Stickman Beowulf.jpg

The Beowulf of Compensation

Most of you know of the poem Beowulf. Legend has it that it was passed down through oral performances for nearly 1,000 years before it was formally documented in Old English. The poem is long and provides details that most people skim through, if they read it at all. But, it is documented and any literate person can look it up and read if they are interested. The more ambitious can (and do) even memorize it and perform it live. Let’s first state the obvious. No compensation plan, philosophy or process is interesting enough to be carried down through 10 years of oral history, much less 1,000 years.

But, a seemingly large number of companies are crippled by processes, plan details and compensation philosophies that depend on a tradition of oral history. For example, “Sally create that spreadsheet and she really needs to be the one to run the data.” “Oh…Don't go by the plan document on that part, we have been doing it this other way for a few years.” “We state our goal is to motivate people using equity compensation, but we really only grant to the top people right now.” And, the worst, “I need to do that myself, no one else knows how.”

The readers of this blog are some of the most conscientious professionals in our industry. You are the people who take the time to stay up to speed on a regular basis. But, I bet nearly every one of you has a similar issue at your company. This isn’t about succession planning. This isn't about efficiency. This is about sanity.

I get it. Fixing this problem isn’t easy. We are strapped for time and resources. We all have higher priorities. But, at a minimum, you need to make a list of the risk factors and include a sentence or two on what it will take fix the problem. Have the list reviewed by anyone who may have pertinent knowledge. Then, give this list to your boss and let him or her know that you would like some assistance in addressing these issues. Make certain that you explain the potential risks without hyperbole or worst-case scenarios (unless asked.) Then bring it up once a quarter until help arrives or, sadly, one of your predictions comes true.

Being a compensation professional is difficult. Every aspect of our profession is more complex and more scrutinized than ever before. When processes are dependent on specific people, they really aren’t processes. When our plan documents don't reflect our actions, we create unneeded risk. When our philosophy doesn't drive our behaviors, we have no defense in time of need. When we depend on an oral history, we do both our companies and ourselves a disservice.

Dan Walter is the President and CEO of Performensation a firm committed to aligning pay with corporate strategy and culture. Get your copy of the new book: “Everything You Do in COMPENSATION IS COMMUNICATION.”Written by Comp Café writers, Ann Bares, Margaret O’Hanlon and Dan Walter. Dan has also co-authored of several other books you may be interested in including“The Decision Makers Guide to Equity Compensation”“If I’d Only Known That”, and “Equity Alternatives.” Please connect with him on LinkedIn and follow him on Twitter at @Performensation and @SayOnPay.

Equity Compensation Gift Cardification

Who’s at Fault for a Lack of Perceived Value?