What we’re all missing about compensation

Image for post
Image for post

Figuring out what makes a ‘great place to work’ and then figuring out how much compensation factors into that is a fairly fraught exercise. Here’s why: most of the research done around the determination of a great place to work involves surveys. Surveys have tons of built-in biases, and one of the biggest ones is that people are sometimes afraid to say the thing they really feel, instead saying the more culturally-appropriate thing. Here’s an example: some dating and sexuality surveys recently have found that “funny is the new sexy.” We’d all like to believe that, and it’s somewhat true in some cases, but supermodels still get more dates than female comedians. You know what I mean? But people on a survey don’t want to say “I want a hot girlfriend!” because that sounds crappy to say.

It’s the same with compensation. Obviously it’s a huge factor in any job search or placement. In a capitalism, your compensation basically determines how you can live. So you’re gonna factor it into decisions, you’d hope. But you’re not necessarily going to tell a survey-taker that you factored it in, because it sounds a little gauche — and if we’re being totally honest, most middle-class people are brought up not discussing money at all. It’s easier to be polled for something and say you value “the mission” or “creativity of co-workers” as opposed to the scratch, when in reality you have no clue what the mission is and hate all your teammates. This stuff does happen.

Hopefully we’ve established that the specific role of compensation in any great place to work is hard to prove via surveys and research alone — but that said, now we move into the next tier of fraught elements.

The great place to work research

I wrote about this a little bit back in 2013-ish based on another ‘great place to work’ list. There, it seemed like the major factor was availability of training. This makes sense, because other research has shown that employees really want opportunities for growth from their employers. (Again, this is fraught: 70 percent of the people saying ‘opportunities for growth’ could simply mean ‘the chance to make more money,’ i.e. higher compensation.)

The training this is a little bit terrifying because at most companies, when a fiscal rough patch hits, training and learning development are usually the first programs sliced to the bone. That’s because we don’t empower anything tied to Human Resources further than we can throw it, but that’s a topic for a different post.

Here’s some new research from Indeed, based on their rankings and company pages, on the top 500 great place to work candidates of 2016. The top 10:

Image for post
Image for post

Here’s the first interesting thing: all these companies make money (some a bunch of money), but only Apple is in the Fortune 500 Top 10 and this top 10. Other Fortune 500 Top 10 companies, i.e. Wal-Mart and Chevron, are way further down this list. That makes sense: big companies that make a ton of money tend to be able to offer high compensation (good), but also get choked in process (bad) and silos (bad), and that would make people less inclined to review their experience there positively.

Here’s the key paragraph of Indeed’s findings:

On Indeed company pages, employees assign their firms an overall ranking from one to five stars and also rate them individually by five additional measures: management, job security and advancement, culture, work-life balance and compensation and benefits. Among the scores for the Fortune 500 we find, perhaps surprisingly, that compensation has the weakest correlation with the overall job satisfaction score. By contrast, company culture and quality of management have the closest correlation.

Compensation has the lowest correlation with overall job satisfaction score.

Since some Baby Boomer hard-line manager just shuttlecock’ed himself through a plate glass window, let’s explain a bit more.

Great place to work: Transactional vs. transformative

You can’t be a great place to work if all the relationships fostered between employees and managers — and employees and company as a whole — are transactional, meaning they’re low-level and rooted in transactions as opposed to broader purpose.

Conversations around salary are transactional conversations. You do A and B, we’ll provide C. This is good for the human brain because it’s a relatively easy transaction to understand and you get paid at the end of it. It provides comfort and stability. The problem? That’s about all it provides — and over the last 30 years, companies have become increasingly awful at providing any real type of security or advancement to people.

2008’s crash was a tipping point for all this. Pre-existing executives saw that fallout, realized they were still somewhat far from their own retirement, and decided to clamp down on the status quo. Yes, companies like Uber have been founded since 2008 — but many established enterprise companies are operating according to a guidebook that rewards the executives and their top lieutenants, and everyone else is a target-chaser that’s totally interchangeable. I’ve seen that at a dozen places I’ve worked. You probably have too, even if you like your direct boss.

