Is it just me, or is the coffee shop always cold?
I spend a lot of time in coffee shops for several reasons, none of which is because I love coffee (which I don’t). However, they are convenient places to meet clients and get work done. The problem is they always seem to be cold.
It has long been thought that restaurants keep cooler temperatures to turn tables faster. If there’s a parallel line of coffee shops, it can’t be a turntable. They want us there, right? I’m assuming that with low room temperature, they’ll push us to buy more hot water dripping through the ground beans. Maybe they’re motivating them to want more behavior? That’s not a knock on the door. Some might say it’s a good business.
One of my clients recently shared how they restructured components of their compensation structure because some of their incentive compensation “didn’t work anymore.” This is a good question because what used to be monetary incentives has become such a standard that incentives have effectively lost their meaning. So this has been absorbed by the grassroots and a new variable pay component is being introduced.
This is not an isolated example. In 2022 alone, I’ve had several such conversations about compensation structures. Some are natural upward pressure on inflation and tight labor markets. Others relate to non-cash benefits and creative ways employers provide relevant and meaningful terms of employment. As in the previous example, a couple is working to design a compensation structure that rewards individual and company performance.
I want to be clear: I’m not a compensation expert. Fortunately, when a client’s needs arise, I know there are a few I rely on. But I find my place in these conversations to be strategic and critical thinking, which is essential for anyone evaluating its position in the market and what the business model can bear. Here are some basics:
Does your compensation structure motivate the behavior you want? Too often, employers don’t think about what they want and whether the structure facilitates that. W. Edwards Deming famously said, “Every organization is perfectly designed to achieve the results it achieves.” This includes your compensation plan. Some people want to work collaboratively and share results. Others hope to stimulate some level of internal competition. The same compensation plan will not work for both. Going a step further: watch out for shadow behavior you don’t want. This team structure can reward people on board for not rowing. The competition you want can degenerate into unhealthy competition.
The benefits don’t benefit everyone. I didn’t make it up, but I hope I did. An important component of total compensation is the cost of the employer providing certain benefits. However, I can assure you that your employees receive a wide range of real value from the benefits you provide. I don’t know of a company that can solve this problem, but it can think critically about the relevance of the services it provides to its employees. The result is a growing “cafeteria” approach that puts more choice in the hands of people.
Are you listening? By being too isolated, any company runs the risk of falling on deaf ears. The truth is, there are market dynamics at play, and while you don’t have to follow suit, you are always competing. There are things you can do to set yourself apart. With great interest, I recently read NOARK’s 2022 Compensation and Benefits Survey results. This is an example of a reliable regional resource that can help you listen.
Final Thoughts: I was in a board meeting a few years ago, and I was a novice, and I asked a question and the answer was, “We never do that.” I politely point out that while this may be an accurate statement, but it rarely answers the question well. The same goes for any systems we have in place and our willingness to constantly evaluate whether they (still) work for us the way we need them to.
Chuck Hyde is the founder of C3 Advisors, a firm focused on executive development and talent optimization.he can be www.c3adv.com. The views expressed are those of the author.