Business Alignment Strategies - January 2010 Newsletter

What's New

Welcome to the January 2010 issue of Alignment Solutions! We are pleased to announce that our free new resource to help you effectively set, align, and implement priorities is now on-line. In this series of 30-minute interviews called Deft Decisions in Chaotic Conditions: How Experts Create Order from Turmoil, thirteen experts in setting and implementing priorities share their insights, processes, methods, and experiences. Three of these experts are clinical psychologists who offer tips on how we can change our behaviors to ensure success in achieving our priorities.

This month's theme is "moving toward recovery." As the economy begins to turn upward, many organizations are making plans to make up lost ground and move forward. High on many employers' list is reversing cost-cutting measures that include employee pay and benefits. What is the most effective way to do this?

The Feature Article, "How to Optimize Retention When Restoring Pay and Benefits Cuts," takes a two-pronged approach to reinstating pay and benefits cuts and retaining key employees. First, it offers four tactics for re-building employee trust and management credibility, which are essential for the successful implementation of change. Second, it suggests three strategies for retaining key employees.

In "How to Communicate Changes in Pay and Benefits Programs Effectively," the Business Solutions section identifies nine best practices for communicating change, whether in pay and benefits or in other programs.

In the Personal Solutions section, "Self-care: Critical Success Factor for Personal and Organizational Renaissance™" provides seven suggestions for taking care of yourself so you can be more successful in life.

I invite you to visit my web site at www.BusinessAlignmentStrategies.com and my blog at www.OptimizeBusinessResults.com to find other articles and resources that may be of value to you and your colleagues. I welcome your feedback!

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How to Optimize Retention When Restoring Pay and Benefits Cuts

Data from a number of surveys over the past few months indicate two related facts:

A majority of organizations reacted to the economic downturn by taking actions such as layoffs, pay freezes and/or cuts, reductions in benefits, and furloughs.
A majority of employees intend to look for new jobs as soon as they have alternatives.

Now that the economy is beginning to show signs of upward movement, executives and business owners face a dual challenge: effectively manage the reversal of cuts in pay and benefits, and maximize the retention of key employees.

Inherent in any discussion about how to reverse cuts in pay and benefits and how to retain key employees must be the recognition that management has got to focus on building or re-building two critical success factors: fairness and trust. Fairness lies at the heart of every effective compensation system, and procedural fairness in the workplace dramatically increases the organization's ability to retain employees. Trust is an integral part of a successful retention strategy. Because employers that froze or cut pay and/or benefits shattered perceptions of fairness and trust, management's first order of business must be to heal those wounds.

Here are four key tactics that together help increase management's credibility and trustworthiness when making changes to pay and benefits programs:

Align the compensation and benefit program objectives with organizational goals.

Take this opportunity to review your compensation and benefits programs from top to bottom, and make sure that their objectives are aligned with desired results. If your business goals have changed, make sure the systems that support them are modified to ensure their successful achievement. For example, survey data indicate that many employers intend to adopt pay practices that reward good performance. Your total rewards system sends a message to employees about organizational values and priorities, so make a conscious choice about the message you want to convey.
Take steps to increase the likelihood that employees will accept the designated changes to the total rewards program.

Although restoring pay and benefits cuts seems like positive news, employees who have been subjected to layoffs and pay and benefits cuts are likely to be wary of further change because they remain distrustful of management. Examples of actions you can take to accelerate the re-building of trust include ensuring that the changes are transparent, involving employees to the extent possible, communicating early and often, and educating first-line managers and supervisors about how the changes will affect individual employees.
Incorporate procedural fairness into organizational processes and decision-making.

Procedural fairness refers to the rules by which decisions are made. It is a key concept in the workplace, and it is especially critical in compensation-related decisions. Employees will accept undesirable outcomes IF they believe that the rules or processes used to make the decisions were fair. You can increase perceptions that changes to the compensation and benefits programs are fair by ensuring that decisions and processes are free from bias, transparent, based on objective criteria, and provide meaningful opportunities for those affected by the outcomes to have a voice.
Communicate, communicate, communicate.

There are two aspects to communication: actions and behaviors, and words. Employees believe what they see rather than what they hear. Thus it is critical that leaders' behaviors and actions are consistent with their words.

Restoring pay and benefits cuts are unlikely to be sufficient to retain key employees. Here are three strategies you may use in addition to changes in total rewards that will increase the likelihood that your good performers will stay with your organization even when they have alternatives.

Make employees a high priority.

An employee-centered workplace™ is one in which every person, system, process, program, and policy is focused on helping employees become fully successful. When employees feel that management really cares about them, their productivity, morale, and engagement increase, and they are more likely to remain with the organization. Employees who are a high priority serve customers well, which results in successful outcomes for the organization.
Ensure that all employees see the "big picture" AND that they can articulate the contributions they make to achieving that outcome.

Employees who feel part of something bigger than themselves are more engaged and committed, and they have higher morale than employees who feel disconnected from the organization.
Develop an appreciative culture.

What I mean by an appreciative culture is an environment in which the proverbial glass is half full instead of half empty. That is, the organization seeks out things that people do well and builds on those strengths. A positive environment in which contributions are valued encourages employee engagement, increases collaboration and morale, and increases trust and credibility. A little recognition has a huge ROI (return on investment).

To learn about best practices in verbal and written communication, please see our article How to Communicate Changes in Pay and Benefits Effectively.