Now, it gets pretty fraught discussing the role of a company in providing purpose — you can easily argue that’s not their role — but a company needs to provide something more than just a salary (transactional) if it wants to be seen as a great place to work.

The problem with the pull-quote above is that “company culture” is ambiguous to define, and “quality management” is too to some extent. Management isn’t intuitive. It’s also defined differently at every level. A SVP thinks a good middle manager is someone that hits targets and drives revenue. A rank-and-file thinks a good middle manager is someone that communicates well, respects them, and doesn’t e-mail them ‘urgent projects’ at 11pm at night.

Because the middle manager is more interested in pleasing the SVP than the rank-and-file, well, hitting targets and driving revenue wins out.

That’s why it’s hard for many companies to create this kind of transformative culture.

Great place to work: The decision-makers need to care

This funnels right on up to the top dogs. If all they care about is making money and chasing growth, it eventually shows to everyone else in the company. You can call meetings and discuss employee engagement and becoming a great place to work and mission and value and culture and purpose and all that, but if the actions ain’t backing up the words, it’s all some degree of garbage.

A place I worked recently was like that: CEO constantly referenced employee engagement, even calling it “the only sustainable competitive advantage” in a few remarks. When we did an engagement survey internally and the results were presented at an all-hands meeting, three of his top lieutenants were on Facebook on their phones during the presentation. It was awesome. A couple of times, I’d propose an engagement-driven idea and someone would shriek at me about margins or growth plays and how that had to be the focus now. Eventually, I stopped giving a shit. That probably correlates with the fact that I got laid off…

But my point is: you don’t build a great place to work unless the decision-makers (who everyone else models, ultimately) actually care about building that type of place. You spend more time in the middle arc of your life with your co-workers than probably anyone else. Who wants that to be a miserable experience? Sadly, many execs do — because they don’t care, so long as the cheddar’s rolling through.

Remember: an exec is almost always protected unless there’s a giant revenue hit or moral/PR hit in their company. In the day-to-day of things happening, a rank-and-file can get booted or tossed for about 19,371 different things. See also: “performance improvement plans.” An exec can basically text his dong to all the cute blond girls in HR and probably get a $20K bump that quarter if the rest of the biz is looking good. Execs fall down for two reasons: money’s been lost in a big way or some PR thing that can’t be controlled by experts. That’s about it.

As a result, why do they have an incentive to care about making their job a great place to work? Are they bonus’ed on that?

A final word about being a great place to work, compensation, and money

Let’s do this in a few short spurts.

First thing: money isn’t directly tied to happiness. We all kinda sorta know this, even if we don’t know how to present this fact back on surveys. But making $150K can make you miserable, and making $53K can make you super happy. It depends on you.

Second thing: as you can see above, you don’t have to be a company that makes billions and billions to do the culture/mission/values/engagement/great place to work thing. It’s not tied to your market cap. It’s tied to how much the people with the decision-making authority are willing to care about it.

Third thing: unfortunately, many companies still operate according to The Spreadsheet Mentality, whereby only measurable things deserve the attention of the most important people. (This is hideously ironic because almost every executive I’ve ever met has no clue how to deal with or analyze information unless it’s spoon-fed to him.) “Culture” isn’t a measurable thing. “Engagement” isn’t either — although, it could be. “Great place to work” isn’t measurable internally — executives will always claim it is (“We pay well and have a good team culture!”).

But Q2 revenue growth? That’s measurable. So in The Spreadsheet Mentality, that wins — and all this other stuff falls to the curb.

But if you lead a company or group and understand one thing from this, understand this: you need to build a great place to work long-term because otherwise, you’re building a revolving door of cheap priorities and BS. And in order to build that great place to work? You don’t need money. You just need to care.

My name’s Ted Bauer; I blog here regularly and you can learn about hiring me for freelance and contract gigs as well. You can also subscribe to my newsletter.

Written by

Blogging, largely about work and how to improve it. How I make (some) money: http://thecontextofthings.com/hire-freelance-writer-ted-bauer/

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store