. Quite often consultants are asked to start working immediately. Therefore, the terms of the contract are finalized after the work starts. Consultants be aware! Here are some ways consulting agreements are negotiated:

A straight competitive hourly rate: factor into this rate a competitive base rate, add to that benefits and an overhead burden. If you have any kind of a specialization and if you are on your own, the current competitive rates are from $70/hour to $250/hour. Do not be shy about asking as high a rate as possible. Remember the organization wants to hire you because they have a serious need. Do not back down here. Also ask for a regular payment deal, if you go into invoicing, then get ready the collections game.

A combination of stock and cash: the stock potential can be very alluring but be ready to aggressively manage this deal. Work out an upfront schedule of when you going to receive the stock. Most regular employees get stock right after they start working. Never hold off receiving stock until after your assignment is over. While you are on the project you have more of a leverage to get what you deserve. If you hold off till after you finish the project you can get forgotten, things change, new people come in and your ability to receive what your contract calls for gets more challenging. My advice to people on this subject is that individual consultants should develop a very secure contract for themselves spelling out items that you want to cover and have your clients sign this contract. Usually clients have a very elaborate contract for you to sign, sign that but still have them sign your contract also.

Consultants who are temporary workers often can get forgotten in the shuffle, therefore if you are a consultant aggressively manage the business side of your assignments. Pay as much attention to the business side as you would to subject matter you have been brought in to deal with. Be assertive and protect your rights!!!

Some thoughts and comments on working in a global cultural setting

With the intensification of global work environments there arises more and more of a need to appreciate the finer differences of the sociological and anthropological dimensions of human behavior as encompassed by the word culture. Cultural differences encountered while working with people from different parts of the world is now almost the main element of career success.

In my opinion the real key here is to understand, that each and every culture has two dimensions – the overt and the covert. Understanding the overt might be easy but understanding the covert requires active listening, acute observation and a great deal of patience, not necessarily traits that can be developed if nonexistent on an acquired basis. Let us understand the differences between these dimensions.

The overt culture consists of established behavioral patterns that can be explicitly identified and studied, and, hence, are relatively easy to understand.

When we talk about overt or surface culture, we refer to the tangible things that are related to and unique to an ethnic group. The customs and practices carried out by each unique group become associated with them and when they are mentioned.  In our minds they automatically trigger the cultural nomenclature. Associated with surface culture are the arts and crafts, intellectual achievements, historic events, spirituality and daily living.

The surface or overt layer of  culture has the following manifestations – visible expressions, dress code, the work environment, benefits, perks, conversations, work/life balance, titles & job descriptions, organizational structure and relationships.

Covert culture is much more subtle, but regulates one’s daily life more vigorously but unconsciously. Learning how to talk and walk, how to move one’s body and make facial expressions, and most of all, how to think and feel, is so deeply ingrained in humans that they are rarely aware of these processes. Certain long- established institutions (e.g., schooling) and daily behaviors are taken for granted.  Every culture has its unique, deep-rooted dimensions that become entrenched in the human brain (Hall 1977).

Thus far more powerful aspects of cultures are invisible. The cultural core is composed of the beliefs, values, standards, paradigms, worldviews, moods, internal conversations, and private conversations of the people that are part of the group. This is the foundation for all actions and decisions within a team, department, or organization.

The covert or invisible core layer of culture are basic values, private conversations (with self or confidants), invisible rules, attitudes, beliefs, world views, moods and emotions, unconscious interpretations, standards, paradigms and assumptions.

This is what makes global work cultures so very complex. The resulting challenges to the management of global human resources is enormous.

In the light of this these it is worthwhile to review Hofstede taxonomy:

Hofstede theorized and researched five different cultural dimensions and stated that there are wide differences in both the overt and covert national cultures. Yet in the workplace people from distinctly different cultures have to work together. Now lets consider the Hofstede taxonomy.

Here are Hofstede’s five dimensions:

Power Distance Index (PDI) that is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. This represents inequality (more versus less), but defined from below, not from above. It suggests that a society’s level of inequality is endorsed by the followers as much as by the leaders. Power and inequality, of course, are extremely fundamental facts of any society and anybody with some international experience will be aware that ‘all societies are unequal, but some are more unequal than others’.

