Salary.com HRVoice

Who's in Charge?

What in the name of insubordination is going on here?!

• Players on France’s World Cup soccer squad refused to attend a practice session after striker Nicolas Anelka was kicked off the team for insulting coach Raymond Domenech

• Three months ago, Washington Wizards’ forward Andray Blatche was taken out of the game by Coach Flip Saunders for not hustling, and when the coach told him to get ready to go back in, Andray refused

And it’s not a recent phenomenon or a recent fad representing the juvenile actions of young, overpaid, and spoiled athletes in 2010. Such behavior has been occurring in the sporting world for several years. We’ve witnessed similar acts of indifference and defiance by former New York Knicks’ point guard Stephon Marbury, then-Boston Red Sox outfielder Manny Ramirez, Philadelphia 76er guard Allen Iverson, football wide receivers Terrell Owens and Randy Moss, and former basketball great and Chicago Bull forward Scottie Pippen, among  many others.

What’s going on is a misalignment in the perception of the hierarchy within organizations, that is, who actually runs the show and therefore calls the shots. Because of the pedestal upon which we’ve placed our athletes in today’s world, we’ve created a belief by high-profile and idolized individuals of being indispensable, invincible, and above the laws and rules by which the rest of society is governed. This perspective, clearly, needs to change.

Outperforming Highly Skilled Rivals in Business

Every four years, I can’t help getting caught up in the excitement of the World Cup. The competition, the talent, the passion and the drama – all on a global scale – are unequaled. The Olympics may come close, but the World Cup has the best teams coming together to compete in one sport, on one stage, generating the top global TV viewership in history.

The competition is still in its early stages, yet it has already had its shares of disappointment, thrills, surprises, personalities and sheer soccer brilliance.  For me, the highlight is that teams that were not predicted to do well, coming from nations not traditionally known as soccer powerhouses, have beaten or drawn with so-called better teams.

Case in point:
• Team USA tied with England, a far superior team that includes some of the world’s top-paid soccer stars such as Rooney and Lampard, earning a point in the early round.
• The Kiwis (New Zealand for the uninitiated), competing in only their second World Cup final, also earned a point after tying Italy, the reigning World Cup champions.
• Spain, ranked second in the world going in to the tournament, lost to a Swiss team ranked outside the top 20. 

Why are these teams, which on paper come to the tournament with less talent and experience, outperforming their highly skilled rivals?  There’s a lesson that professionals managers can take to their own work as they face competitors who likewise may have more experience and skills.

Independent Review Services for Executive Compensation

Prior to my career at Salary.com, I was an executive compensation analyst for The Wyatt Company  (pre-Watson and Towers mergers). Initially, my role was to analyze the executive compensation practices of public companies. My analysis would yield commonly accepted executive compensation practices by industry or company size. My efforts were often integrated into senior consultants’  presentations and recommendations for their particular clients. These clients would rely on executive compensation consultants as an independent, unbiased voice to help their organization set executive compensation programs.

As I grew professionally, I came to the realization that these senior consultants that I worked with had essentially two jobs, to provide recommendations and assessments of their clients’ executive compensation practices, and also to find new clients and drive revenue for the firm. If you have ever worked in sales, you know finding new clients is easier said than done. Often times, new business is generated from prior working relationships, word of mouth, and successful prior engagements. In other words, it really helps if you have worked with someone in the past, and that work was deemed a success. As a result, there is pressure on executive compensation consultants to recommend equitable compensation programs while making a name for themselves in the consulting community. Complicating matters even more, these consultants are often tasked with recommending compensation packages for the individuals that hired them. One can see the dilemma.

Clawbacks in Practice at Diebold Following SEC Settlement

The U.S. Securities and Exchange Commission last week filed accounting fraud and other charges against Diebold and former executives of the company. The SEC charged that Diebold engaged in fraudulent accounting practices to inflate the company's earnings to meet forecasts from at least 2002 through 2007. Diebold agreed yesterday to pay a $25 million penalty to settle the allegations.

As these inflated results were used to calculate compensation payouts during the period, the company's former CEO Walden O'Dell has also agreed to reimburse $470,000 in cash bonuses, $1,000,000 in stock, and $85,000 in stock options. Other executives including Gregory Geswein and Kevin Krakora, both former CFOs of the company during the period, have not thus far agreed to settlement.

The first of this rare type of settlement with the SEC was the chairman and CEO of UnitedHealth Group, who settled for funds related to compensation and the proceeds of stock sales received between 2003 and 2006 totaling close to $450 million dollars. Similarly in 2009, the SEC brought a landmark settled enforcement action against the CEO of CSK Auto.

The Sarbanes-Oxley Act of 2002 requires public company CEOs and CFOs to return bonuses and other incentive-based compensation, equity-based compensation and profits on sales of company stock received within the 12 month period following the release of company financials if there is a restatement due to material noncompliance or misconduct. There are several limitations to this general provision. It applies only to CEOs and CFOs, leaves the definition of misconduct ambiguous, and is enforceable only by the SEC.

New SEC Rules and Succession Planning

New SEC rules continue to be a hot topic. Their impact on corporate governance, compensation transparency and risk disclosure has been ample fodder for these pages. The requirement that filers more fully document their company leadership structure has led to greater detail on board qualifications and separation of chief executive and chairman roles.

