Straight Outta Comp Time

It is the beginning of the year and that means time for raises and bonuses, also known as compensation (thus the witty title of the posting). This can be an anxious time for employees who count on bonuses and raises for financial reasons and who use it as a measure of how they are valued by their organizations. This is an even more anxious time for managers who were given a constrained amount of money and had to allocate to their employees as fairly as possible.

I always tell people that compensation is based on a few things…

1. Individual contribution
2. The impact of that contribution to the organization
3. Those items relative to peers
4. How well the company did and what the ‘pool’ size is

What is interesting is that people only really have control over the first item and so it is important to manage expectations. There are several examples where someone feels like they have done a good job and then get disappointed with financials…

• Doing a good job IS the expectation and not a definition of “exceeding” expectations
• You can do a really good job but the impact of the work may not be as higher as others – e.g. I could be the best photocopier in the building nut the relative impact is not as high as other roles
• The company has different years and often changes the math and bonus pool (which is why comparing to prior years is not advised)

So, the key is managing expectations with employees and being as fair and transparent as possible. If that is done, then you can have a “Good Day” just like Ice Cube.