Individualism (IDV) on the one side versus its opposite, collectivism, that is the degree to which individuals are inte-grated into groups. On the individualist side we find societies in which the ties between individuals are loose: everyone is expected to look after him/herself and his/her immediate family. On the collectivist side, we find societies in which people from birth onwards are integrated into strong, cohesive in-groups, often extended families (with uncles, aunts and grandparents) which continue protecting them in exchange for unquestioning loyalty. The word ‘collectivism’ in this sense has no political meaning: it refers to the group, not to the state. Again, the issue addressed by this dimension is an extremely fundamental one, regarding all societies in the world.

Masculinity (MAS) versus its opposite, femininity, refers to the distribution of roles between the genders which is another fundamental issue for any society to which a range of solutions are found. The IBM studies revealed that (a) women’s values differ less among societies than men’s values; (b) men’s values from one country to another contain a dimension from very assertive and competitive and maximally different from women’s values on the one side, to modest and caring and similar to women’s values on the other. The assertive pole has been called ‘masculine’ and the modest, caring pole ‘feminine’. The women in feminine countries have the same modest, caring values as the men; in the masculine countries they are somewhat assertive and competitive, but not as much as the men, so that these countries show a gap between men’s values and women’s values.

Uncertainty Avoidance Index (UAI) deals with a society’s tolerance for uncertainty and ambiguity; it ultimately refers to man’s search for Truth. It indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. Unstructured situations are novel, unknown, surprising, different from usual. Uncertainty avoiding cultures try to minimize the possibility of such situations by strict laws and rules, safety and security measures, and on the philosophical and religious level by a belief in absolute Truth; ‘there can only be one Truth and we have it’. People in uncertainty avoiding countries are also more emotional, and motivated by inner nervous energy. The opposite type, uncertainty accepting cultures, are more tolerant of opinions different from what they are used to; they try to have as few rules as possible, and on the philosophical and religious level they are relativist and allow many currents to flow side by side. People within these cultures are more phlegmatic and contemplative, and not expected by their environment to express emotions.

Long-Term Orientation (LTO) versus short-term orientation: this fifth dimension was found in a study among students in 23 countries around the world, using a questionnaire designed by Chinese scholars It can be said to deal with Virtue regardless of Truth. Values associated with Long Term Orientation are thrift and perseverance; values associated with Short Term Orientation are respect for tradition, fulfilling social obligations, and protecting one’s ‘face’. Both the positively and the negatively rated values of this dimension are found in the teachings of Confucius, the most influential Chinese philosopher who lived around 500 B.C.; however, the dimension also applies to countries without a Confucian heritage. After studying and contemplating the Hofstede thesis what follows is a  practical enunciation of five major cultural differences that are universal across global cultures that affect work behavior.

The difference between individual effort and team effort – in many countries because of the scarcity of resources immense competitiveness exists and individual effort and recognition is what is sought. In other countries, because of changing work patterns, collaboration and teamwork and the ability to work together is more valued than individual skill and knowledge. In such cultures one has to impart, cooperate, collaborate, coach and overall look out for the good of the group or organization.

The second major difference is in the subtle communication patterns. In certain countries communication styles are more direct – ask a question and give an answer. In certain other countries from the very childhood people are taught to watch what they say, therefore, not to always tell people what is in their minds. People tell each other what they perceive other people want to hear. In these cultures people convey hidden meanings, avoid confrontation, are extremely polite and do not tell others what their true concerns are. Thus problems are hidden. Activities get conducted in round about ways without going through a direct route. In certain cultures confrontation is regarded as impoliteness. But in other cultures confrontation is organized and celebrated. The Intel culture was built around, “constructive confrontation”. Thus in corporate cultures more informal communication opportunities should be created. Formal and informal social gatherings should be encouraged. Long formal work meetings  should be avoided. Half the people attending such meetings do not say a word, thus formal meetings are a waste of time. Create dialogue programs, like performance dialogues and not performance appraisals.

