The Intended Consequences of Taking HR Risks

I wrote a few months ago about the unintended consequences of HR programs. In this case, it was the decision of a Seattle CEO to make minimum wage $70,000 at his firm. So, some time has passed. What have been the consequences in the six months since the plan was implemented?

The results have been good for the company. Not only are they still in business, but they have thrived. The publicity led to a lot of new customer interest, they increased their already high customer retention rate, turnover is the same, and stories about customers leaving in droves proved to be false. The jury is still out on their long term profitability as the raises have not yet fully kicked in. The negativity around the story  PPSSPP emulator seems to have faded (at least according to my Google searches), but that could be due to a general lack of attention span of the media. I was surprised to even see the Inc./Slate story about it.

The CEO claimed that the reasons behind the raises were altruistic and I am willing to take that at face value. I do wonder whether the higher customer retention rate is due to some people being attracted by what they see as a political statement made by the raises or if the happier/less money stressed employees are providing better service. The former should fade pretty quickly. However, the real test is the latter. If the company continues to have a higher retention rate than before the raises, a large part could be attributed to the higher pay.

My takeaway at this point is that the CEO took a risk, based on a core belief, and it seems to have paid off, at least for now. Sure, he considered the numbers and took a short term pay hit, but it is likely that he’ll continue to profit for years to come if his strategy pays off. More importantly, the risk was one which had immediate benefits for the employees. In other words, he put people first in order to benefit the company. I am thinking that his gamble will pay off.

For more information on increasing employee engagement and retention, please contact Warren Bobrow.

I’d Prefer To Have My Work Eulogy While I’m Still Here

We often hear the best things about people at the end. Testimonials are generally saved for retirement dinners an almost every eulogy tells us about how wonderful a person was. Why is that? Are we afraid of embarrassing people? Would hearing such great things about ourselves be a de-motivator?

This paper posits that hearing about our best selves is motivating and we should share this praise with people early in their work careers. Instead of leading to complacency, their data show that thinking about when we have performed well and hearing others applaud our accomplishments activate us and leads to higher resilience, performance, and engagement.

I’ve written before about highlighting positive aspects of performance feedback in order to motivate people and how the best performers keep improving from feedback. The activation research gets me thinking that there is a bit more to it. The better performers may be doing more with the constructive feedback because it is surrounded by so many good stories. Perhaps if we built more positive activation into our performance feedback processes (whether they be performance appraisals or 360s) non-top performers would receive some of the same benefits

We always tell managers that intrinsic motivators are more effective than extrinsic ones because people don’t tire of them (when they are authentic) and they are free. The self-activation data tells us that reminders of employees’ best selves are deeply rooted and inspire them to return to that state. Let’s look for more opportunities to do that.

For more information on providing motivating feedback, please contact Warren Bobrow.

Equal Pay for Similar Work—A New Era in Job Analysis and Salary Negotiations?

California has prohibited gender-based wage discrimination since 1949. Courts ruled that the law applied only to exactly the same work. The state took it one step further this week by passing a law this week saying that women have a discrimination claim if there is unequal pay for substantially similar work. Some feel that the new law is good news for everyone from cleaning crews to Hollywood’s biggest actresses.

Practically speaking, the decision could lead to renewed interest in job analysis (let’s not get too excited, OK?). The law is written so that the burden is on the employer to demonstrate that the difference in pay is due to job related factors and not gender. So, if someone is going to argue that two jobs are substantially similar, there is going to need to be some data to back that up.

The law states that similarities are based on “a composite of skill, effort, and responsibility, and performed under similar working conditions.” A good job analysis will quantify these so that jobs can be compared. Who knows what statistical test tells you when jobs are substantially similar, but the data will tell you if they are the same or really different, and that’s a start. Regardless, I’m guessing that the meaning and demonstration of substantially similar will be litigated for a while.

The other impact of this law is likely to be on salary/raise negotiations. There’s plenty of data which indicates that men are less averse to this process than women, and this has real economic impacts. Companies may want to consider whether to make non-negotiable offers to avoid bias claims.

California, as usual, is setting a new standard in equal pay legislation. There’s the usual concern that this will cost the state jobs, but it may also attract more professional women. Either way, companies will need to review their compensation structures and determine which jobs are substantially similar to each other.

For more information on analyzing and grouping job titles, please contact Warren Bobrow.

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