An area that was not specifically addressed in expanded leadership descriptions, but arguably of comparable significance to company stability and management is an evaluation of how fragile leadership structures can be if there is a turnover in the top tier of executives. Shakeups in 2009 occurred at GM, Yahoo, Tyson Foods, Wal-Mart, DuPont, and Spectra Energy just to name a few. Only a few on the 17 turnovers in the S&P 500 in the first quarter of 2009 according to a Wall Street Journal article were part of planned transitions. I hope to share a look at stats for the later part of 2009 later.

Succession planning ties into retention, risk management, pay for performance, and board qualifications, which have all been at the forefront of executive compensation discussions for some time. With this in mind, I set about taking a look through recent filings to see how companies may or may not be talking about how succession planning is being addressed in corporate governance.

Third Failed Management-Sponsored Say on Pay Vote

With proxy filing season coming to a close, attention turns to proxy voting results. On the say on pay front, a third U.S. company has had its management-sponsored, say-on-pay ballot initiative voted down. Keycorp follows Motorola and Occidental Petroleum in this dubious distinction. Keycorp's say-on-pay initiative was voted down by 55 percent of voters after passing by a safe margin of 87 percent one year ago. Keycorp is particularly noteworthy since it is also a TARP recipient.

Clearly this is big news in the executive compensation community. At a recent combined NASPP/GEO regional meeting, several people prompted a speaker who could not recall that Keycorp was the latest company to not pass its say-on-pay proposal. I thought I was the only data geek in the room who would know that...

With more and more companies adding say on pay to their agenda items, and the very real possibility that it will be required for all companies soon, companies should start thinking now about how to best manage communication regarding their compensation plans and policies with shareholders now to avoid such painful surprises.

Insight and Advice from an Experienced Ex-pat

More than nine years ago, I had an opportunity to take a two-year assignment in Bangalore. I served as my former employer's head of compensation in India. Overall, the assignment was most valuable and enriching, and I benefited greatly from the experience. Interestingly, the biggest challenges my family and I had were the little things, which in retrospect may seem like minor inconveniences, but at the time were quite burdensome and time-consuming.

For example, the apartment we chose was being renovated and should have been finished well before we arrived. However, construction delays arose, so I had to stay in a hotel for the first three weeks, and that delayed my family’s arrival.

There were regulations regarding registering with the police department that took multiple visits and several hours of completing paperwork, meeting with officials and waiting in line.Identifying an appropriate school for my son was a challenging and time-consuming process, as the company with whom we worked to get us settled wasn't as well-versed in private, English medium schools.

Recapping the WorldatWork Total Rewards Conference

There was a lot of excitement for Salary.com at this year’s Total Rewards 2010 WorldatWork Conference that just wrapped up in Dallas.

Every year, human resources professionals from around the world gather at the Total Rewards 2010 WorldatWork Conference & Exhibition to learn the latest HR strategies on how to attract, motivate and retain talented employees. They come in search of the following information:
- increased knowledge of total rewards, compensation, benefits and work-life
- strategic insight
- latest best practices
- tactical skills (how to’s) for immediate implementation at the office

At the show, Salary.com announced a new partnership with Hewitt Associates to offer clients world-class compensation technology and consulting services. Salary.com is providing Hewitt with survey management and pay analytics software, while Hewitt to is providing broad-based compensation consulting services to Salary.com enterprise customers. We also launched new interactive salary structure functionality as part of our CompAnalyst software suite. The CompAnalyst Salary Structures software module empowers compensation professionals to align salary structures, grades and the placement of jobs and employees with drag-and-drop ease.

Get the Most Out of Total Rewards 2010

There are two main reasons that attendees spend significant time and money going to conferences – education and networking. No surprise there. But did you know that by networking you can actually reach higher levels of learning? Research suggests that when you engage in discussing and sharing ideas with other attendees, your comprehension and retention of new information is higher.

So here are some networking tips to help you get the most out of WorldatWork 2010 Total Rewards Conference and Exposition:

BEFORE YOU GO:

Set up a personal networking goal. By thinking about why you are going to this conference and setting up a few realistic goals, you are sure to get more from the event. Plus, you will be better able to justify (to yourself and your boss) your attendance next year. Some examples: Commit to meeting at least 10 new people, or to learn how three attendees have solved an issue that you are having.

Register for the event community and reach out. Go to the Total Rewards 2010 Conference Attendees page, sign up for this group, read the discussions and jump in with your thoughts. Or start a new discussion.

Doing More with Less

It’s human nature to reflect on hard times once they pass. We look back for lessons learned and ways to avoid the hard times again. And while we may not be out of the woods just yet, it seems fitting to look back on the economic downturn to see what we can do differently and better.

If I had to pick one universal lesson we can call take away from the past two years, it’s that we need to do more with less. Having less money, less time, and less resources to do things – something we’re all feeling right now – doesn’t mean we have to do less. And having less doesn’t mean we stop doing all together.

Having less means looking for new ways to do what we’ve been doing all along. Having less means re-evaluating all the things we’ve been doing to decide if we should be doing them in the first place. Having less means being creative, innovative and smart in our decision making. Having less means understanding where we can make the biggest impact. Having less means measuring the impact of the things we do.

For HR professionals, having less and needing to do more is a frequent challenge. When there’s less money for salary increases, we use what we have to target our key talent and top performers. When there’s less money for training and development, we plan and implement programs that are essential to running the business. And when there’s less time for us to do our work, we figure out a way to work more effectively.

I’d like to put out a challenge for HR folks: when times are prosperous again, when we have more, let’s still use what we have efficiently and effectively. Let’s not be wasteful of our time and our money and our resources. Let’s keep being creative and smart and innovative in our decision making. Let’s keep doing more with less.