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How to Communicate Changes in Pay and Benefits Programs Effectively

In a previous article, How to Optimize Retention When Restoring Pay and Benefits Cuts, we stated that an effective strategy for communicating change - whether in pay and benefits programs or in other programs - has two important components: the actions and behaviors of leaders, and the spoken or written words. The former carries more weight than the latter - i.e., employees believe what they see rather than what they are told. That article addresses actions and behaviors. In this article we identify some best practices for verbal and written communication of organizational change

I do not discount the importance of the words used to describe and support change. To the contrary, language is critical: used effectively, it can accelerate the intended changes. The key point is that the words must be backed up by behaviors, especially by organizational leaders. With that in mind, here are nine best practices for communicating changes in pay and benefits programs:

Develop a communication strategy that enables employees to understand the value of their total compensation package. By "strategy" I mean a well thought-out and articulated plan that is supported by leaders who are active advocates for its implementation. This communication must be on-going.
Communicate throughout the organization. Employees at all levels must understand clearly how the changes will affect their individual pay and benefits package.
Focus on answering the question, "What's in it (the changes) for ME?" The operative word is "me:" pay is very personal, and people want to know how their lives will change - for better or worse - as a result of the modifications to their pay and benefits.
Use multiple media. Individuals have different learning styles, so using a variety of media increases the likelihood that your message will be received as intended.
Watch your language. As noted above, language can help or hinder the effectiveness of your communication efforts. For example, consider the differences between referring to compensation and benefits as a "cost" versus describing them as an "investment." When we speak in terms of costs, the focus is on cutting expenses, which include pay and benefits by virtue of the fact that they often are considered costs. The problem is that there is a limit to how much an employer can cut pay and benefits. In addition, such actions destroy management's credibility and trust; they also send morale into a tailspin, and productivity plunges as employees pull back and focus on what they cannot do. In contrast, there is no upper limit to the potential benefits of "investing" in a total rewards program. The focus is on seeking what employees and the organization CAN do instead of what they cannot do. Employees feel valued because the message being conveyed is, "We are investing in you because you are valuable to the organization."
Communicate frequently and clearly. This point cannot be overemphasized, especially in an environment of low or no trust. Tell employees what they need to know to be fully informed about their pay and benefits. Answer the question, "What does this change mean for ME?"
Ask for, and listen carefully to, employee feedback. People are more likely to accept changes when they have had meaningful opportunities to provide input into decisions that affect them. Provide multiple means for employees to convey their suggestions. Be sure to respond to that feedback, whether the answer is "yes," "no," or "not now." Responsiveness increases management's credibility and trust.
Set clear expectations, then meet or exceed them. Be honest, telling employees as much as possible. Keep them informed. Unmet expectations destroy trust and credibility, so make sure you avoid the mistake of over-promising and under-delivering.
Educate first-line managers and supervisors about the changes. They are the people to whom your employees will turn with their questions, so you must provide them with the tools that will enable them to give accurate answers in a timely manner.

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Self-care: Critical Success Factor for Personal and Organizational Renaissance™

Renaissance may be defined as a renewal of life or interest, a re-birth. I use the term Organizational Renaissance™ to highlight the fact that the economic downturn has provided a unique opportunity for organizations and individuals to take a close look at what they are doing, how they are doing it, why they are doing it, and then to either re-affirm the path they are on or choose a new one. However, the window of opportunity for organizations is closing quickly: by the time the economy turns around, it will be closed in the sense that current and past practices again will be entrenched and people will be very resistant to change. Right now you truly have a once in a lifetime chance to purposefully examine who you are as an organization and how you want to operate. Similarly, individuals have that same opportunity to examine their values, choices, wants, and need, and to make changes as desired.

As I was piecing together the components of the Organizational Renaissance™ concept, it seemed incomplete. Then I realized a critical element was missing: self-care. A familiar example illustrates why self-care is important. Those who travel by air are familiar with the flight attendants' instructions about use of the oxygen masks: "Put your own mask on first and adjust the straps before you help others." This metaphor illustrates that we cannot be fully effective in helping others, whether inside or outside of the workplace, unless we take care of ourselves first.

For those who may be out of practice in taking care of themselves, here are seven suggestions to help you get started or re-started:

Take the time to paint a picture (literally or figuratively) of how you want to live your life and the values that you espouse. Use this picture as the standard against which to make decisions and set priorities. Relentlessly jettison things that don't support your vision.
Zealously guard your time. I like the perspective provided by Alan Weiss, my mentor. He defines wealth as discretionary time, saying that while individuals can make more money, they cannot make more time.
Refuse to play the role of victim. Acknowledge that although bad things happen, you are the only one who can define yourself as a victim, and only you can choose to remain in or leave that state of mind. Most of us experience rough patches. One of my friends, a cancer survivor, shared her secret for getting through those "woe is me" times: she allows herself to have a 15-minute "pity party," during which time she can feel as badly as she wants. Once the time is up, however, she resolutely picks herself up and moves on.
Surround yourself with people who infuse your life with positive energy, and avoid those who suck the energy out of you. If you must be around individuals in the latter group (e.g., family members, co-workers), minimize your time with them.
View your life as a whole rather than segmenting it into arbitrary parts - e.g., work life, home life. Approaching your life holistically enables you to maximize it and, importantly, to integrate its various aspects. (See #6 and #7.)
Develop a career that allows you to express your passion. Life is too short, and we spend too much of it at work, to squander our time by doing things that don't make our hearts sing.
Remember to strive for balance in your self-care. That is, tend to the mental, physical, emotional, and spiritual aspects of your being. All of our "selves" need care and attention.

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