The concept of time varies from culture to culture. In certain cultures deadlines, time commitments, delivery on schedule are not of value. Look at Hofstede’s LTO factor. In other cultures being on time is of utmost importance. This element alone causes the most amount of angst in the global workplace. Certain cultures take a longer view of their lives and certain other cultures time is of the essence. Do it now or perish.

In certain parts of the world there are many immediate swings in attitudes, behaviors, wants and desires. In certain other countries people move a slower pace thus creating longer term cycles for most things. In some countries situations are taken philosophically, attributing work situations to the will of the Almighty. Nothing wrong with this, if only one accepts workplace cultural differences. In other parts of the world procrastination is seen as a sign of weakness and disorganization.

The workplace implications of this discourse are many. But awareness and sensitivity to our differences is the first step in devising ways to work in the global environment.

Everyone aspiring to bigger and greater in the global work arena should first judge for themselves where they stand in these attributes and through a professionally developed (with value-added advise provided a coach)  individual career plan create a work success journey.

Am I paid fair wages?

Can you help me understand how the pay systems in most companies work. How do I determine whether I am getting a fair and equitable pay for the work I do?

A great question, I am sure there are many of us who cannot quite determine how we get paid.

Global pay systems are usually based on three principles; 1) Paying for the job – this is the traditional pay system with salary grades, classifications and pay ranges, and other obfuscations, 2) Paying for skills – this system pays for now what are called competencies which days gone by were called knowledge, skills and abilities, you get paid whether you actually contribute or not, 3) Paying on the basis of purely the market.

Find out what your organization’s pay system is all about within the context given above. If an organization pays for the job, more often than not this organization is traditional, rigid and bureaucratic. Paying for skills, knowledge or competency is actually great, but there is a certification process involved, and this system requires a lot of administration. Paying on the basis of purely the market is the most equitable methodology because it focuses the pay system directly into the economic dimensions of employment, such a system requires that your organization has access to market data and that the data is believable and acceptable. In addition to the methodologies to determine base – or what I call “come to work pay” – there are merit systems that pay incremental increases to cover the “cost of living” and job performance as laid out by senior management. Other types of programs include bonuses, cash profit sharing and long term cash bonuses, milestone bonuses and employee referral payments.

All of these are organizational behavior scenarios which one can learn to navigate through. Then there stock or other equity related compensation programs for some or all employees. This is also a good practice and in the dotcom era made a lot of employees millionaires. Greed populated executives take home astronomical sums of money courtesy of these equity based programs.

 Whether you are paid equitably or not is quite subjective and it depends on your concept of “felt fair pay”. So compare your pay with others in a similar position within your company or with others in other companies holding similar positions as you and then you can determine whether you are paid fairly or not.

Fairness also depends on whether you understand the processes and methods to determine your starting pay or even when an organization doles out annual increases or bonuses or any other compensation scheme. Fairness depends on what, how and why you are paid. Research evidence shows that if employees do not know the what, how and why of their pay system as it relates to them then the employee’ pay perception does not equate fairness.

The Performance Management Mythology

Most organizations profess to practice performance management. This is myth? Because most organizations do not engage in true performance management. There are many reasons for the perpetuation of this myth, which I will be discussing in this oped piece. The intentions are noble but execution suffers from the intense realities of a frail psychological eco-system that exists in most organizations.

What do I mean by the phrase “a frail psychological eco-system” ? In reality managers who have to discriminate and weed out the “good”, “the bad” and the “not so bad” employees do not exercise the mental and verbal disciplines of managing employee performance – that is confronting the non-performers and rewarding the better ones. All of us like to be good guys and gals and we really do not want to sit in judgement of others, lest others also judge us unfairly. We are all very insecure in organizations that have all kept us on our toes with job insecurity. It is much easier to be delightful rather than being a nasty truth seeker. Thus most managers take the path of least resistance – we tend to evaluate everyone at average or above. Listen, why would a manager want to rate someone poor or extremely bad? Does that not reflect bad on the manager themselves? One can tell a manager you have “bad” employees because you are a bad manager. Ever thought of this dimension before? So the main reason performance management is a myth is the fact that the results of the process is skewed towards the upper end of the performance rating scale. 

A corollary to this dimension most organizations use a “performance appraisal” system to evaluate employee. These systems to say the least are subjective but tend to attempt objectivity with the imposition of a rating scale, Well guess what, based in the argument presented in the previous paragraph the evaluators exercise “skewed” rating profiles – most of the ratings are average or above. If there was indeed a true performance management system then one would have seen a more normal distribution. This is not reality, the reality is an upward distribution rating profile.

Then take the case of “Executive Compensation Madness”. Today one can find a negative correlation between the growth in executive compensation and the growth in corporate profits. Executives make the big bucks in spite of not making the necessary profits to satisfy share-holder interests. Thus when there is really no executive performance management why should managers practice what the executives preach but do not practice. There is no “walking the talk”. So most organizations mossy along their merry way, by giving lip service to performance management and engage in maximizing the accouterments of the system, rather than practicing the organizational philosophy in its true spirit.

Also in recent times there has been a marked “softening” of the workplace. Form has replaced substance. It is very important now to be “sensitive” towards the feelings of others. Behavioral dimensions are emphasized as much if not more than skills, knowledge and abilities when performance judgements are made. Thus by its very nature good or bad behavior is judgmental and thus subjective. Beauty is in the eye of the beholder. Hard facts are sacrificed in comparison to results. Managers are being judged on their abilities to show empathy. All of this mussy stuff is not conducive to hard factual of performance based on results.

And finally the connection between pay and performance is almost a joke. whenever an organization ties the performance management system in time with the pay management process they write themselves the ticket to total disaster. When a manager is giving an employee a performance appraisal and the employee knows that at the end of that session, the manager is going to tell the employee how much of a pay increase they are going to get, you can bet your bottom dollar that the employee is thinking “boss cut performance appraisal non-sense, just tell how much of a pay increase am I going to get”. “Show me the Money!” In this scenario the employee gives a deaf ear to anything the manager is saying about their performance – good, bad or indifferent. The management of performance is a “holistic” process. As long as practice ties pay to it then the value of a performance dialogue between manager and subordinate goes out the window.

So I say do away with formal performance appraisals systems. They do not work. Over my long career in the many organizations I have been associated with, I do not know of a single organization that can hold their heads high and say that their performance management/appraisal system works. When you do away with these HR perpetuated systems much overhead expenses will be saved.  Make it informal. Leave it up to your managers. Encourage continually performance management dialogue between managers and employees. Don’t introduce or use rating based appraisal processes. Because as soon as you do that you introduce a negative “punished by rewards” culture.

Performance Management as currently practiced only introduces negative angst into the culture thus destroying morale and motivation.

Pay Knowledge = Pay Satisfaction

Many years ago when I read Dr. Ed. Lawler’s book “Pay and Organizational Development” I had discovered this research based theoretical construct. Ever sine then I have seen the validity of this concept in real life.

The more employees know about their pay – how the pay determination process works and how the individual pay decision that affects them was made, the more satisfied with pay the employee will be. Transparency  with everything about pay is  a crucial step in the effective design of pay systems. The more secret the pay system the more ineffective it will be.

This is simply because employees are not necessarily concerned about what they get paid but with how their pay decision was made. They judge the “fairness”, the “appropriateness” and the “simplicity” the pay system more than anything else.

Researchers have found that there is a direct correlation between pay knowledge & pay satisfaction.The more staff know about how pay is set  and how they can improve their pay level, the happier they are with their pay, job & level. It has been determined that pay processes are often not well understood by employees and managers. Researchers have found that  employees are more satisfied with the amount of their compensation than with the process used to determine it. Also note that pay knowledge and performance management knowledge is positively associated with organizational effectiveness. In many firms, pay is a guarded topic,  but those companies who shared information with their employees found that openness yielded high returns in retention, commitment and trust in management.

Thus “pay secrecy” needs to be eliminated if the system is going to be an effective one. 

Thus the key I have found is open communication about everything about the organization’s pay system.

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